In point one (link above), Create constancy of purpose for improvement of product and service, the concept of long-range thinking was touched on. This must be driven from the top, and be evident in every facet of the business. This sets the background for the philosophy to be applied. My experience is that Dr. Deming’s theories are extremely effective and must be applied consistently over time. Prevalent today is the practice of jumping from one strategy to another, try something for a while and then switch to something else. Constancy of purpose is a totally different approach and can provide far better results.
Point Two: Adopt the new philosophy.
To me, the new philosophy, very simply stated is that improved quality results in lower cost. This is quite contrary to the old industrial model of quality many people still accept. In the old model, quality was obtained largely through inspection.
A process produced widgets [car repairs?] It cost as much to produce a bad widget as a good widget, yet the bad widgets cannot be sold without rework. Further, it takes costly inspection to separate the bad widgets and costly/wasteful rework to make them useable. In this respect car repair is no different from widgets. These extra steps are non-value added cost. They increase cost without adding value.
By improving the process of producing widgets, so bad ones are not produced, all the widgets produced can be sold. Without the cost of rework and inspection each widget [car repair] cost less to produce. Thus the better the quality of the widget the lower the cost. This is possible from removal of the non-value added processes.
In auto repair widgets could be expressed as time. For example if an hour of time cost $60.00 to produce and can be sold for $80.00 the profit is $20.00 per widget. Sell ten widgets and the profit is $200.00. The problem is each widget [hour] cost $60.00 whether it can be sold or not.
Suppose a shop produces ten widgets, but finds a problem with two. These two non-sellable widgets still cost $60.00 each. If it takes two more hours to make them sellable, the cost is much greater. This is a non-value added process, it adds cost, but no value to the product [service.]
The original cost was $120.00 [2 widgets at $60.00 each] plus the rework of $120.00 plus the cost of finding the problem. Conservatively let’s say $245.00, divided by two is $122.50 cost. Yet they still sell for $80.00 each.
We must also consider that the two hours spent reworking the widgets are two hours we could not sell otherwise. We have lost at least $40.00 more [the potential profit from those two hours] and this does not include the loss of client confidence, disruption to the schedule, materials used, supervisory cost or loss of employee morale as a result.
Further, each great widget sold might hold the potential of a referral for additional sales. Also not counted is the 20% possibility [2 in ten] of receiving additional referrals, possibly loss.
It has long been taught that nothing is perfect. Rather the new philosophy teaches there will always be room for improvement. As processes are developed, that do not produce [as many] defects, efficiency rises and cost are reduced. Further, perfection is not necessary. What is necessary [desirable] is consistently exceeding the clients needs [specifications] at very least, far more often than the clients other options do.
As cost are decreased, relative to the client’s other options, a business will likely expand. With expansion comes economies of scale, further reducing cost. Such a business may choose to sell at a lower price than their competition and still make the same profit. They may also sell at the same price and enjoy a greater profit.
Adopting the new philosophy means to me, not accepting the current state of anything as okay, rather looking for constant improvement. In a previous post I wrote about the process of improving a wheel alignment.
In that example several things were found that affected an alignment. When complete average alignment time was reduced 40% with a huge increase in quality and even greater cost savings. This was largely accomplished by removal of non-value added steps. At that point a 12 month/12,000 mile warranty on alignment could easily be offered. The marketing advantage was huge yet the cost was nil. The same principles can be applied to many processes with similar results.
If examined closely, non-value added steps exist almost everywhere. The new philosophy is to work to remove them, rather than simply adding their cost to the cost of the service.
Joined: 15 May 2007 Posts: 146 Location: Garden City, KS
Posted: Sat Jun 23, 2007 9:49 am Post subject:
Maybe another example would be producing estimates? Many shops freely give quotes without seeing the vehicle, this takes an SA's time. If the client feels this is a just quote, they may bring the vehicle in to have it repaired. A technician finds that the quoted work will not actually fix the clients complaint, and the SA is informed. The SA calls the client with the news, a new quote, and for the sake of arguement gets the okay for repairs to take place (all this again takes more of the SA's time). The technician begins repairs by disassembling the vehicle at which time he/she finds other "required" repairs. The SA is again informed, and now a little perturbed. Calls the client AGAIN, with more "bad news" and gives out yet another quote. The client, who is also now perturbed, reluctantly gives out a go-ahead (after all, the car is all apart now). The repairs are completed, and the vehicle is brought back into "specification" and within the latest estimate's $$$.
The client probably has lost trust in the company, the SA wasted valuable time calling and creating/reworking estimates, and the company has almost certainly lost out on that 20% referral work.
I think everyone reading this forum can pick out multiple failures of the "system". Now...if we did that with every process in the shop...
Great post, Louis. I'm almost sorrowful that there will only be 12 more.
That happens because of menu pricing, trying to make selling repair service like ordering food at McDonalds. Simply improving the estimating system of menu pricing will not solve the underlying problem we tech face; lousy or total lack of communication with the clients.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Sun Jun 24, 2007 10:24 am Post subject:
Hi Matt,
MattFMN wrote:
The client probably has lost trust in the company, the SA wasted valuable time calling and creating/reworking estimates, and the company has almost certainly lost out on that 20% referral work.
You are quite perceptive, this is one of the leading complaints clients have about shops, "The price charged was more than quoted." Sort of a chicken and egg dilemma. Clients wish to know that which can't be known. The results will be predictably bad. Shops participate, knowing its wrong, in order to attract sales. This leads clients to believe this is a viable approach so they continue to use it. Shops loose sales so quote more and lower prices, and on it goes. Pretty much insanity from my perspective.
Disreputable operators have taken this to an art form. They call the competition, decide what price will likely attract the largest market and go from there. I seems to make no difference that the entire approach is based on deception, only that it favors the disreputable.
I see quoting prices without checking the vehicle as a no win situation for an honest shop. A crook can always quote a lower price and then claim, they had no way to know once the vehicle is disabled.
The Art of War teaches, never throw strength against strength. Rather throw strength against weakness. The weakness of the system is fairly obvious and where I feel a quality shop should market. Dishonesty is always a short-term approach and can always be overcome with a long-term commitment [point 1,] using a new philosophy [point 2.]
MattFMN wrote:
I think everyone reading this forum can pick out multiple failures of the "system". Now...if we did that with every process in the shop...
Great post, Louis. I'm almost sorrowful that there will only be 12 more.
One thing I love about the auto repair trade is the almost unlimited opportunity for improvement. There are few other examples where so little effort, properly guided, can show such great rewards.
Thanks Matt, your's are good observations. I appreciate your comments.
Joined: 15 May 2007 Posts: 146 Location: Garden City, KS
Posted: Sun Jun 24, 2007 10:43 pm Post subject:
Quote:
That happens because of menu pricing, trying to make selling repair service like ordering food at McDonalds.
I can't help but to agree with that, only I don't believe it is the only issue. Menu pricing is a hoax, and a scam. I've been to classes where it is taught as a scam to get customers in the door and spend more while there. The asterix is always near saying: "starting at", or "most vehicles".
I feel a large problem is poor inspections, period. If a tech is inspecting a system, such as brakes, without the tech disassembling the system to the point of reassembly...how can an accurate assessment much less estimate on repairs be made? I don't think that accurate estimates can be consistently done with a "quick inspection methodology"...and it doesn't. Shops everywhere do the yank the wheels, or worse yet look through the wheels, and inspect brakes. Seems that those are the shops that "do things right" by replacing EVERYTHING. We can site many reasons why proper inspections are being done. Flat-rate, owners/managers not charging for inspection/diagnosis, etc for starts. I feel point 2 may be a good indicator to the shop instituting Demings philosophy that to improve quality, it has to start with proper inspection. Thanks, Bud! I look forward to your views! Later, Matt.
If we were penalized for typos I'd be sunk by now!!
As for vehicle inspections or diagnostics not being done well, I've heard of and seen problems with that in flat rate, commission and straight salary shops. So my view is that it is not the pay plan alone that causes this loss.
How about lack of leadership, lack of common goals, lack of purpose?
Joined: 19 May 2007 Posts: 206 Location: Camp Verde, AZ
Posted: Mon Jun 25, 2007 10:53 pm Post subject:
MattFMN wrote:
I feel a large problem is poor inspections, period. If a tech is inspecting a system, such as brakes, without the tech disassembling the system to the point of reassembly...how can an accurate assessment much less estimate on repairs be made?
Proper inspections and tear down to the point of reassembly???
What is considered proper? How far do we disassemble?
For sake of argument, consider rear drum brakes on a vehicle with a full floating axles, and with inboard mounted drums.
The customer authorizes an inspection fee for brakes. Just what does that cover?
Vehicle comes in, the tech takes apart the rear the brakes and inspects. He finds the lining on the shoes at 3/32 of an inch. The drums are .010 below Max diameter. The vehicle could use shoes and drums, but could also be reassembled and driven safely. The wheel cylinders are not leaking.
1) Do we estimate wheel cylinders or tear them apart to see if they are rebuildable? If we take them apart the vehicle is disabled.
2) The springs and hardware all look good. Do we reuse or replace?
3) It is shop policy that any time a seal is disturbed, that seal gets replaced.
The tech gives the inspection sheet to the SA. Now what happens?
A) Do we let the vehicle tie up a stall while waiting for approval? it may be an hour, it may be several days. After approval, it will be at least the next day before we get the parts. It may be another day or two before the schedule allows a tech to actually work on it again.
B) Do we reassemble the vehicle to the point it can be pushed out of the shop? In this case we would have to partialy take apart and put back together if the client refuses the work.
C) Do we completely reassemble the vehicle with new seals and wheel cylinders (they were taken apart for inspection)?
D) Do we completely reassemble the vehicle using the old seals and reassembling the wheel cylinders? If the client declines the work are we liable for leakage from the original seals and cylinders?
It seems that if we inspect and reassemble. the customer is going to pay again for disassembly when the repair is actually done. But, on the other hand if we leave it torn apart the shop suffers by having a bay tied up.
I am for inspections and having the customers pay for them, but how far do we go with then in regards to Dr. Demmings teachings? Help me apply what we are learning, to my world.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Tue Jun 26, 2007 7:00 am Post subject:
Hi Dave,
Dave wrote:
I am for inspections and having the customers pay for them, but how far do we go with then in regards to Dr. Demmings teachings? Help me apply what we are learning, to my world.
Dave
There will always be circumstances as you mention, where an accurate estimate is not possible/practical. I think Matt is speaking of the majority of the other times where it is possible. He also makes a good point, improved diagnosis reduces downstream cost.
We are sometimes faced with similar situations to yours. The way I handle it is to quote a high, low and average to the client and get approval based on that. When building a quote, I also locate all possible parts and factor the cost of rapid procurement, if waiting for tear-down is the clients choice.
Sometimes, once all cost are factored in, downtime, expediting parts, etc, I can demonstrate to the client, it may be less expensive to perform a more complete repair? For instance it may be less expensive to simply replace hardware, build cylinders, etc. rather than tear down and wait if they are needed. I find sometimes in order to save a few dollars, I would waste hundreds in loss efficiency and downtime.
Another thing I have done with some fleets is to order all possible parts in advance and have them cover the restock cost if not needed. This is still less expensive for them than down time and for me than to stand around.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Wed Jun 27, 2007 7:35 pm Post subject:
Hi Dave,
Dave wrote:
louis wrote:
I find sometimes in order to save a few dollars, I would waste hundreds in loss efficiency and downtime.
Been there, done that on more than one ocassion. It has taken a while for me to learn that lesson.
There is much to learn.
Dave
Amen to that! I have found that when I think in terms of overall cost I find many practices of the past don't seem to make a bunch of sense.
Many years ago, I would have thought nothing of having a man tear something like that down. Making up a list, calling the client and waiting around to hear back. Two days later they decide to go with it and I would move it back in again and go. I really couldn't figure out why I wasn't making any money.
Today if someone wishes to do it that way, I would calculate the cost of the wasted time and the cost of the job [overall cost,] and give them the figure. I would also give them the figure for doing it as I suggest. They can then decide which method they prefer.
Looking back there are often time when I could kick myself
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There are few other examples where so little effort, properly guided, can show such great rewards.
