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Market Pressure Driving Demand for Shop Management SystemsPosted 7/23/2007
By Marc Brungger
Mitchell International's Industry Trend report found there is increased competition for a decreasing volume of claims. What's more confounding is that shop owners and managers aren't making tighter management of their enterprises a priority. Improvements in automotive navigation and safety technology benefit everyone, and safer cars are nothing anyone should complain about, despite the unfortunate side effect of fewer and fewer damaged vehicles coming to shops for repairs. So the question facing shops in the 21st century is: "What can I do to offset this loss of business and stay profitable?" The answer for many has been to consolidate.
The past five years have seen a major increase in the presence and influence of mega-shops (single facilities exceeding 50,000 square feet, or generating in excess of $3 million dollars in annual revenue) and even to a greater extent, multilocation shop enterprises. Multishop locations are able to produce significant economies of scale, thereby capturing more and more repairs, putting additional pressure on midsize shop businesses.
Size alone does not produce an economy-of-scale, however. The true advantage enjoyed by large- and/or multishop operations is their increased willingness to invest in management systems. Indeed, it was often a progressive attitude toward adopting management systems that enabled them to identify the economic opportunities that allowed them to grow into the mega/multishops they are today. Many shops use some type of business accounting system, such as QuickBooks or BusinessWorks or MAS90. While undoubtedly superior to manual accounting, such systems are simply not designed to provide the specific insight shop managers and owners need to be successful.
But there are alternatives to going out of business or being absorbed by a consolidated enterprise. That is to take control of your business through the use of a powerful, shop-focused management system! No shop can expect to stem the 10 percent decline in damaged vehicles coming through their doors, but if a strong management system helps them increase their efficiency in 10 other areas by even 1 percent, they'll offset the decline in top-line revenue and claims volume.
Some benefits to a shop management software system include:
Parts ordering/tracking - Automating a shop's parts procedures can significantly improve its bottom line. Tracking vendor discounts on every part helps ensure shops are receiving their proper discounts, and timely and accurate analysis of parts sales can present shops with an opportunity to proactively negotiate better discounts with suppliers.
Scheduling repairs - Implementing an intelligent scheduling system that takes into account repair history, repair size, supplement time, and shop capacity helps shops schedule repairs efficiently, throughout the week, resulting in a general reduction in cycle times as well as reduced rental car expenses.
Production management - Tools such as electronic whiteboards help shops manage production by department, enabling them to identify and eliminate bottlenecks to improve productivity and further reduce turnaround time. Tech stations provide production specialists/technicians with the information they need (notes, parts status, target dates, red flags, etc.) in real-time and right from the shop floor.
There's no such thing as "business as usual." The market is always changing, and it is the companies that change with it that remain engaged and profitable. To continue to be successful, business owners and managers have to focus on areas where they have some control, and direct their energies and inspirations toward improving the way they do business in a changing environment. Working together, participating in industry associations, engaging in new ideas and emerging technologies, and sharing best practices are great ways to do that. And using the most sophisticated, comprehensive, collision- or mechanical-specific shop management system is also key.
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