Measure, track, analyze KPIs for increased profit
Eugene, Ore.—“You can’t manage what you can’t measure,” is advice most often attributed to the late Peter Drucker, credited as the father of modern business management techniques.
With a small investment in time, Industrial Finishes & Systems customers can measure, track, and analyze their key performance indicators (KPIs) using the company’s Performance Tracking Portal dashboard, providing guidance on the common areas of focus of paint and materials: Margin, Usage, and Spend, said Accounting Manager Mark Walter, who is responsible for data analysis at the company and works closely with shops to develop business analytic tools.
It’s an easy-to-use cloud-based interactive program, also available on mobile platforms, that addresses five major body shop KPIs on two main tabs, he said.
“You don’t need a business degree, and you don’t have to be an I.T. professional to unlock the value of understanding your business KPIs.”
Taking as little as 10 minutes, the demo bypasses the typical reluctance of an owner or manager to share the business’ numbers or to grasp “mental math,” he said. With an interactive demonstration at a shop, Walter and an Industrial Finishes account manager show an example of how improving one KPI — paint and material sales as a percentage of total sales from 9 to 10 percent — can increase a shop’s gross profit margin dollars on paint and materials by 30 percent.
“That increase is probably the most captivating thing we say. If I sat down with you, a shop owner, and I started to draw that out on the back of a napkin, it wouldn’t work. And if I tried to show you on a spreadsheet, it wouldn’t work; you’d lose interest.”
It’s easily demonstrable during the presentation using an imaginary scenario, but the dashboard’s “What if” dropdown tab also allows a customer to visualize the impact on a shop’s profitability a number of small changes can have.
“When we input their own numbers, the opportunity for a shop to improve margin is typically on the estimate side, while other times it is on the material usage side. When the KPI is not 10 percent and it’s 9 percent, we say, ‘Well, you may have an opportunity on the estimate side to write a fuller estimate, and most of them say, ‘Yeah, that’s what I figured; now I see it.’ If it’s not 10 percent, that means that there are line items on the estimate that are likely being missed; they’re not being picked up for a variety of reasons.”
The user is required to provide five measurements: total monthly revenue, paint and material sales, paint shop hours, body shop hours, and total repair orders.
The portal is linked to Industrial Finishes’ database, which is updated every 24 hours with the shop’s paint and material purchases, which gives a shop a day to day look at product spend and what is being delivered. When a shop provides their monthly user-input, it then tracks KPIs for paint hours per R.O., sales per R.O., paint and material sales percentage of total sales, paint cost as a percentage of total sales, body cost as a percentage of total sales, and paint and material profit margin percentage.
“When you buy all of your paint and materials from IF, we have the unique advantage of tracking ongoing total cost, both paint and allied. Over time, this allows us to work together to set goals and realize improved profit over time."
An MSO user can compare and contrast multiple shops to indicate, as an example for a shop showing a higher paint cost of total sales, a location where a painter may be using inefficient paint equipment, poor training or technique, or overuse of liquid per repair.
Most users can spend only two to 10 minutes per month updating figures and tracking their shop’s performance, Walter said. “The advantage of the dashboard is it has the ability to do math very quickly, so it allows you to not only view cost, but also cost per liquid ounce, cost per paint hour, etc. You can look at your whole month at a bird’s eye view, in multiple ways.”
Customers can request a demo, or check out the e-book, which explains the portal in greater detail, at www.industrialfinishes.com.
About eight out of 10 customers who demo the portal buy it, Walter said. There is a software access charge of $295 per year, but that cost also includes ongoing consultations. An Industrial Finishes rep is available to come in for observation, typically for one week, working with shop personnel to help set up processes and systems, evaluate the products used, and establish the system’s baseline information.
“And next month or next quarter, when it’s time to go over it again, we actually go over the exercise again with their own numbers. They love the demo, because they imagine seeing their own numbers in it and getting a consultation like this.
“When we sell you our dashboard, it comes with our commitment that we’re going to have a periodic meeting with you and address your profitability. We promise to be profit partners, so part of that is the consultation where we help you find ways to earn a better margin from what we sell you. And if you’re not, then we address it.”