By Rachael J. Mercer, Contributing Editor
Bernie Blickenstaff, CEO and owner of Collision Management Services, sets the tone to his “Measuring Collision Center Performance” session with high expectations: “Participants will be able to understand the importance of performance measurement, improve the performance of their collision center and benchmark performance with non-competitive collision centers.”
Participants are encouraged to manage by objectives:
• Evaluating where your business stands.
• Determining goals and objectives.
• Developing action steps to meet the goals.
• Measuring performance.
“These steps of management are the building blocks for measuring collision center performance,” Blickenstaff said.
Blickenstaff urged students to learn to manage what they can affect. That is, to separate the internal and external factors in their business. For example, owners cannot change environmental regulations, the general economy or demanding customers, but they can affect the way their employees sell work, use negotiating skills and control paint and materials use. Learning the difference between the internal and external is key, according to Blickenstaff.
Today’s participants learned:
• Value measurement is key to business success.
• Know what to measure.
• What impacts these measurements.
“Numbers are how we measure those things we can affect,” he said. “Your collision center’s numbers have a story to tell; make sure you are ready to listen!”
Tools are important in measuring performance, Blickenstaff stressed. He encourages shop owners and managers to understand percentages, ratios, trends, benchmarks and goals to measure performance. “These tools provide information and the ability to communicate,” he added.
During the course, Blickenstaff talked about 24 key performance indicators (KPIs) that can direct change. He divided those KPIs into four categories: sales, production cost, profitability and output, and capacity. Managers and owners should measure all KPIs monthly to distinguish patterns in their business.
Blickenstaff also discussed the effective labor rate (ELR), and he shared the formula for determining it and factors that impact ELR. He explained the repair versus replacement analysis, allowing attendees to answer a series of questions designed to determine whether certain parts should be replaced or repaired for maximum profitability.
In his review, Blickenstaff stressed that shop owners and managers should “manage what you can affect by measuring performance and setting goals.” “Maintain accurate and timely financial and non-financial data,” he added. “The KPIs will enable you to measure your progress and compare performance with others.”
“There are numbers that don’t show up on your financial statement,” he reminded participants. “You must learn what to measure and how to read those results.”