hello everyone and welcome to Collision Repair Magazine’s industry Insider radio a podcast for shops shop owners techs and every level of the collision repair industry I’m your host James Kerr today’s episode is brought to you by Simplicity Car Care Quality Auto repair Superior value fast car service for more information on Simplicity please visit their website at www.s simplicity carare doca every collision repair shop has been there there are just too many vehicles queued up and not enough hours to repair them on a good cycle time you feel like you’re throwing money out the window when you turn a vehicle away so what do you do today we’re going to discuss those answers talk about how to increase the capacity of your shop and the things you don’t know may be causing the backlog that’s throwing money out the window today on industry Insider it’s how to manage capacity in your shop with our guest from Simplicity carare hello Ken I’ve got Ken Chung from Simplicity here would you please introduce yourself and talk a little bit about your shop experience and why you’re the right person to be talking about managing capacity in a collision repair shop sure um you know first of all thank you for giving me the opportunity to to speak on this topic um that I care a lot about so much appreciation um hello everyone so my name is Ken Jung I am currently the vice president of operational excellence and Technology at Simplicity Car Care so what I do is I I work with a team of repair and professional uh and Appraisal professionals that support our Network support our franchises and our shops and the interesting thing is that I’m actually from outside of Industry I actually don’t come from from Collision Repair um I I know shocking e so actually um I came actually from healthc care and Retail uh and the retail space you guys might have heard of a a small tiny organization called Shoppers Drug Martin La Bloss you know just just a tiny family-owned grocery CH just a mom and pop down the street yeah ju just just just a mom and pop just trying to get by and whatnot and um essentially you know it’s interesting coming to Simplicity because you know my role in the past has really been around operations and helping businesses kind of make the most of what they have and perform with what they have available so how do we imp achieve performance how do we achieve profitability how do we leverage the most of our operations and so that’s what I bring to the table that’s what I do it Simplicity um really so that we can deliver more cars faster more profitable so that essentially everyone wins out of the it the shops the customers our Insurance Partners vendors etc etc and so I really welcome this opportunity because I’m not going to pretend to be a collision expert like so if you’re going to ask me about the latest techniques in terms of extracting a dent I’m sorry we’re going to be we’re going to be have crickets and signs for a while but what I’m hoping to do is actually introduce a few perspectives um as an outsider and some perspectives that come from Simplicity that I hope can really actually help the shops and help your listeners well managing so you seem to be pretty laser focused on managing capacity and and capacity and turn around uh uh times and those are key key aspects of running a collision repair shop today right so uh I don’t you you say you’re an outsider I don’t know if we can really count you as much of that much of an outsider can it sounds like you well because the topic is so particular to the Collis repair industry it’s so important to shops uh and we’ve got such a tough nut to crack today but we’re going to do it we’re gonna we’re going to crack this nut today so absolutely first let’s identify the problem how would you characterize how can we characterize a backlog of vehicles what’s what’s the circumstance give us a give us a broad rundown again what are we looking at yeah so I think you know if we think about like the you know definition of backlog it’s really that you have work or vehicles that you know to be worked on but you just can’t get to it at the moment so essentially you have an inventory of work so what what does that look like or what is that well I mean for a shop that’s like the cars that’s in the lot you know those are your cars that’s on the road that you need to be scheduled in it’s the work orders sitting on your desk and if you’re with the insurance it’s the assignments that’s sitting in the system that you have to get to so all of that is inventory of work a backlog or stuff that you have to get to and the reason why I’m so um passionate and I care so much about capacity is that anytime you have a backlog you run the risk of having more work that you can handle at any given time and I remember in terms of one of my mentors told me said hey Ken you know what’s the the fastest way to turn a high performer into a poor performer I was like what’s that start loading them up with work and that really resonate with me and that’s why I actually care a lot about capacity and you know when we talk about you know what’s the problem you know when I think about capacities there’s actually two sides of it we’re actually going to talk about one but you actually have a a problem when you have too much capacity so you’re you so you’re uh burning cash you’re bearing costs and you’re not recouping it with revenue or with work and then there’s obviously the other one where you actually have too much and the other reason why I care so much about like the capacity and such is because when I think about operations in a shop it’s actually it’s like you’re walking this tight rope right you’re trying to get this balance of a proper amount of work within the shop right and it’s not just oh I have so much work and that’s it I don’t think about the other side so that’s why I think so much about capacity and that’s why I I really appreciate the fact that we’re talking about this topic today okay we’re going to focus on I’ve got too many cars right like I don’t have enough cars is a whole another topic of how to attract the cars but we’re talking I’m using cars as a short form here exactly we’re we’re we’re going to talk about too many because post pandemic the way things have bounced back um you know that’s more the circumstance I think most absolutely I just want to make sure that when we talk about capacity we recognize that there are two sides to it yeah absolutely so so it must hurt right having cars sitting there knowing that you can make money on them and you just can’t get to them for whatever reason so I want to go through I want to break down some of these some of the reasons why this is happening and work through some of the solutions to that shops can actually do something about today about the shop capacity but it’s worth revisiting this is common problem like this is happening all over and why why is this happening how does shops get into the circumstance of having too many vehicles to repair well I think right now there’s just open that can of worms see see the worms flying everywhere yeah so I think right now there there’s a chunk of factors especially in current state or to today which is driving this problem so I think one we are really seeing the bounce back um of coid and not only that but seeing of the bounce back of not only working from home but employers asking for employers to return to work and so as a result we are having more cars you know on the road and such and that scenario where there was a lack of work is no longer the case and when I talk with some of the shops not only have a good chunk of our shops recovered they’re actually even seeing more volume than preco people forget how to drive over Co people forget how to drive which is going to the second thing in terms of what’s affecting capacity is if the type of work or if the complexity increases I can say you know within simplicity we’ve actually seen a higher volume of non- drives and so the nature of the work has changed as well so if you were thinking about a shop and we talk about vehicles in general we don’t realize or not to say not realize but we have to recognize that there’s actually a mix of work dribles and non- drives and even within that there are various complexities and when we talk about capacity what’s the capacity for the type of mix that you have so now we have a mix where it’s now heavily more weight the complex jobs the non- drives and so now we have to think about capacity given this new mix um you know another challenge within you know some of our shops you know at least with Simplicity is we have some shops that are dealing with more customers especially when we bring on a new shop and some shops whenever they they bringing on the insurance work they don’t they assume that sometimes the work kind of trickles in but in reality in some cases the floodgates open and the amount of volume of work that they receive is higher than they expect and so the planning doesn’t quite link up with that and then obviously there’s some of those challenges as in you know you know labor shortage Staffing you know supply chain issues and whatnot all that affects you know capacity and also affects backlog so you know there’s a multitude of items which are just really coming together which is exacerbating and kind of driving this capacity challenge here let’s start breaking them down a little bit because there’s some common causes that are that are fairly easy to recognize and you you touched on a few of them Staffing uh training shop space but I think where we’re going on this magical journey of a podcast is to try and talk about the difference you have in approaching how to run your shop when you’ve got all the data and when you don’t uh if if I can anticipate a little bit I think that’s where we’re gonna heading and so there are common causes on the surface that are definitely factors things like Staffing things like training things like shop space but I don’t think they can shoulder all the blame and they how much how much are things like Staffing training and shop space contributing to this backlog issue um you know what they they are actually um significant contributors because when we talk about uh a backlog it’s really you know how much work are you receiving and how much work that you can handle and so when you’re talking about Staffing training and shop space it’s about how much work you can handle right so if you have you know uh you know 10 cars coming in you know within the week but because of you know how many bays how you know how quickly how productive you are and such you can only get through eight Vehicles well because of your supply because of your resourcing you can’t handle that capacity right so like one of the things that that I look at or whenever I I work you know with a team at Simplicity is we we spend our time with the shop saying okay what is the maximum potential how much can they actually handle and then based on on that are they actually realizing so if we take a look at a shop and say hey you know what base with this you know one Tech and you know one painter one prepper and whatever that we expect that they can handle you know 10 you know 15 Vehicles a week you know according to our model well then the question is saying okay but how many are you actually delivering well I can only get through one a day okay now we have to take a look at those two those three pieces Staffing training and shop space if any of those are barriers or restricting the capacity available to do the work all right let’s say I’m a shop owner and I don’t want to have to care about any of this I like I am sorry I’m overworked I’ve got enough to do I’m managing people I’m managing Supply chains I’m I’m dealing with administrative load uh it’s it’s hard to know how deep to go down the rabbit hole of gathering data that’s going to yield any tangible or good result because you want your time spent with a return on investment it’s it can get easy to get sucked up into like oh well then the average car and giv this square footage and and and trying to do calculations how do you know that that all the information you’re Gathering is actually going anywhere good is is doing anything useful yeah you know and I think that’s that’s one of the the benefits or or you know one of the reasons why I enjoy kind of what what I’m doing is because my role and especially with Simplicity is that we we partner with these shop owners so that they don’t have to do the the the calculations and and such so it really comes down to be like you know Ken I’ve got like take a look at my lot I’ve got 15 cars sitting out there you know and I can’t get you know get to it and you know what every day I’ve got three or four customers walking in and I’m only able to get to you know you know two two car you know two cars within the day okay you know you don’t need to be a mathematician know that you have too much work well then let’s start talking about the you know then we we got a shop saying okay well let’s take a look at the 8020 rule right let’s look at your shop look at what’s do what you’re doing both administratively or in the floor what’s taking up the majority of your time right and what we will guide and what we’ll do is saying okay well you know I see that you may not have um you know may not have someone at the front office someone in terms of the administration and such and I see you running back and forth from the you know from the front to the end right so if that’s the case how can we set up some systems how do we set up some processes and such so that we can actually control and actually reduce some of that load right because some of the things that we see especially with the smaller shops when we go in is you see like some of those owners that they’re running out and they’re doing like three or four jobs administratively you know coordinating the shop floor and such and in some cases it’s you know trying to Define what are the roles and responsibilities within the shop itself and so that individuals can focus and they’re not bearing on that you know switching cost or the cost of jumping from one task to another I feel like we’re really getting somewhere here now because I can see ringing in my ears shop owner saying I just don’t have time I just don’t have time to try and figure out this puzzle and to find out what’s going wrong and what you’re telling me is that there are answers you’re just people are usually going too fast to try and uh figure it out but there are answers and oftentimes they’re not um yes Staffing yes training yes shop space but those are the ones that like people complain about over coffee right those are the ones that people oh if only I could get the right people in but there are other factors like what you’re saying like uh administrative load dealing with the administrative load trying to figure out what role people need to be in in order to to work through the load more efficiently right yeah and and before we jump forward to administrative load you know like when we talked about Staffing training shop space I really want to emphasize on the shop space piece because part of the one of the big drivers around capacity is how well does work flow within your shop right and if you walk into a shop and you have Parts lying around if it’s not clear in terms of where the tools are like one of a a lean concept sorry lean is is an improvement methodology you know it talk about prepare for the day set up for the day so the you know you never leave your facility you need never leave your shop as is you set it up as if how you want to start the next day if it is not organized properly think about now you have your staff your Tech going okay like shuffling the desk okay where’s that order oh I have to call someone oh where’s that that you know where’s that scan tool oh uh you know what I see that there’s five cars can you move that car from this spot to the other spot you’re now burning up you know valuable production capacity on just Administration and just juggling things and trying to make things flow within the workspace and you potentially if your parts management you know spot within the shop like where you’re storing your parts that is you know we take a look at your square footage at your floor as every square foot should be Revenue generating if it is just holding Parts if it is just like garbage or whatever it’s nonproduction spacing so how do you minimize that so you can increase your capacity right that’s a very important component when we talk about shop space people think about the space itself but you have to think about how does the work perform within the space and how does it flow right so can we characterize that maybe you’re losing more than you think you’re losing in terms of time and money with how you’ve got things set up yeah like I I wonder um how many individuals or or body you know Body Shop owners and then whatever you know start thinking of the term of the opportunity cost right what is the cost by me dealing with the administration what is the cost of me um searching for stuff what is the cost of me storing this vehicle on the lot and I’m dealing with this whenever I could be spending my time actually being more involved within the repair itself within in terms of building up those relationships with vendors and Distributors to reduce my costs and such right so all of that capacity that you draw from the shop is also affecting from your Administration and how you manage your business and Shop as a whole I think it’s an ongoing I say this with love but I think it’s an ongoing theme in collision repair shops to not value yourself like especially if you’re the if you’re running things to not value your time you just you’re busy putting out fires and uh and so you don’t accommodate for uh how much how much you get lost in the details how much time you can spend in the details for sure absolutely I can fully understand that you know in times dealing with some of the shops ourselves you know um I can see like sometimes you’re just caught trying to get that vehicle out hey you know what I now have a vehicle that’s in a storage yard you know the customer is asking for and I’m just dealing with that how do you have the capacity right in terms of making your shop run so knowing what you’re missing is really tricky though right like sometimes you need someone from the outside to say hey why don’t you have someone hired to this position so that you don’t you can take that away from you if that’s where the time suck is happening it’s it’s kind of hard to uh to make a self assessment of of what it is where you’re getting eaten up right and I think with the through line that we’re trying to present here is it’s those details that are causing the end result of a backlog because it means whatever is preventing you from being able to get through uh what’s on the floor is what’s causing the backlog so I mean this isn’t um stepping outside of our our the talking points we set here but I still think it’s a really really interesting how do you how do come to understand your shop processes and and to refine them that doesn’t seem yes you know I mean in terms of you know the shop processes um itself it is overall at a high level it’s not overly comple uh sorry it’s not overly complex you bring in the car you have to detail you know you have to in terms of doing your your repair planning you’re doing assessments ordering your parts and and such right what you know to to make it simple right because not everyone can suddenly hire a lean Six Sigma you know uh black belt hire a consultant to kind of scrutinize the process is just kind of listing what are the tasks that you are performing and then you know recognizing in terms of what are those High return activities that I really need to systemize and have reoccurring versus these are the outlying kind of conditions and then rather than trying to build a process around it is what is my contingency plan or how do I budget or manage around those right so that’s the other part around when we talk about capacity it’s it’s not only for the capacity that of the work that you’re doing what’s your capacity to handle those warranty jobs those customer complaints the things that actually happen on the out on the outside or that’s not the Fringe which slice away at Your Capacity right that you may not budget for but you really do need to consider because otherwise you know there’s a lot of variability within the jobs and if you don’t set up systems or processes to contain that variability you’re just going to feel like your shop and your operations is just chaotic and you’re going to have these challenges getting through the work like for instance oh Gary isn’t here today and Gary’s the only one who can do that so I guess we’re out of luck oh I hear that so I I hear that so often oh this person they had a personal problem so now we’re not a you know we’re I don’t know the insurer guidelines to do the estimation and then they reach out to our regional performance managers to for help and assistance I think that’s one of the great things in terms of what I enjoy about my role itself is that we have this this team to really support these support these shots when these outline conditions and our role is to get them operational as quickly as possible so that they so that they don’t lose the capacity right well you get these questions so you’re probably the good person to ask here what would you say is the key mistake that shops make that lead to capacity problems oh um even even if it’s unfair to put a little crown on one thing let’s uh let’s try let’s try and TR you know what you know we’ve been talking about processes and systems so so this this is what I’m going to say is is are is the two the two key mistakes and such so I I think the first is that you know uh the shops they they don’t outright set um and Implement systems and processes even in the first place right so if you think about every job that comes in no no you know no two jobs are exactly the same right you know you have different Vehicles you have different types of uh accidents collisions and such you know no two is exactly the same and so we treat treat everything as unique and and special and so you know shops we we allow ourselves to become victims of this variability and we don’t think about saying you know what I may not have a system or a process that can reduce the variability or reduce every single issue and it’s super clean but you know what let me take a look at if there’s an opportunity that I can even reduce the variability by 25% 50% give some predictability so I can do proper scheduling I can do proper Staffing so that’s like one mistake and then related to that is another key mistake is things happen especially when we get busy we allow good practices and standards falling to the side right we all know in terms of the dishes at the end of our day should be clean we should have an empty sink and such but sometimes you just have a busy day and you’re like you know what I’m just going to leave it there and then second you know you have a pile of dishes accumulating and you’re like how do I get through this I I don’t know what you’re talking about Ken I certainly don’t have a full of dishes right that’s from my perspective the the the key mistake that that we perform and you know like you know that’s one of the things that we find whenever you know um a shop asks us for help when we go in we realize saying oh you know what you actually don’t have a system or process in place or there’s a gap here and we go in with our Playbook and we help help set that up and try to bring some order remove some of the chaos remove some of the variability so to your point around the data we can understand the capacity and we can understand where capacity is being lost right I just keep thinking about your example of the shop owner running back to the front of shop and then running to the back of Shop and running to the front of shop and I I completely understand the mentality because I’m the same way I’d rather just go and do it because I know I can get it done but the time lost just going back and forth I it starts to add up right so can I can we add on to that like the ways that you don’t like that is a hidden cost really like the amount of time that you’re spending running back and forth absolutely the the hidden cost like you know like we’re talking about your time your effort scheduling communicating you know checking on Parts like take a look at like not only the owner but you have have a tech um you know if you think about you know their value is whenever they’re actually pulling out the dent when they’re installing and removing and when they’re spending their time trying to hunt for things or they’re cleaning up the shop and such and they’re sweeping you’re saying well this Tech their value is actually repairing the vehicle not performing janitorial activities as an owner your job your role is in terms of ensuring or a GM Your Role is making sure that the shop runs properly you don’t have the time to kind of figure out how oh you know what I can’t open up this this invoice right and I’m dealing with the accounting and and and such you know but at the same time you have to empathize that not all shops are in a situation where they can suddenly bring on a whole bunch of Staffing and given the labor market that you know you may not be able to you know bring in the staff that you need um and so the part of the challenge or part of the the issue here that is how do you set it up how do you set up a Cadence on this administrative work or these hidden costs so that they don’t blow up in your face or they don’t blow up and you’re bearing higher cost you know on you than you should be right and I think you know one of the things that I see or you kind of bring bring forward is you know what I I have to do it let me take it on right right and some of our discussions that we have with the shop is when they say yeah you know what I could bring on a a CSR I could bring on a parts person but I can’t afford it but then you’re a one1 million2 million shop you’re you’re growing and then our question back is yeah but can you afford not to have that person well when we’re talking about overc capacity presumably there’s more money to be had if we can just get better organized to do that and I have a lot of sympathy with how trick that is because you plan roles according to people’s capacity and according to their talents and according to their schedule and that’s that’s not easy like and and those Solutions have got to be differ quite a bit from shop to shop and people to people uh 100% I mean look we have some shops that are that you know um they are not struggling with the capacity issue but then you know you have and I’m not going to pretend that I have all the solutions we have over capacity challenges in some of our shops as well but you take a look at some of the shops and you see that when you take a look at how much inventory they have that maybe they’ve got about 300 $400,000 of inventory and you and you think to yourself huh if I could just get capacity right to do that you’re opening up another 300 $400,000 of sales and then when you dig into it and you find yes maybe it is related to Tech but it’s like look I don’t even have the time to write the estimate I don’t have the time to like reach the C custom it’s like okay well think about now Administration bringing that on I’ve now expanded my administrative capacity so now I can spend my time on the production capacity in the back end can we apply the old business adage of hire for tomorrow and not hire for today yeah absolutely and you know what I think in terms of you know one of the challenges um and one of the things that that we deal with or see on the shops is the the memory or the recency effect of like well what happens if we have coid what happens if suddenly the work doesn’t come in right and now I’m bearing on this cost I’m bearing on this staff and such and so you know that that’s part of that that’s part of the challenge and part of the things that we try to work with you know on our shops right is you know how do we plan for the future what is your business plan and in terms of not only business plan how much capacity how much work do you need for your business and how much work can your shop handle rcky business goodness it is I I I wish you know what if I had the perfect solution if I had all the answers I’d probably be the richest man in the world right well we can we we did promise some answers though so we’ve got some answers here abut some answers today we talked about Staffing and training and shop space we talked about dealing with the administrative load we talked about hidden costs and the one thing I also want to kind of just impress upon you when we talk about administrative load is it’s changed today you know in the past you know way way in the past you had to just focus on I can actually do the repair produce it out of the shop now the administrative load has become much more complex before you even repair the job you have you know uh you know administrative staff the shop has to touch like seven pieces of software you have to touch you know if they’re doing Insurance works the insurance uh you know uh estimating system they have to do the part sourcing if they’re doing you know rentals they may have to go into a rental system they have to do the Collision Repair management system they have to take a look in all data this and that and that before they can even do the job so the administrative load has definitely increased and it’s just thinking about how we become creative and what are some solutions that we can take you know things that we’ve explored as Simplicity to be able to ease that administrative load so pieces of software while the uh the car owner is out front tapping their foot impatient and annoyed because they’re laid for their own work AB absolutely goodness all right so let’s take a few steps back and talk from kind of a 10,000 foot view the impact of holding on to a car too long we tend to think of it as just oh that’s the revenue that I haven’t gotten yet or if only I could get to it but are there are there is there more to it than that is there more than just lost Revenue having uh having cars too long yeah I so you know having cars to you know um one of the things that that I talk about is is this notion of carrying cost what does it mean to have like inventory of work right and when we think about you know the the hidden cost or the cost of having this inventory think about it um you have the challenge of I’ve got work I’ve got Vehicles I’m trying to schedule this I’m trying to shift it shift it around and such right so you have this administrative cost of juggling the inventory you have you have the cost of making sure that your inventory has not expired and what I mean is in that inventory expired let’s say that you actually have cars on the road right but if you’re over capacity let’s say you have repair that’s been on the road for two or three months you now have the cost of I now have to reach out to the customer right and confirm that they are still wanting to do the repairs that they didn’t go to another shop you have the cost of perhaps I procured the parts and now I’m waiting in terms of for another part to come in I’m waiting for the V you know the the you know the the vehicle to come in so I can do the repair I’m now bearing the cost of the parts or the or the car sitting in my lot or in my building so I’m burning utilities I’m burning rent I’m burning storage costs for that vehicle if you think about the the the carrying cost is the longer a car sits on the road in your building in your lot the value of that job decreases over the time because the incidental costs and the hidden cost decrease the value we really talk about when you think about a job you have the sale coming in and we think oh yeah you know what there’s a labor there’s parts and materials and such but you don’t think about all those fixed costs in the overhead which actually starts accumulating onto that so we talk about gross profit that’s the direct cost for the job but we don’t think about the indirect cost and the potential loss of Revenue that comes from having that inventory sitting either in our system in our lot or on the road sounds stressful Ken sounds stressful I know but it’s kind of exciting actually oh yeah yeah it’s very exciting yeah well sorry so let let me refrain it’s kind of like you know you have this tough nut to crack and whenever you actually finally crack that nut or you you tear that wall down it it feels relieving and you know what whenever you know some of the shops that we’ve helped you know whenever it’s it’s you know it’s um I really enjoy seeing you know when a shop succeeds right it sounds like you’re the right person Ken to be talking about managing capacity shops then so there is a a pot of gold at the end of the rain right there is a solution like you can you you have taken shops that had capacity problems and unblocked whatever was blocking them from doing it and and they have achieved capacity yeah you know what here’s here’s the thing what whenever there are success stories here I need some hope you know we we dwelled on the stressful enough yeah so like like whenever you have o over overc capacity you know some of the responses that that we see or the responses that we have from from from shops is just okay I need to turn off the toe ends I need to push away the the the tow truck I need to put put away the vehicle and I hate seeing that because that is revenue or sales that you can accumulate that that you lose the business that go at the door and so you know the thing that I focus on and what I love about being at Simplicity is we we don’t want to accept that we want to identify what are the barriers and the constraints you know and then remove those barriers so that we open up capacity and bring on more vehicles I can tell you that one you know one franchise or one shop that we had at one point was sitting on about two months of inventory um at that time I think their whip was somewhere around 170 180,000 you know what it was a large number because at my age sometimes the memory is not quite as quite as accurate and we start talking about you know some of the some of the solutions that we have how we uh you know level the capacity within the shop how we tighten up in some of our cycle time doubling down on repair and replace you know those kind of pieces and we’re actually able to bring up this six figure around ,000 down to about a 40,000 you know type of inventory what I like to aim for is a shop you know has about enough inventory that they have about between two weeks to A month’s worth of inventory for me that kind of feels healthy and if we take a look at industry standards and I’m not talking about Collision Repair but operations management standards we like to see a facility or a shop run to 90% of their capacity so they have this 10% of their buffer and we like to see in terms of the max potential like how they can perform if they have proper Staffing if they have proper up trining get to around that 95% of Max potential that’s what I try to Target and that’s where I think any shop owner should be targeting and you know when we work with shops when you know simplisity goes in these are some of the things that we’re trying to Target opening up the capacity you know increase the maximum potential and getting the most out of what you have so it sounds like the issues of managing capacity it’s kind of like a doctor diagnosing a patient like you need to find out what’s going wrong and and find out how to fix it and every shop is different but there’s only so many things that can be going wrong is that is that roughly what you’re saying um or you don’t want to compare yourself to a medical doctor so actually it’s kind of funny so so here’s the thing I actually came from the healthcare space and when whenever I take a look at Collision it’s like my my vehicle is the patient on the operating bed and I take a look at the text as the surgeons and it’s a team you know like the prepper is in terms of the surgical assistant and the painter like you know when I take a look at I see so many of the parallels and you can arguably say just like every vehicle is different well every patient is different every person is different and you know what I can say is there can be multi multiple reasons and multiple drivers why you’re losing capacity why things are are not working exactly the way that it can be but at the same time you you can there are a certain number of solutions you don’t need a multitude of solutions sometimes you just need one or two common solutions that addresses a majority of the issues so it can be very complex but it doesn’t require a complex Solution that’s what I’m trying to say so your job is ultimately solving puzzles then is it again um my job is helping the shops solve the puzzle oh careful so so so so so let let me kind of FR frame it this way you know I think of myself as the coach and I think as the shop and the shop owner as the athlete so if we take a look at the like the Raptors Nick nurse wasn’t scoring the three-pointers the Raptors they won it they’re the athlete the shop owners are the athletes they’re the winning team I’m just the support I’m just the guy in the back end trying to help you be successful that’s what my job is if I try to make try to make it as simple as possible and that’s what Simplicity is doing we are we are the the team behind the sports team behind the shop to allow them to be successful that’s how I think of us lot of good analogies going on here so I mean you know we we’ve we’ve put forward like you know you’re from Simplicity obviously say Simplicity is the answer but uh can we can we tie this back to what is the first step do you think a shop should take to properly assess uh their vehicle process in order to have an accurate assessment of capacity and Pace how how should a shop that is listening to this and says I need I need that doctor I need that sports coach I need to be diagnosed I need to find out what the blockage is what is the first step that a shop should take well so I think the very first first step um is really you know I mentioned this early on when we started talking about the data is if you take a step back and you ask yourself how many vehicles can I produce how much sales can I produce and then you ask the following question about how much sales and vehicles do you need to produce right because that’s an important question is no not just how much do I do actually what’s my goal what am I trying to achieve and then you can ask yourself the question why what is the gap if I’m trying to do an extra $50,000 of sales and let’s say that’s another you know 10 15 Vehicles right what is holding me back from doing that 1015 vehicles and then looking across the board actually I kind of have to hold because I’m kind you know maybe I need to pause because I’m pulling out of the Simplicity Playbook but you know what I mean this is this is how we approach it and and you know the what what I’m is just it’s taking that step back out of the daytoday the chaos to ask that question and say you know based on that 8020 rule what’s the 20% of my process or 20% of my time that I’m spending on that I can actually if I looked at that differently I might be able to open capacity right soul searching in Collision soul searching and like I said that you know that’s what we that’s what you know that’s what I do you know anyone in my role does that this is the core of of what we do at Simplicity you know absolutely this is my you know this is what I would guide or or tell shops you know as a first step and if they’re not sure about the first step or the second step third step look I enjoy this type of work they can always reach out to me right thank you so much Ken I can’t think of a better a better way to end on this than soul searching and collision repair uh we talked a lot about managing capacity today we did a lot of colorful analogies and I think we’ve uh you know in in among a lot of discussion I think there’s a lot of really interesting action points people can take up too so is there anything else you’d like to say to the collision repair shops through industry Insider as we’re on our way out um no no not just again I I really I really appreciate this this opportunity to share perspective you know to to perhaps help individuals help your listeners and like I said you know um my inbox is always open you know I always open to have a coffee a conversation if people need any help you know it doesn’t matter who you are where you’re from simplisity nons Simplicity please give me a reach out because I’m more than happy to okay thank you very much Ken for being our guest today Ken Chung from Simplicity uh what a lovely discussion Collision Repair is a fast-paced business and it’s easy to feel overwhelmed when there are more Vehicles when you can handle it should be a happy event and let’s make sure it is by knowing KN your processes being fully aware of your costs and then you can sleep at night knowing you didn’t throw money out the window by turning the vehicle away do you have a capacity problem no you’re at maximum capacity and that’s exactly where you should be thank you to our special guest Ken Chung from Simplicity car care for helping us explore this topic be sure to subscribe to this podcast wherever you’re listening Amazon music Apple podcast Spotify SoundCloud or YouTube and tune in next time for another episode of Industry Insider radio I’m James Kerr thank you for listening today’s episode was brought to you by Simplicity Car Care Quality Auto repair Superior value fast car service for more information on Simplicity please visit their website at www.s Simplicity car [Music] [Music] hello everyone and welcome to Collision Repair Magazine’s industry Insider radio a podcast for shops shop owners techs and every level of the collision repair industry I’m your host James Kerr today’s episode is brought to you by Simplicity Car Care Quality Auto repair Superior value fast car service for more information on Simplicity please visit their website at www.s simplicity carare doca every collision repair shop has been there there are just too many vehicles queued up and not enough hours to repair them on a good cycle time you feel like you’re throwing money out the window when you turn a vehicle away so what do you do today we’re going to discuss those answers talk about how to increase the capacity of your shop and the things you don’t know may be causing the backlog that’s throwing money out the window today on industry Insider it’s how to manage capacity in your shop with our guest from Simplicity carare hello Ken I’ve got Ken Chung from Simplicity here would you please introduce yourself and talk a little bit about your shop experience and why you’re the right person to be talking about managing capacity in a collision repair shop sure um you know first of all thank you for giving me the opportunity to to speak on this topic um that I care a lot about so much appreciation um hello everyone so my name is Ken Jung I am currently the vice president of operational excellence and Technology at Simplicity Car Care so what I do is I I work with a team of repair and professional uh and Appraisal professionals that support our Network support our franchises and our shops and the interesting thing is that I’m actually from outside of Industry I actually don’t come from from Collision Repair um I I know shocking e so actually um I came actually from healthc care and Retail uh and the retail space you guys might have heard of a a small tiny organization called Shoppers Drug Martin La Bloss you know just just a tiny family-owned grocery CH just a mom and pop down the street yeah ju just just just a mom and pop just trying to get by and whatnot and um essentially you know it’s interesting coming to Simplicity because you know my role in the past has really been around operations and helping businesses kind of make the most of what they have and perform with what they have available so how do we imp achieve performance how do we achieve profitability how do we leverage the most of our operations and so that’s what I bring to the table that’s what I do it Simplicity um really so that we can deliver more cars faster more profitable so that essentially everyone wins out of the it the shops the customers our Insurance Partners vendors etc etc and so I really welcome this opportunity because I’m not going to pretend to be a collision expert like so if you’re going to ask me about the latest techniques in terms of extracting a dent I’m sorry we’re going to be we’re going to be have crickets and signs for a while but what I’m hoping to do is actually introduce a few perspectives um as an outsider and some perspectives that come from Simplicity that I hope can really actually help the shops and help your listeners well managing so you seem to be pretty laser focused on managing capacity and and capacity and turn around uh uh times and those are key key aspects of running a collision repair shop today right so uh I don’t you you say you’re an outsider I don’t know if we can really count you as much of that much of an outsider can it sounds like you well because the topic is so particular to the Collis repair industry it’s so important to shops uh and we’ve got such a tough nut to crack today but we’re going to do it we’re gonna we’re going to crack this nut today so absolutely first let’s identify the problem how would you characterize how can we characterize a backlog of vehicles what’s what’s the circumstance give us a give us a broad rundown again what are we looking at yeah so I think you know if we think about like the you know definition of backlog it’s really that you have work or vehicles that you know to be worked on but you just can’t get to it at the moment so essentially you have an inventory of work so what what does that look like or what is that well I mean for a shop that’s like the cars that’s in the lot you know those are your cars that’s on the road that you need to be scheduled in it’s the work orders sitting on your desk and if you’re with the insurance it’s the assignments that’s sitting in the system that you have to get to so all of that is inventory of work a backlog or stuff that you have to get to and the reason why I’m so um passionate and I care so much about capacity is that anytime you have a backlog you run the risk of having more work that you can handle at any given time and I remember in terms of one of my mentors told me said hey Ken you know what’s the the fastest way to turn a high performer into a poor performer I was like what’s that start loading them up with work and that really resonate with me and that’s why I actually care a lot about capacity and you know when we talk about you know what’s the problem you know when I think about capacities there’s actually two sides of it we’re actually going to talk about one but you actually have a a problem when you have too much capacity so you’re you so you’re uh burning cash you’re bearing costs and you’re not recouping it with revenue or with work and then there’s obviously the other one where you actually have too much and the other reason why I care so much about like the capacity and such is because when I think about operations in a shop it’s actually it’s like you’re walking this tight rope right you’re trying to get this balance of a proper amount of work within the shop right and it’s not just oh I have so much work and that’s it I don’t think about the other side so that’s why I think so much about capacity and that’s why I I really appreciate the fact that we’re talking about this topic today okay we’re going to focus on I’ve got too many cars right like I don’t have enough cars is a whole another topic of how to attract the cars but we’re talking I’m using cars as a short form here exactly we’re we’re we’re going to talk about too many because post pandemic the way things have bounced back um you know that’s more the circumstance I think most absolutely I just want to make sure that when we talk about capacity we recognize that there are two sides to it yeah absolutely so so it must hurt right having cars sitting there knowing that you can make money on them and you just can’t get to them for whatever reason so I want to go through I want to break down some of these some of the reasons why this is happening and work through some of the solutions to that shops can actually do something about today about the shop capacity but it’s worth revisiting this is common problem like this is happening all over and why why is this happening how does shops get into the circumstance of having too many vehicles to repair well I think right now there’s just open that can of worms see see the worms flying everywhere yeah so I think right now there there’s a chunk of factors especially in current state or to today which is driving this problem so I think one we are really seeing the bounce back um of coid and not only that but seeing of the bounce back of not only working from home but employers asking for employers to return to work and so as a result we are having more cars you know on the road and such and that scenario where there was a lack of work is no longer the case and when I talk with some of the shops not only have a good chunk of our shops recovered they’re actually even seeing more volume than preco people forget how to drive over Co people forget how to drive which is going to the second thing in terms of what’s affecting capacity is if the type of work or if the complexity increases I can say you know within simplicity we’ve actually seen a higher volume of non- drives and so the nature of the work has changed as well so if you were thinking about a shop and we talk about vehicles in general we don’t realize or not to say not realize but we have to recognize that there’s actually a mix of work dribles and non- drives and even within that there are various complexities and when we talk about capacity what’s the capacity for the type of mix that you have so now we have a mix where it’s now heavily more weight the complex jobs the non- drives and so now we have to think about capacity given this new mix um you know another challenge within you know some of our shops you know at least with Simplicity is we have some shops that are dealing with more customers especially when we bring on a new shop and some shops whenever they they bringing on the insurance work they don’t they assume that sometimes the work kind of trickles in but in reality in some cases the floodgates open and the amount of volume of work that they receive is higher than they expect and so the planning doesn’t quite link up with that and then obviously there’s some of those challenges as in you know you know labor shortage Staffing you know supply chain issues and whatnot all that affects you know capacity and also affects backlog so you know there’s a multitude of items which are just really coming together which is exacerbating and kind of driving this capacity challenge here let’s start breaking them down a little bit because there’s some common causes that are that are fairly easy to recognize and you you touched on a few of them Staffing uh training shop space but I think where we’re going on this magical journey of a podcast is to try and talk about the difference you have in approaching how to run your shop when you’ve got all the data and when you don’t uh if if I can anticipate a little bit I think that’s where we’re gonna heading and so there are common causes on the surface that are definitely factors things like Staffing things like training things like shop space but I don’t think they can shoulder all the blame and they how much how much are things like Staffing training and shop space contributing to this backlog issue um you know what they they are actually um significant contributors because when we talk about uh a backlog it’s really you know how much work are you receiving and how much work that you can handle and so when you’re talking about Staffing training and shop space it’s about how much work you can handle right so if you have you know uh you know 10 cars coming in you know within the week but because of you know how many bays how you know how quickly how productive you are and such you can only get through eight Vehicles well because of your supply because of your resourcing you can’t handle that capacity right so like one of the things that that I look at or whenever I I work you know with a team at Simplicity is we we spend our time with the shop saying okay what is the maximum potential how much can they actually handle and then based on on that are they actually realizing so if we take a look at a shop and say hey you know what base with this you know one Tech and you know one painter one prepper and whatever that we expect that they can handle you know 10 you know 15 Vehicles a week you know according to our model well then the question is saying okay but how many are you actually delivering well I can only get through one a day okay now we have to take a look at those two those three pieces Staffing training and shop space if any of those are barriers or restricting the capacity available to do the work all right let’s say I’m a shop owner and I don’t want to have to care about any of this I like I am sorry I’m overworked I’ve got enough to do I’m managing people I’m managing Supply chains I’m I’m dealing with administrative load uh it’s it’s hard to know how deep to go down the rabbit hole of gathering data that’s going to yield any tangible or good result because you want your time spent with a return on investment it’s it can get easy to get sucked up into like oh well then the average car and giv this square footage and and and trying to do calculations how do you know that that all the information you’re Gathering is actually going anywhere good is is doing anything useful yeah you know and I think that’s that’s one of the the benefits or or you know one of the reasons why I enjoy kind of what what I’m doing is because my role and especially with Simplicity is that we we partner with these shop owners so that they don’t have to do the the the calculations and and such so it really comes down to be like you know Ken I’ve got like take a look at my lot I’ve got 15 cars sitting out there you know and I can’t get you know get to it and you know what every day I’ve got three or four customers walking in and I’m only able to get to you know you know two two car you know two cars within the day okay you know you don’t need to be a mathematician know that you have too much work well then let’s start talking about the you know then we we got a shop saying okay well let’s take a look at the 8020 rule right let’s look at your shop look at what’s do what you’re doing both administratively or in the floor what’s taking up the majority of your time right and what we will guide and what we’ll do is saying okay well you know I see that you may not have um you know may not have someone at the front office someone in terms of the administration and such and I see you running back and forth from the you know from the front to the end right so if that’s the case how can we set up some systems how do we set up some processes and such so that we can actually control and actually reduce some of that load right because some of the things that we see especially with the smaller shops when we go in is you see like some of those owners that they’re running out and they’re doing like three or four jobs administratively you know coordinating the shop floor and such and in some cases it’s you know trying to Define what are the roles and responsibilities within the shop itself and so that individuals can focus and they’re not bearing on that you know switching cost or the cost of jumping from one task to another I feel like we’re really getting somewhere here now because I can see ringing in my ears shop owner saying I just don’t have time I just don’t have time to try and figure out this puzzle and to find out what’s going wrong and what you’re telling me is that there are answers you’re just people are usually going too fast to try and uh figure it out but there are answers and oftentimes they’re not um yes Staffing yes training yes shop space but those are the ones that like people complain about over coffee right those are the ones that people oh if only I could get the right people in but there are other factors like what you’re saying like uh administrative load dealing with the administrative load trying to figure out what role people need to be in in order to to work through the load more efficiently right yeah and and before we jump forward to administrative load you know like when we talked about Staffing training shop space I really want to emphasize on the shop space piece because part of the one of the big drivers around capacity is how well does work flow within your shop right and if you walk into a shop and you have Parts lying around if it’s not clear in terms of where the tools are like one of a a lean concept sorry lean is is an improvement methodology you know it talk about prepare for the day set up for the day so the you know you never leave your facility you need never leave your shop as is you set it up as if how you want to start the next day if it is not organized properly think about now you have your staff your Tech going okay like shuffling the desk okay where’s that order oh I have to call someone oh where’s that that you know where’s that scan tool oh uh you know what I see that there’s five cars can you move that car from this spot to the other spot you’re now burning up you know valuable production capacity on just Administration and just juggling things and trying to make things flow within the workspace and you potentially if your parts management you know spot within the shop like where you’re storing your parts that is you know we take a look at your square footage at your floor as every square foot should be Revenue generating if it is just holding Parts if it is just like garbage or whatever it’s nonproduction spacing so how do you minimize that so you can increase your capacity right that’s a very important component when we talk about shop space people think about the space itself but you have to think about how does the work perform within the space and how does it flow right so can we characterize that maybe you’re losing more than you think you’re losing in terms of time and money with how you’ve got things set up yeah like I I wonder um how many individuals or or body you know Body Shop owners and then whatever you know start thinking of the term of the opportunity cost right what is the cost by me dealing with the administration what is the cost of me um searching for stuff what is the cost of me storing this vehicle on the lot and I’m dealing with this whenever I could be spending my time actually being more involved within the repair itself within in terms of building up those relationships with vendors and Distributors to reduce my costs and such right so all of that capacity that you draw from the shop is also affecting from your Administration and how you manage your business and Shop as a whole I think it’s an ongoing I say this with love but I think it’s an ongoing theme in collision repair shops to not value yourself like especially if you’re the if you’re running things to not value your time you just you’re busy putting out fires and uh and so you don’t accommodate for uh how much how much you get lost in the details how much time you can spend in the details for sure absolutely I can fully understand that you know in times dealing with some of the shops ourselves you know um I can see like sometimes you’re just caught trying to get that vehicle out hey you know what I now have a vehicle that’s in a storage yard you know the customer is asking for and I’m just dealing with that how do you have the capacity right in terms of making your shop run so knowing what you’re missing is really tricky though right like sometimes you need someone from the outside to say hey why don’t you have someone hired to this position so that you don’t you can take that away from you if that’s where the time suck is happening it’s it’s kind of hard to uh to make a self assessment of of what it is where you’re getting eaten up right and I think with the through line that we’re trying to present here is it’s those details that are causing the end result of a backlog because it means whatever is preventing you from being able to get through uh what’s on the floor is what’s causing the backlog so I mean this isn’t um stepping outside of our our the talking points we set here but I still think it’s a really really interesting how do you how do come to understand your shop processes and and to refine them that doesn’t seem yes you know I mean in terms of you know the shop processes um itself it is overall at a high level it’s not overly comple uh sorry it’s not overly complex you bring in the car you have to detail you know you have to in terms of doing your your repair planning you’re doing assessments ordering your parts and and such right what you know to to make it simple right because not everyone can suddenly hire a lean Six Sigma you know uh black belt hire a consultant to kind of scrutinize the process is just kind of listing what are the tasks that you are performing and then you know recognizing in terms of what are those High return activities that I really need to systemize and have reoccurring versus these are the outlying kind of conditions and then rather than trying to build a process around it is what is my contingency plan or how do I budget or manage around those right so that’s the other part around when we talk about capacity it’s it’s not only for the capacity that of the work that you’re doing what’s your capacity to handle those warranty jobs those customer complaints the things that actually happen on the out on the outside or that’s not the Fringe which slice away at Your Capacity right that you may not budget for but you really do need to consider because otherwise you know there’s a lot of variability within the jobs and if you don’t set up systems or processes to contain that variability you’re just going to feel like your shop and your operations is just chaotic and you’re going to have these challenges getting through the work like for instance oh Gary isn’t here today and Gary’s the only one who can do that so I guess we’re out of luck oh I hear that so I I hear that so often oh this person they had a personal problem so now we’re not a you know we’re I don’t know the insurer guidelines to do the estimation and then they reach out to our regional performance managers to for help and assistance I think that’s one of the great things in terms of what I enjoy about my role itself is that we have this this team to really support these support these shots when these outline conditions and our role is to get them operational as quickly as possible so that they so that they don’t lose the capacity right well you get these questions so you’re probably the good person to ask here what would you say is the key mistake that shops make that lead to capacity problems oh um even even if it’s unfair to put a little crown on one thing let’s uh let’s try let’s try and TR you know what you know we’ve been talking about processes and systems so so this this is what I’m going to say is is are is the two the two key mistakes and such so I I think the first is that you know uh the shops they they don’t outright set um and Implement systems and processes even in the first place right so if you think about every job that comes in no no you know no two jobs are exactly the same right you know you have different Vehicles you have different types of uh accidents collisions and such you know no two is exactly the same and so we treat treat everything as unique and and special and so you know shops we we allow ourselves to become victims of this variability and we don’t think about saying you know what I may not have a system or a process that can reduce the variability or reduce every single issue and it’s super clean but you know what let me take a look at if there’s an opportunity that I can even reduce the variability by 25% 50% give some predictability so I can do proper scheduling I can do proper Staffing so that’s like one mistake and then related to that is another key mistake is things happen especially when we get busy we allow good practices and standards falling to the side right we all know in terms of the dishes at the end of our day should be clean we should have an empty sink and such but sometimes you just have a busy day and you’re like you know what I’m just going to leave it there and then second you know you have a pile of dishes accumulating and you’re like how do I get through this I I don’t know what you’re talking about Ken I certainly don’t have a full of dishes right that’s from my perspective the the the key mistake that that we perform and you know like you know that’s one of the things that we find whenever you know um a shop asks us for help when we go in we realize saying oh you know what you actually don’t have a system or process in place or there’s a gap here and we go in with our Playbook and we help help set that up and try to bring some order remove some of the chaos remove some of the variability so to your point around the data we can understand the capacity and we can understand where capacity is being lost right I just keep thinking about your example of the shop owner running back to the front of shop and then running to the back of Shop and running to the front of shop and I I completely understand the mentality because I’m the same way I’d rather just go and do it because I know I can get it done but the time lost just going back and forth I it starts to add up right so can I can we add on to that like the ways that you don’t like that is a hidden cost really like the amount of time that you’re spending running back and forth absolutely the the hidden cost like you know like we’re talking about your time your effort scheduling communicating you know checking on Parts like take a look at like not only the owner but you have have a tech um you know if you think about you know their value is whenever they’re actually pulling out the dent when they’re installing and removing and when they’re spending their time trying to hunt for things or they’re cleaning up the shop and such and they’re sweeping you’re saying well this Tech their value is actually repairing the vehicle not performing janitorial activities as an owner your job your role is in terms of ensuring or a GM Your Role is making sure that the shop runs properly you don’t have the time to kind of figure out how oh you know what I can’t open up this this invoice right and I’m dealing with the accounting and and and such you know but at the same time you have to empathize that not all shops are in a situation where they can suddenly bring on a whole bunch of Staffing and given the labor market that you know you may not be able to you know bring in the staff that you need um and so the part of the challenge or part of the the issue here that is how do you set it up how do you set up a Cadence on this administrative work or these hidden costs so that they don’t blow up in your face or they don’t blow up and you’re bearing higher cost you know on you than you should be right and I think you know one of the things that I see or you kind of bring bring forward is you know what I I have to do it let me take it on right right and some of our discussions that we have with the shop is when they say yeah you know what I could bring on a a CSR I could bring on a parts person but I can’t afford it but then you’re a one1 million2 million shop you’re you’re growing and then our question back is yeah but can you afford not to have that person well when we’re talking about overc capacity presumably there’s more money to be had if we can just get better organized to do that and I have a lot of sympathy with how trick that is because you plan roles according to people’s capacity and according to their talents and according to their schedule and that’s that’s not easy like and and those Solutions have got to be differ quite a bit from shop to shop and people to people uh 100% I mean look we have some shops that are that you know um they are not struggling with the capacity issue but then you know you have and I’m not going to pretend that I have all the solutions we have over capacity challenges in some of our shops as well but you take a look at some of the shops and you see that when you take a look at how much inventory they have that maybe they’ve got about 300 $400,000 of inventory and you and you think to yourself huh if I could just get capacity right to do that you’re opening up another 300 $400,000 of sales and then when you dig into it and you find yes maybe it is related to Tech but it’s like look I don’t even have the time to write the estimate I don’t have the time to like reach the C custom it’s like okay well think about now Administration bringing that on I’ve now expanded my administrative capacity so now I can spend my time on the production capacity in the back end can we apply the old business adage of hire for tomorrow and not hire for today yeah absolutely and you know what I think in terms of you know one of the challenges um and one of the things that that we deal with or see on the shops is the the memory or the recency effect of like well what happens if we have coid what happens if suddenly the work doesn’t come in right and now I’m bearing on this cost I’m bearing on this staff and such and so you know that that’s part of that that’s part of the challenge and part of the things that we try to work with you know on our shops right is you know how do we plan for the future what is your business plan and in terms of not only business plan how much capacity how much work do you need for your business and how much work can your shop handle rcky business goodness it is I I I wish you know what if I had the perfect solution if I had all the answers I’d probably be the richest man in the world right well we can we we did promise some answers though so we’ve got some answers here abut some answers today we talked about Staffing and training and shop space we talked about dealing with the administrative load we talked about hidden costs and the one thing I also want to kind of just impress upon you when we talk about administrative load is it’s changed today you know in the past you know way way in the past you had to just focus on I can actually do the repair produce it out of the shop now the administrative load has become much more complex before you even repair the job you have you know uh you know administrative staff the shop has to touch like seven pieces of software you have to touch you know if they’re doing Insurance works the insurance uh you know uh estimating system they have to do the part sourcing if they’re doing you know rentals they may have to go into a rental system they have to do the Collision Repair management system they have to take a look in all data this and that and that before they can even do the job so the administrative load has definitely increased and it’s just thinking about how we become creative and what are some solutions that we can take you know things that we’ve explored as Simplicity to be able to ease that administrative load so pieces of software while the uh the car owner is out front tapping their foot impatient and annoyed because they’re laid for their own work AB absolutely goodness all right so let’s take a few steps back and talk from kind of a 10,000 foot view the impact of holding on to a car too long we tend to think of it as just oh that’s the revenue that I haven’t gotten yet or if only I could get to it but are there are there is there more to it than that is there more than just lost Revenue having uh having cars too long yeah I so you know having cars to you know um one of the things that that I talk about is is this notion of carrying cost what does it mean to have like inventory of work right and when we think about you know the the hidden cost or the cost of having this inventory think about it um you have the challenge of I’ve got work I’ve got Vehicles I’m trying to schedule this I’m trying to shift it shift it around and such right so you have this administrative cost of juggling the inventory you have you have the cost of making sure that your inventory has not expired and what I mean is in that inventory expired let’s say that you actually have cars on the road right but if you’re over capacity let’s say you have repair that’s been on the road for two or three months you now have the cost of I now have to reach out to the customer right and confirm that they are still wanting to do the repairs that they didn’t go to another shop you have the cost of perhaps I procured the parts and now I’m waiting in terms of for another part to come in I’m waiting for the V you know the the you know the the vehicle to come in so I can do the repair I’m now bearing the cost of the parts or the or the car sitting in my lot or in my building so I’m burning utilities I’m burning rent I’m burning storage costs for that vehicle if you think about the the the carrying cost is the longer a car sits on the road in your building in your lot the value of that job decreases over the time because the incidental costs and the hidden cost decrease the value we really talk about when you think about a job you have the sale coming in and we think oh yeah you know what there’s a labor there’s parts and materials and such but you don’t think about all those fixed costs in the overhead which actually starts accumulating onto that so we talk about gross profit that’s the direct cost for the job but we don’t think about the indirect cost and the potential loss of Revenue that comes from having that inventory sitting either in our system in our lot or on the road sounds stressful Ken sounds stressful I know but it’s kind of exciting actually oh yeah yeah it’s very exciting yeah well sorry so let let me refrain it’s kind of like you know you have this tough nut to crack and whenever you actually finally crack that nut or you you tear that wall down it it feels relieving and you know what whenever you know some of the shops that we’ve helped you know whenever it’s it’s you know it’s um I really enjoy seeing you know when a shop succeeds right it sounds like you’re the right person Ken to be talking about managing capacity shops then so there is a a pot of gold at the end of the rain right there is a solution like you can you you have taken shops that had capacity problems and unblocked whatever was blocking them from doing it and and they have achieved capacity yeah you know what here’s here’s the thing what whenever there are success stories here I need some hope you know we we dwelled on the stressful enough yeah so like like whenever you have o over overc capacity you know some of the responses that that we see or the responses that we have from from from shops is just okay I need to turn off the toe ends I need to push away the the the tow truck I need to put put away the vehicle and I hate seeing that because that is revenue or sales that you can accumulate that that you lose the business that go at the door and so you know the thing that I focus on and what I love about being at Simplicity is we we don’t want to accept that we want to identify what are the barriers and the constraints you know and then remove those barriers so that we open up capacity and bring on more vehicles I can tell you that one you know one franchise or one shop that we had at one point was sitting on about two months of inventory um at that time I think their whip was somewhere around 170 180,000 you know what it was a large number because at my age sometimes the memory is not quite as quite as accurate and we start talking about you know some of the some of the solutions that we have how we uh you know level the capacity within the shop how we tighten up in some of our cycle time doubling down on repair and replace you know those kind of pieces and we’re actually able to bring up this six figure around ,000 down to about a 40,000 you know type of inventory what I like to aim for is a shop you know has about enough inventory that they have about between two weeks to A month’s worth of inventory for me that kind of feels healthy and if we take a look at industry standards and I’m not talking about Collision Repair but operations management standards we like to see a facility or a shop run to 90% of their capacity so they have this 10% of their buffer and we like to see in terms of the max potential like how they can perform if they have proper Staffing if they have proper up trining get to around that 95% of Max potential that’s what I try to Target and that’s where I think any shop owner should be targeting and you know when we work with shops when you know simplisity goes in these are some of the things that we’re trying to Target opening up the capacity you know increase the maximum potential and getting the most out of what you have so it sounds like the issues of managing capacity it’s kind of like a doctor diagnosing a patient like you need to find out what’s going wrong and and find out how to fix it and every shop is different but there’s only so many things that can be going wrong is that is that roughly what you’re saying um or you don’t want to compare yourself to a medical doctor so actually it’s kind of funny so so here’s the thing I actually came from the healthcare space and when whenever I take a look at Collision it’s like my my vehicle is the patient on the operating bed and I take a look at the text as the surgeons and it’s a team you know like the prepper is in terms of the surgical assistant and the painter like you know when I take a look at I see so many of the parallels and you can arguably say just like every vehicle is different well every patient is different every person is different and you know what I can say is there can be multi multiple reasons and multiple drivers why you’re losing capacity why things are are not working exactly the way that it can be but at the same time you you can there are a certain number of solutions you don’t need a multitude of solutions sometimes you just need one or two common solutions that addresses a majority of the issues so it can be very complex but it doesn’t require a complex Solution that’s what I’m trying to say so your job is ultimately solving puzzles then is it again um my job is helping the shops solve the puzzle oh careful so so so so so let let me kind of FR frame it this way you know I think of myself as the coach and I think as the shop and the shop owner as the athlete so if we take a look at the like the Raptors Nick nurse wasn’t scoring the three-pointers the Raptors they won it they’re the athlete the shop owners are the athletes they’re the winning team I’m just the support I’m just the guy in the back end trying to help you be successful that’s what my job is if I try to make try to make it as simple as possible and that’s what Simplicity is doing we are we are the the team behind the sports team behind the shop to allow them to be successful that’s how I think of us lot of good analogies going on here so I mean you know we we’ve we’ve put forward like you know you’re from Simplicity obviously say Simplicity is the answer but uh can we can we tie this back to what is the first step do you think a shop should take to properly assess uh their vehicle process in order to have an accurate assessment of capacity and Pace how how should a shop that is listening to this and says I need I need that doctor I need that sports coach I need to be diagnosed I need to find out what the blockage is what is the first step that a shop should take well so I think the very first first step um is really you know I mentioned this early on when we started talking about the data is if you take a step back and you ask yourself how many vehicles can I produce how much sales can I produce and then you ask the following question about how much sales and vehicles do you need to produce right because that’s an important question is no not just how much do I do actually what’s my goal what am I trying to achieve and then you can ask yourself the question why what is the gap if I’m trying to do an extra $50,000 of sales and let’s say that’s another you know 10 15 Vehicles right what is holding me back from doing that 1015 vehicles and then looking across the board actually I kind of have to hold because I’m kind you know maybe I need to pause because I’m pulling out of the Simplicity Playbook but you know what I mean this is this is how we approach it and and you know the what what I’m is just it’s taking that step back out of the daytoday the chaos to ask that question and say you know based on that 8020 rule what’s the 20% of my process or 20% of my time that I’m spending on that I can actually if I looked at that differently I might be able to open capacity right soul searching in Collision soul searching and like I said that you know that’s what we that’s what you know that’s what I do you know anyone in my role does that this is the core of of what we do at Simplicity you know absolutely this is my you know this is what I would guide or or tell shops you know as a first step and if they’re not sure about the first step or the second step third step look I enjoy this type of work they can always reach out to me right thank you so much Ken I can’t think of a better a better way to end on this than soul searching and collision repair uh we talked a lot about managing capacity today we did a lot of colorful analogies and I think we’ve uh you know in in among a lot of discussion I think there’s a lot of really interesting action points people can take up too so is there anything else you’d like to say to the collision repair shops through industry Insider as we’re on our way out um no no not just again I I really I really appreciate this this opportunity to share perspective you know to to perhaps help individuals help your listeners and like I said you know um my inbox is always open you know I always open to have a coffee a conversation if people need any help you know it doesn’t matter who you are where you’re from simplisity nons Simplicity please give me a reach out because I’m more than happy to okay thank you very much Ken for being our guest today Ken Chung from Simplicity uh what a lovely discussion Collision Repair is a fast-paced business and it’s easy to feel overwhelmed when there are more Vehicles when you can handle it should be a happy event and let’s make sure it is by knowing KN your processes being fully aware of your costs and then you can sleep at night knowing you didn’t throw money out the window by turning the vehicle away do you have a capacity problem no you’re at maximum capacity and that’s exactly where you should be thank you to our special guest Ken Chung from Simplicity car care for helping us explore this topic be sure to subscribe to this podcast wherever you’re listening Amazon music Apple podcast Spotify SoundCloud or YouTube and tune in next time for another episode of Industry Insider radio I’m James Kerr thank you for listening today’s episode was brought to you by Simplicity Car Care Quality Auto repair Superior value fast car service for more information on Simplicity please visit their website at www.s Simplicity car [Music] [Music]