I believe that if shop owners really knew the financial impact of their body shop’s bottlenecks, most would quickly become a student of the Theory of Constraints (TOC).
In the 1990s, I was operating a very small body shop called Luehr’s Auto Body. It was only a few thousand square feet with a single (non-bake) paint booth in the back. It felt like my team and I spent more time moving cars around than actually repairing them.
One day, a mentor of mine who worked in the manufacturing industry gave me a book called The Goal by Eliyahu M. Goldratt and Jeff Cox. That book changed my life and taught me about the Theory of Constraints
I was able to turn my small body shop into a money-making machine by focusing my efforts on the primary “system constraint.” In my case, it was the paint booth.
Since then, I have been able to use TOC to improve many many body shops’ throughput and profits regardless of the size, shape or layout of their space. In most cases, they experienced more than 50% growth in a moderately short time!
Throughput Determines Money in the Bank
Imagine you are looking at an hourglass. The top portion represents your work in process (WIP). The amount of sand (vehicles) reaching the bottom of the hourglass represents what can be invoiced.
The entire process of taking a repair job from WIP to invoice is called “throughput.” The narrow part of the hourglass—the pinch point—is the primary constraint. That determines your throughput.
In other words, it doesn’t matter how much WIP is in the upper part as long as there is enough to feed the pinch point (your primary constraint). This determines your ability to make money.
You might have heard the cliche, “You’re only as strong as your weakest link.” It’s like that with bottlenecks. You can only make as much money as your primary constraint will allow.
I recommend following these five steps to incorporate TOC and bust a bottleneck:
- Identify the constraint
Find that bottleneck first. It’s easiest to find as it is usually the resource or department with the most inventory (cars) parked in front of it.
Body shops typically discover that their administrative processes are actually the primary constraint. Examples may include vehicles getting backed up in blueprinting or waiting on insurance approvals.
The challenge is that the constraint is constantly moving—bouncing from department to department. This happens for a few different reasons, but the most common is that your bottleneck is constantly moving due to poor scheduling habits and repair planning, causing unexpected production delays.
- Exploit the constraint: Are you using this resource as effectively as possible? Ask yourself:
- Is the blueprinter also running cars to sublet?
- Does the paint booth sit empty until 10 am?
- What hours (including the lunch hour) is the booth in operation?
- Are batch sizes too large?
- Does the painter tint colors in the booth?
- Subordinate to the constraint: Subordinate means that all other departments are subservient to the constraint resource. In other words, every employee is taught to understand how important it is to ensure the system’s constraint is allowed to operate continuously and without interruption!
- Proper damage analysis to eliminate stop/starts.
- Everyone ensures the buffer is never empty, so the constraint always has work to do.
- Prep work is done correctly, so redos are unnecessary.
- Parts have been double-checked for correctness.
- Elevate the constraint
- Make it bigger (if you have demand).
- Add a technician.
- Purchase a paint-drying system, which will allow your booth to produce more vehicles.
- This is an area to deploy some LEAN thinking … Such as cleaning, organizing and making the constraint department more efficient as is taught in lean 5S methodology.
- Repeat steps 1-4
- Like LEAN, it is based on continuous improvement.
- Once you elevate a constraint, it is possible to have it move to another resource or department.
You may ask, “Why do I need a constraint at all?” The fact is: there always will be one. It can even be the market itself not delivering enough work to feed your new TOC cash monster!
One suggestion is to choose which resource in your business makes the most sense to be your primary constraint.
Theory of Constraints can help optimize your profitability and massively improve your cycle time. Now, go out there and bust those bottlenecks!
For more information about busting bottlenecks and Theory of Constraints, join Operations Monthly Live (OML), an online management training program and community of high performers. Here you’ll find hours of world-class training. With a very affordable OML subscription, you can join me live for an hour each month, where you will learn a new, relevant topic and be able to ask questions while interacting with many of North America’s best collision operators. To learn more, subscribe to the Dave Luehr YouTube channel and visit the Elite Body Shop Academy at elitebodyshopsolutions.com/academy.