Not long after founding Elite Body Shop Solutions, I received a phone call from an old coworker and friend. We’ll call him Kelly.

Kelly said, “Dave, I’m in trouble and I need your help!”

Several years before, Kelly and I worked together at an auto body shop, and I always considered him a smart guy and a good friend.

I said, “Sure thing, pal. What’s going on?”

He said, “My shop has just been removed from tier one status of the Allstate direct repair program. I’m afraid I am going to lose my job!”

For those who aren’t aware, in the DRP world, being bumped from tier one to tier two on the Allstate program usually means a devastating decrease in referrals.

Wanting to help my friend, I wasted no time driving over to his shop in South Nashville. After the usual pleasantries, I asked him to show me around the shop.

As we walked through each department, I saw all his workers hard at work. Knowing Kelly, I wasn’t surprised to see a good team all working hard. He never was the kind of guy to tolerate a bunch of employees standing around and it seemed like they all respected him. Other than a few sloppy habits taking place in some of the work stalls, I was finding it difficult to understand why Allstate would be dissatisfied with the performance of Kelly’s shop.

After touring the final assembly area of the shop, Kelly opened the small man door leading to the back parking lot. As the door swung open, a whole new picture began to emerge. Wrecked cars and trucks… everywhere!

“Holy crap Kelly, are you starting a salvage yard here?”

“No,” he said with a big grin. “We are just really busy – I guess we are just blessed with a lot of work.”

“Blessed?” I asked. “This looks like a curse to me!”

“What do you mean, Dave?”

 “Kelly, how many vehicles are sitting back here?”

 “There are about 45 cars out here and another 20 or so inside the shop.”

Then I asked, “Okay, so how many cars do you deliver on average each day?”

After pulling up a couple reports from his management system, he replied, “We deliver 105 cars a month on average, so if I divide that by 21 working days that is about 5 cars a day.”

Looking at his report, I could also see his average repair order had 22 labor hours per vehicle.

“Okay, my friend, I think I know what your problem is. Can we look at your most recent Allstate performance report? From what I have seen today, I am guessing your cycle time performance is running around 13 days at about 1.7 hours per day touch time.”

As he pulled the Allstate report from his upper desk drawer and looked at it, his jaw hit the floor.

“Dude, are you some kind of cycle time wizard?” Kelly asked in astonishment. “How did you know the report would show 13 days at 1.7 hours per day?!”

(As much as I would have reveled in keeping my little party trick a secret…) I went on to explain the simple mathematical equation I learned from my mentor so Kelly would understand the reality of his performance problems.

I drew out the magical formula on the back of a napkin for him.

Work In Process Units ÷ Daily Delivered Units = Cycle Time Performance

Even though I felt like a magician giving up his secrets, I really needed my friend to understand his problem so he could save his job.

I went on to explain, “When you told me you typically store 45 repairable vehicles out back and another 20 in the shop, I simply divided the 65 units by the daily average delivery units, which you told me was 5 cars. 65 divided by 5 is 13.”

Kelly said, “Wow! I am so relieved to learn this. I thought our cycle time problem was because my team wasn’t working fast enough and I had no idea how to make them go faster!”

“Kelly, you do not have a problem with anything inside the shop – except you are a bunch of greedy ‘WIPaholics’,” I joked.

I grabbed another piece of paper and asked Kelly, “Now, tell me, Kelly, what does Allstate consider an acceptable cycle time?”

“They would really like us to be at 8 days or less.”

“Okay. In order to reach the 8-day goal and continue to produce at a rate of 5 cars a day, just reverse the math we did earlier on this napkin.”

“What do you mean?” he asked.

I demonstrated on the scrap of paper.8 X 5 = 40.

 “If you want to operate at a cycle time rate of 8 days, you just need to maintain an optimum WIP of 45 cars instead of 65. See how that works?”

I could see Kelly’s newfound confidence to correct the situation by always operating to maintain his optimum WIP through a combination of smarter scheduling and ensuring they could deliver his target of 5 vehicles per day.

I wished him well and headed home. A month later, I had not heard from him, so I decided to call. As much as I love a happy ending, this story did not end up that way because, sometimes, even with mathematical facts, some people will never be able to overcome old limiting beliefs.

Sadly, when Kelly reported our discovery to his boss at corporate headquarters, his boss disagreed and emphatically instructed that, when an Allstate repair job shows up, he is to do whatever is necessary to get the keys!

Soon, my friend Kelly, a smart operator and a good leader, was demoted from location manager to an estimator and moved to another location across town. His boss deemed him incapable of leading a team to produce cars fast enough to meet the demand of their direct repair programs.

What’s even more absurd, the people managing most of the DRPs also insist that their program vehicles must be attended to immediately. And so, the work in process continues to build in an insane circus of incompetence at thousands of shops across North America.

If you as a reader are feeling the pain that excess work-in-process brings, there is an answer. It’s math.

There are more than enough facts and experiences substantiating excess WIP causes operational problems in all areas of your business. Extended cycle times, customer dissatisfaction, employee dissatisfaction, poor profitability, poor quality, not to mention massive stress can all be alleviated by knowing your optimum WIP, then scheduling and managing to it.

So, just by remembering these cycle time formulas, you too can become a cycle time wizard and impress your friends at body shop parties or perhaps use them to manage efficient, profitable collision repair businesses.

Watch this short video explaining two other factors, in addition to optimum WIP, that determine whether your body shop’s schedule will be smooth sailing or a recipe for stress. You’ll be surprised how simple and effective your shop’s scheduling can be!