CYCLE TIME IS A JOKE AND A LIE!

Posted on 08. Jun, 2009 by biggs in Body Shop Advocate, Collision Industry News

Cycle time is a joke and a lie when used as a benchmark comparison between shops or as a accurate key performance indicator shop-to-shop evaluation tool. Sure, it can have value for an individual shop for internal comparison, but it is totally and completely inaccurate and misleading when used as it is today by insurers and others to compare the performance of multiple shops in multiple markets with a wide variety of repair types and work force. As it is today, it is damaging the lives and livelihood of thousands of businesses and consumers throughout America.

Can you imaging trying to synchronize watches with thousands of others to ensure timely coordination, but everyone uses a different definition of a day and has differing length hours, and even a different number of hours in a day? It is a ridiculous scenario, yet the collision repair and insurers employ measurements with nearly the same absurdity to evaluate and rank body shops. The result is thousands of lives are adversely affected and until now, no one has offered to improve the measurements or even acknowledge that they are arbitrary and ignorant.

The most ridiculous of all of the key performance indicators (KPI) that insurers and repairers use is “cycle time.” The collision and insurance claims industries have used a measurement of cycle time that contains neither consistency of how large a repair is or how many hours of repair time is applied. If one shop happens to be in a rural market where speeds are higher and hits are heavier, the cycle time will be far longer than in a suburban area where a shop specializes in lighter hits. According to industry and insurer cycle time measurements, one shops is far better performer, but that may be only because the measurements are inaccurate, illogical and insufficient.

The definition of cycle time even varies from industry segment to industry segment as it should, but again there is no factor that normalizes these units of time. Consider these varying definitions from a CIC task force committee charged with determining the definition and addressing this issue.

-Repairer Cycle Time: From the Time the Vehicle Arrives at the Repair Facility for Repair Until the Vehicle is Completed and Picked Up by the Consumer, (includes weekends). Commonly Referred to As, “Keys to Keys”.

-Insurer Cycle Time: “The Time From the First Notice of Loss to When the Claim is Paid”.

-Consumer Cycle Time: “From the Time of the Accident to the Time the Vehicle is Repaired and Returned to the Consumer.”

INVALID AND INACCURATE: To be used as a valid measurement, cycle times must include normalizing factors that will mitigate distortion and ensure consistency in application. In the case of cycle time of a repair, there are several factors that change the duration of the repair the most obvious is the severity of the repair. This is illustrated in today’s terms best by the dollar amount of the repair. Therefore, the most logical “normalizing” factor should be to calculate the number of days according to the overall dollar amount of the repair. For vernacular, the terms might be “repair days per repair cost”

SAMPLE CASE:

Consider this sample case of three shops with cycle times of:
Shop A = 10,
Shop B = 6, and
Shop C = 12.

From this data using today’s non-normalized calculations, shop B would have the best cycle time. On the other hand, if we add per repair cost factors, the results reflect a far different scenario.

Shop A = Average RO = $2,200 = 10 days = 4.54 days per thousand dollars
Shop B = Average RO = $1,500 = 6 days = 4 days per thousand dollars
Shop C = Average RO = $3,200 = 12 = 3.75 days per thousand dollars

You can take acception to the random sample numbers I used or disagree with any specific example, but the point is still valid and undeniable. A non-normalized measurement of cycle time does not accurately reflect efficiency either. For example, it does nothing to reflect how many repair hours were applied to the job since cycle time does not reflect how many technicians worked on the vehicle and how many hours were estimated on the repair. Therefore, another normalizing factor might be to how many hours of estimated repair time was used. This again would reflect a far different scenario than any arbitrary measurement of cycle time without any consideration for severity of damage or hours estimated or technician hours worked.

Isn’t it time for fix these inaccuracies and come to a common agreement surrounding consistent measurements? If and when they are fixed, these KPI’s will be valuable again. Cycle time will have meaning, consistency, accuracy and value. It will no longer be a joke or a lie, but become an essential measurement that could be the foundation for the most important aspects of making a body shop profitable and an relationship between insurers and repairs based upon logic and reason!

As of July 2009, those assembled at the mid-year Collision Industry Conference (CIC) voted to accept the condition that there should be a disclaimer when using cycle time by any group, entity or business. Here is the language accepted by the body:

Disclaimer: Cycle time is only one component of shop performance. The measurement of Cycle Time should be used in conjunction with other critical KPI’s to determine the overall efficiency and performance of a repair facility.

Normalizing the Variables
o Drivable vs. Non-Drivable
o Performance Relative to Your Market
o “Keys to Keys” vs. Production Time
o Specialized or Luxury Vehicles
o Possible Subsets for Each of the Definitions

Cycle Time Definitions

o The Committee Identified the Need for Three Different Definitions for Cycle Time:
o Repairer
o Insurer
o Consumer

The following are the definitions that we are recommending to the CIC body for approval.

Repairer Cycle Time: From the Time the Vehicle Arrives at the Repair Facility for Repair Until the Vehicle is Completed and Picked Up by the Consumer, (includes weekends). Commonly Referred to As, “Keys to Keys”.

Insurer Cycle Time: “The Time From the First Notice of Loss to When the Claim is Paid”.

Consumer Cycle Time: “From the Time of the Accident to the Time the Vehicle is Repaired and Returned to the Consumer”.

2 Responses to “CYCLE TIME IS A JOKE AND A LIE!”

  1. support

    09. Jun, 2009

    Agree that it’d be great to have a uniform approach to defining/calculating Cycle Time. Some info providers have addressed this KPI through their Advisory Groups over the years with a general understanding that “keys to keys” makes the most sense. That said, most insurers establish their own measurement methodology and objectives. Some are average total “key to key” days and others are average labor hours per day. I think some insurers break-it down by “drivable” and “non-drivable” and some provide an admin (free) day, while some don’t.

    Not sure total repair cost divided by days is the way to go … insurers can be rightly sensitive to the possibility of improving cycle time thru higher repair cost. Maybe total labor hours or total labor cost per day would be more accurate, even though this offers a similar risk regarding inflating labor cost to improve cycle time. Also, different markets often have significantly different labor cost per hour and overall (N. Cal vs. S. Cal for example).

    Not sure how you ever get a “pure” comparison given that:

    1. the same damaged vehicle can offer a variety of repair methodologies (repair vs. replace decisions), one shops 10.0 hour repair is another shop’s 14.0 hour repair, one person’s “drivable” is another’s “non-drivable”, results are often calculated on a small # of repairs (a single really heavy hit, even recorded as a non-drivable, can skew results significantly), some states (CA) require consumer approval before any supplemental repair can be initiated and some insurers want to approve supplements before repair methodology is modified
    2. type vehicle mix is significantly different market to market and shop to shop … basic, SUV/truck, luxury, exotic, etc.

    Possibly “shock” losses should be excluded … any vehicle with a no-controllable, significant part delay or an extraordinarily long, but warranted, length of repair is remove from calculations … this gives “cycle time” sensitive shops incentive to repair the ones that would normally destroy short-term, and possibly long-term, cycle time results.

    Currently, repairers with DRPs that deliver a high volume of drivable only vehicles are producing some great cycle time results (no matter how you measure it) … but the mix is significantly different than a shop that has a more traditional ratio of “drivable” vs. “non-drivable”.

    Might need a comparative metric that addresses both accuracy of repair cost and cycle time … if repair methodology and repair cost are acceptable, then the foundation for a labor cost per day cycle time calculation is in place … but you’ll still have both “drivable/non-drivable”, local market labor cost, vehicle mix and shock loss issues to address

    Sorry, no answers, just thoughts.

  2. Bill Park

    10. Nov, 2009

    Who cares! Lets boil this down to business 101. Customers are happier when their vehicle is repaired quicker than expected, which inspires them to tell friends and familiy. Hmmm not rocket science. Also, the only place that your company produces profit is in the prodcution environment, so speed is important to maximize profit. Do it for your business and your customer, because the only purpose your business has is to grow customers!! Period end of story.

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