How Utilizing Business Management Software Can Increase Profits

As collision repair software becomes more integrated--taking advantage of expanded hardware capabilities, greater storage capacities, and, of course, the Internet-- questions arise as to how repair technicians are utilizing these business management systems once they leave the developers' hands.

There's no arguing that today's collision repair software (which for business purposes can include everything from financial management to estimating, production management, task management, customer retention, communications, etc.) can greatly improve the efficiency and productivity of a bodyshop, leading to increased profits. However, while most realize the benefits of a new software system, few utilize them to their fullest potential. The "power users" of these software systems represent only a small percentage in the collision repair industry.

The process starts with implementation. For many developers, this is the single biggest challenge in releasing (or updating) a new software product to market.

"When you add additional features or functions to a product or make a change that requires them to do something different, the biggest challenge for the user is to understand the benefit," says Frank Terlep, president of Summit Software Solutions. "It's part of a communications strategy. The user is going to have to change how he is using the software. When they understand the benefits and it matches what their expectations are, it's relatively easy to get them to use it."

One of the ways developers have been accommodating collision repairers is by offering packages tailored to the size of their bodyshop's operations. Summit Solutions' CollisionRepair-Net software suite allows shops of all sizes to get the features and functions they need to achieve the objectives they want from a shop management system.

Not to be outdone, Mitchell's RepairCenter, launched at last year's NACE Expo in Las Vegas, allows collision repairers to choose from six customizable RepairCenter packages and 30 modules. And while only a select number of modules have been released to the Canadian market thus far (including the ClaimTools Photo Management module and the TechAdvisor Collision & Mechanical Parts & Labour Estimating Data module), more are expected to be available in the first quarter of 2010.

"The challenge with any change of systems is within the migration from differing systems," says Mike Jerry, Mitchell Canada vice-president and general manager. "If [a collision repair facility] has been using software or a particular program for a considerable period of time, there's a level of comfort. It's overcoming a new workflow, a new process. These programs can take you to being as lean as you want to be, and the real struggle is not the software but the internal process changes within the shop."

Just as there's a considerable difference between reading about the benefits of a business management system and seeing actual tangible results to your bodyshop, the same can be said about the potential costs, as Frank Terlep explains.

"If [a bodyshop] has the capability of going paperless and they have chosen not to over the last three or four years, we have identified that the average cost of paper and paper-based processes to a shop is approximately $50 per repair order--and that cost is not just based on the paper. It's based on the loss and misfiling of paperwork, the time needed to search and find information, the cost of printing, copying, etc. Another part of the fifty-dollar cost per RO is that the typical repair order jacket travels 2.6 miles during the course of its lifetime.

"Another 'hidden cost' in many collision repair shops is their flat-rate or commission-based pay structure and processes. We have a feature in our software called 'Auto Flagging,' that automates the flagging and commission payroll process, which can eliminate anywhere from three to five hours a week in payroll processing time."

Bernard Peloquim, a consultant for Carrus Technologies' CollisionWay software, says that in terms of finances, many collision repair facilities fall victim to what he calls the "shoebox syndrome." This is where all of the invoices and paperwork needed to conduct accounting procedures are placed in a shoebox and sent to the bodyshop's respective accountant on a regular basis, leaving the owners and managers with little understanding of the true day-to-day profitability of the business.

Peloquim believes that part of the solution for bodyshops lies in real-time, accurate communication between collision repairers and their respective business partners.

"What the industry needs is a day-to-day contact with what's happening in their shop. [Imagine] if, for example, you can pull the report on whether you made money or you lost money on the car that just left your door, instead of having to wait for the report for two to three weeks, or even a month. What is the negative effect and how much is it costing them? I would say somewhere between 0-5% of net profit."

Audatex took a different approach with its Lean Six Sigma for Collision Repair. Instead of offering a robust suite of integrated modules, Audatex strives to improve efficiency and productivity in collision repair facilities through its time-tested Lean methodology, which has led to success with its other platforms and systems.

Through its Web-based audio and video tutorials that collision repairers can access anytime online, Audatex gives industry professionals a cost-effective, broad foundation to learning how their business operates and how to improve upon it.

"The whole idea behind Lean is to gain efficiencies through productivity. It's really looking at removing redundancies or unnecessary steps in the process," says John Kotsopoulos, managing director for Audatex Canada. "It's like getting 30% more output with 30% less input. So how do I get 30% more with an existing process, [then] how do I get 30% more with 30% less on the input side?"

For those wishing to get the most out of their business management software, there's no shortage of available resources from the developers themselves. While most software systems will have comprehensive tutorial modules included in the program, many developers go the extra mile when it comes to technical service and training.

Carrus Technologies, for example, offers one-on-one online training, while Mitchell offers alternative "Mitchell University" courses that allow clients to learn the finer points of their software at home on their own time. Summit Software Solutions, as part of its consultant work, will actually revisit a bodyshop as many as four or five times after initial implementation to help its customers better utilize their software.

It's impossible (and somewhat unreasonable) for collision repair industry professionals to learn all the functionalities offered within these software platforms, but don't dismiss them entirely. Be aware of the resources out there and the potential to improve the operations of your bodyshop.