Lean Material Management


  Turning Data into Information

Because you can't manage what you don't measure!


Lean Material Management for the Auto Body Industry

KPI Terms for the Auto body Industry

Often an over used buzz words KPI (Key Performance Indicators) are critical in measuring most all areas of business management. They are critical in managing productivity and material / resource utilization.  Where we sometimes get lost in the inundation of too many KPI's.  We strongly encourage our customers to focus a select list of KPI's. The list of KPI's we choose to focus on may and should evolve as we hone and polish our procedures. Below we have assembled a comprehensive list of Auto Body Industry KPI's.

  Cycle Time KPIs
Production Biased Cycle Time  The average number of calendar days elapsed from the date the vehicle was received at your business, to the date the repairs were completed. Formula: Date Received - Repairs Completed
Customer Biased Cycle Time The average number of calendar days elapsed from the date the vehicle was received at your business, to the date the customer took delivery. This is also commonly referred to as keys-to-keys. Formula: Date Received - Date Delivered
Little's Law  Cycle Time Performance # of Vehicles in Process (keys in hand Authorization in hand) / Average # of Vehicle Delivered per day
Throughput Performance Index Average repair hours per job / Average cycle time in days (using Little's Law)
You can visit our Tools page perform some of these calculations On-Line.

Common KPI's

  • Total Sales Sum of Sales for Labor, Parts, P&M & Sublet. (Total Sales)
  • Sales per RO Average Repair Order Amount. (Total Sales / R.O. Count)
  • Effective Labor Rate (ELR) Actual Labor Dollars per Hour Sold. (Labor Sales / Labor Hours)
  • P&M Sales per Paint Hour P&M Dollars per Paint Labor Hour (Material Sales / Paint Labor Hours)
  • to Total Sales P&M Dollars as a Percentage of Total Sales (P&M Sales / Total Sales)
  • Paint Hours per R.O. Average Paint Hours per R.O. (Paint Hours / RO Count)
  • Parts to Labor Sales  Parts Sales as Percentage of Labor Sales (Parts Sales/ Labor Sales)
  • Effective Labor Cost (ELC) Total Production Cost per Labor Hour (Labor Sales / Labor Hours)
  • P&M Cost per Hour (Material Costs / Paint Labor Hours)
  • P&M Material Costs to Total Sales (Material Sales / Total Sales)
  • Paint Labor Gross Profit (Paint Labor Costs / Paint Labor Sales)
  • P&M Gross Profit (P&M Sales - P&M Costs)
  • P&M Gross Profit % (P&M Gross Profit / P&M Sales)
  • Sales per Tech (Total Sales / # of Techs)
  • Sales per Stall (Total Sales / Production Stalls)
  • Sales per Admin Employee (Totals Sales / Admin Employee Count)
  • Admin Hours per $1000 in Gross Sales (Totals Sales in 1,000 / Admin Hours)
  • Vehicles per Day per Booth (RO Count / Production Days / Booth Count)
  • Booth Cycle Time Number of RO's Generated vs. Hours Booth is in Operation
  • Gallons Waste per RO (Waste Generated in Gallons / RO Count)
  • Waste Costs per RO (Total Waste Costs / RO Count)
  • Sales per Gallon of Clear (Total Sales / Gallons of Clear Used)Color per RO (Ounces of Color
  • Oz. Surface Prep per RO (Ounces of Surface Prep used / RO Count)
  • Oz. Clear per refinish Hour (Ounces of Clear used / Flagged Paint Hours)
  • Oz. Color per refinish Hour (Ounces of Color used / Flagged Paint Hours)
  • Oz. Surface-Prep per refinish Hour (Ounces of Surface Prep used / Flagged Paint Hours)
  • Total Liquid Cost per RO (Total Liquid Costs / RO Count)
  • Allied Cost per RO (Non-Liquid Costs / RO Count)
  • Re-Do Count Count of ALL RO's with any paint re-work throughout the month
  • Re-Do Costs Sum of all costs in Re-do, this includes Labor and Materials

Avoid Information Over Load, Start with Select KPI's.

LM2 Paint Shop KPI’s  You Can’t Manage what you don’t measure. These are the KPI's we start with when working with new shop clients.

  • Average Material Cost per R.O.

  • Material Cost and Sales per Refinish Labor Unit.

  • Material Sale & Cost as a Percentage of Gross Sales.

  • Labor as a Percentage of Sales (Paint Sales?).

  • Material Gross Profit.

  • Color and Clear Usage per R.O.

  • Major Material Category.

  • Comparisons to Regional and Group (MSO or other group) Averages.

Our most popular report is our LM2 (Lean Material Management) report.  We are often asked about the flow of data in and out of these reports, with data coming from multiple sources we thought perhaps a map view would help. You can also download the Data Flow Chart along with some basic notes on our download page.

Waste is NOT always obvious.
Unnecessary Material Movement The flow of material through the process is often a big opportunity towards getting Lean. Handle P&M twice on it's way in and on it's way out.
Unnecessary Worker Movement Most companies have employees wandering around to get materials. All are great opportunities to get employees involved, get their input.
Wasted Space Keeping unneeded material or tools in the workspace/stall is wasteful. This is premium space and needs to be well-planned and reviewed frequently. 5-S principles should be applied—everything has a place and everything in its place. If it is not needed, get rid of it.
Wasted Time Wait time, queue time and setup time are non-value-added time. Minimize this waste through improved scheduling processes and setup reduction.
Wasted Material Zero Waste is the Goal of our Lean Material Management.
Poor Quality Quality is a major opportunity in all companies since process variation is never completely eliminated. Poor quality wastes labor, material and time.
Wasted Knowledge Documentation is a boring topic but it is the only way. Document procedures and work instructions don't relearn the same task repeatedly. Benefits of S.O.P.s
Wasted Creativity Problem solving and continuous improvement are built around employee imagination and creativity. The culture in good business needs to be tolerant of mistakes ... the first time they are made.

Added Benefits to Lean Material Management:


 Reduced Waste Costs

Improved Labor Efficiencies

Cleaner Production Areas

Reduced Material Handling Costs

A Greener Shop

Improved Employee Moral

Stronger P&M Profits