Posted on 08. Jun, 2009 by biggs in Uncategorized

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

Cycle Time Definitions

The Committee Identifed the Need for Three Different Definitions for Cycle Time:

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”.