An industry challenge for the New Year

January 1, 2016

A NEW YEAR'S RESOLUTION

An industry challenge for the New Year

By:  Michael Giarrizzo

The new year is exciting for me because it really motivates me to reflect, evaluate and establish a refreshed and reinvigorated resolve in my daily routine (which has become anything but routine).

As I look at the collision repair industry—an industry to which I've devoted my entire career—I'm discovering that what I'm doing every day can't really be called a "job." For me it has become a very personal way of life. And because of this everyday personal relationship I have with the industry, I find myself constantly evaluating the industry's ongoing progress and the many outside resources that help to create an improved customer experience that enhances the overall perception of our business.

Part of that evaluation involves cleaning up "standard procedure" facets of the business that have been around forever but, today, don't seem to make too much sense.

One of those facets is paint and material (P&M) invoicing, which has been a thorn in the industry's side seemingly since the beginning of time. We've forever relied on a "best-guess" number that is derived from a fixed dollar amount multiplied by the refinish labor hours to determine P&M costs, simply because we've had no better way of tracking specific materials to the specific vehicle that was being invoiced.

I'm sure you'll agree with me that P&M invoicing using this method has always been a "You win some, you lose some" notion that (we hope) will even out in the long run. Hear me when I tell you that this archaic costing measure is a "lose-lose-lose" proposition! It's not fair to the customer, it's not fair to the insurer and it's definitely not fair to your bottom line.

Thankfully, today we have a much more sophisticated and accurate method of determining these costs in the variety of material calculators available that allows us to identify those line-item materials that are specific to each repair.

And these material calculators couldn't have been developed at a better time, since the vast amount of job-specific materials are increasing at an incredible rate.

Material calculators provide a detailed list of what was used to repair the vehicle, which leads to a more accurate invoice, which improves the customer perception of your work, while ultimately helping to reduce waste in the shop.

So if this technology tool is so great, then why isn't every shop in the universe using it? That question is so intriguing; I'm going to follow it up with a few more thought-provoking queries that hopefully challenges your thinking for the coming year:

Can we continue to operate as a viable industry knowing that we're overcharging and/or undercharging for P&M, hoping it will somehow work out over the long haul?

Don’t our customers deserve to be accurately invoiced for materials being applied to their vehicle?

Aren’t loss costs supposed to be directly associated with that specific vehicle's loss?
Is there a mistrust or suspicion of the validity of material calculators that I'm not aware of? Or is it just that we really don't understand them (or just don't believe them)?

How in the world can we as industry still be so committed to the status quo and archaic methodology when technology enables us to identify, calculate and invoice the material specific to the job?

Materials are specific and unique to each and every job. As professionals, we must invoice with the intention of accuracy and integrity. My "type-A" personality, for one, can't comprehend it any other way.

In this new year we need to resolve to find the collective courage to seek out better ways to do our job, serve our customers and create change. If you have any ideas on the answers to the questions I've posed above, or want to boast about how P&M material calculators have affected the way you do business, feel free to let me know. 

Michael Giarrizzo, Jr.
President & CEO

Michael Giarrizzo Jr. is president and CEO of DCR Systems, which develops on-site accident repair facilities for auto dealers nationwide seeking to outsource this function as an additional fixed operation while preserving financial and customer benefits. Giarrizzo was formally vice president and chief operating officer of Sterling Auto Body Centers, where he led operations of more than 1,300 people across 10 states. Giarrizzo was instrumental in growing the company to 65 stores, developing 5 greenfield locations and transitioning 39 existing stores from traditional one-technician, multiple-car thinking to a true process flow environment, directing focus to cycle time, quality and market competitiveness. Prior to assuming the COO role with Sterling, Michael served as regional director in charge of the Cleveland and Akron markets. Before that, Giarrizzo helped to grow his family’s Cleveland-based JSI Collision Centers from a single location to a four-store chain in Northeastern Ohio with annual sales of $12 million. JSI was twice recognized by the industry as “Collision Business of the Year” for its customer service and standardized operating procedures and was acquired in 1999 by Sterling Autobody Centers. Giarrizzo holds a business administration degree in marketing from St. Bonaventure University.

*Article originally published in ABRN on Jan. 1st, 2016.  Direct link to article published in ABRN is HERE.