When Bernd Schwedntke, Senior Managing Director of Abdul Latif Jameel Investments joined the company, he was determined to pursue the necessary changes to make Abdul Latif Jameel Body & Paint the preferred collision and repair service provider by the people in the Saudi Arabian market, while optimizing the cost structure and maximizing the productivity in the centers.
The first activity on the top of his agenda was to identify the challenges & issues the company was facing, and more importantly to capture the feedback from the customers regarding their perception of the Body & Paint service quality and the customer’s willingness to recommend the service.
Abdul Latif Jameel Body & Paint represents the largest collision and repair service supplier in the Kingdom with a total of 17 workshops across the country and a yearly turnaround of 60,000 vehicle repairs.
Despite the strong brand that Abdul Latif Jameel has built through decades of delivering high quality products and services to its customers, the recent economic crisis combined with increased competition in the market and the shift of customer focus from quality to price has impacted the business model negatively.
The ‘Voice of the Customer’ was captured through surveys and highlighted two main reasons why customers were hesitating to come and perform their repairs at Abdul Latif Jameel Body & Paint: first, the extremely long service lead times and second, a less competitive price compared to other competitors. As Bernd summarized, the main challenges were the long vehicle service lead time, the cost of service, the quality of repair with 40% of the jobs being reworked at the stage of final quality inspection in operations and finishing only 36% of the jobs at promised delivery time. Furthermore, the internal processes between Body & Paint and the various insurance companies were not aligned, resulting in double work, cost variances, internal process inconsistencies and about 60% of the jobs getting delayed even before starting the repair.
Therefore, Body & Paint management decided to kick-off the Lean journey along with Four Principles with the aim, to define cross-functional processes to reduce the overall vehicle turnaround lead-time by providing faster customer service and increasing the workshop capacity.
‘What we asked Four Principles to do is basically to optimize the process from the time the customer brings-in a vehicle to the time the customer picks-up the vehicle & we call this Key-to-Key’, Said Bernd. In simple terms, it’s the time from when the customer hands in his key until he gets it back.
The current state analysis showed that for vehicles with 3 or less panels to be repaired i.e. ‘light’ repair jobs, accounting for 45% of the total jobs volume, the overall service lead-time from receiving the vehicle by the Body & Paint facility until delivery to the customer was significantly high.
Moreover, 50% of the lead time was consumed by administrative activities such as repair price estimation, approval processes and double work: typically the customers that would come to the center would push themselves onto a service advisor, and would face at least 4 stages until their vehicle was received:
- Customer’s documents verification by Body & Paint representative, assessment walk around to the vehicle with the service advisor and data capturing at Body & Paint system.
- Customer’s documents verification by the claims management representative, assessment walk around the vehicle and data capturing at claims management system. Unfortunately, only in about 30% of the cases would bring the full documentation, which meant that the customer would have to come back several times in order to get the vehicle received.
- The Body & Paint representative would then create the repair estimation, which would be reviewed and reduced by the claims management representative, and then given to the customer. This caused a long waiting time for the customer in the center’s reception lounge.
- Once the repair estimation reached the workshop, the chief technician would review it again and would identify items that needed to be added, and this triggered a ‘negotiation’ period with the claims management company, until the final cost estimation was agreed to.
- Finally, the cost change would be communicated to the customer, who would accept or reject it before starting the repair on the vehicle for the customer.
These activities which essentially extended the overall service lead-time were the result of a strong silo mentality and misaligned processes among the insurance companies and Body & Paint.
On the operations side, 87% of the lead time was related to unnecessary waste embedded in the operations in the shop floor due to improper job scheduling, missing parts, poor utilization of resources and misaligned internal processes.
The initial focus was to tackle the administrative waste caused by silo mentality and to align the cross-functional processes between Body & Paint and the insurance company by introducing a new concept to simplify the cost estimation process.
To that matter, Four Principles proposed the introduction of a new concept, the Total Average Repair Cost (TARC) which is a fixed agreed repair cost including all labor, spare parts and material costs for all kind of service jobs between Body & Paint and the insurance company.
The implementation of the TARC concept enabled Body & Paint to eliminate the lead-time from the approval of the case by the insurance company until the start of repair in the shop floor which resulted in a reduction of the total average vehicle service lead-time for ‘light’ repair jobs by 40%.
Furthermore, the customer journey at the reception was also modified by implementing simple concepts such as a queuing system, a greeter & modifying the customer flow according to FIFO principle. These changes enabled to reduce the overall time the customer spent in the reception area by 55%, with a single point of contact for the customer. Moreover, the processes between the insurance company and the Body & Paint representatives were enhanced by implementing quality gates between the different touchpoints to ensure that all required documents were available & completed, avoiding unnecessary reworks and waiting time for the customer.
In addition to the ‘game-changing’ improvements implemented in the administrative portion of the overall service process, the enhancements performed in the shop-floor allowed the workshop to increase the number of vehicles completed within the promised delivery time by 113%, to reduce the repair lead-time of the vehicles by 76%, and ultimately increasing the capacity of ‘light’ jobs by 144%.
These improvements were only possible through the implementation of accurate job scheduling and by introducing an optimized line flow concept including properly defined policies & rules, where all repair process steps are aligned in sequence and the vehicle is flowing based on the ‘FIFO’ principle through each process step or station according to a defined ‘Takt’ to ensure a smooth flow in the line.
In summary, the changes enabled to reduce the overall ‘light’ repair Key-to-Key lead time by 63.8% and to improve significantly the quality of repairs which means that as of today, a guest could bring his vehicle for a ‘light’ repair in the morning at 08:00 hours and get it delivered in the same day at 18:00 hours.
As Bernd highlighted, by implementing the proposed changes designed by Four Principles, Body & Paint managed to reduce the repair lead-time by a stunning 76% & the overall Key- to-Key lead time by over 60% while also achieving a reduction of the number of quality issues by 85% at the stage of quality inspection.
‘I might add’, Bernd says, ‘All of those efficiency gains have been achieved without implementing any fancy IT solution, but only by re-designing processes, training people and aligning the targets and KPIs of the departments that previously worked against each other & business units that previously did not speak to each other and legal entities that were basing business assumptions on very old collaboration model.’
The optimized implemented processes have enabled Abdul Latif Jameel Body & Paint to achieve significant improvements in terms of quality, lead time and cost. Furthermore, the silo mentality and boundaries between the various entities and business units were removed and processes were aligned & streamlined to improve the customer experience throughout the service journey.
The real success
‘We can now produce for customers based on demand, and this ability and flexibility allows us to save time and money. That’s the real success here’
‘We were able to achieve a 47% space reduction in our production areas and warehouses’
Short delivery times
‘We improved the preparation time for home delivery orders and dropped it from 31 minutes to 16 minutes’
Improved on-time delivery
‘We improved on-time delivery to the guests by 113%’
Significant Lead Time Improvements
‘Transfer of vehicles from and to branches dropped from 15 days to 1 day and the insurance approval lead time from 7 days to half a day’
‘The overall new vehicle delivery lead time was reduced by 43%. The positive results led to an increase of 65% of the average conversion ratio per salesman for new guests’
‘Take-out customer wait times dropped from over 20 min to below 2 min’
Better Space Utilization
‘We managed to reduce our inventory which resulted in a 28% space reduction in the distribution center and the branches’
Retail Sector Sustainable Improvements
‘The in-store inventory was reduced by over 30% while maintaining an availability of core items of over 99%’
A Clear Structured Approach
‘With Lean we are now structured and work systemically and that ensures quality, besides efficiency and productivity’
QUICK AND MEASURABLE IMPROVEMENTS
‘The rate of daily consumption of supplies per patient was reduced by up to 20% and reduced the waste of unutilized time of the nurses by up to 30%’
EXPONENTIAL PRODUCTIVITY GROWTH
‘After implementing Lean improvements and keeping the same resources, we achieved an increase in sewing productivity by 292% and an increase in embroidery productivity by over 1500%’
SALES AND PRODUCTIVITY INCREASE
‘Sales were increased by 4% in comparison with other branches and logistics staff productivity was increased by 56%’
‘We have increased our output from that machine by 20% and the availability of the machine by 32%’
Reduced customer waiting times
‘We reduced the time the customer spent waiting in our reception area by 55%’
Reduced lead times
‘We were able to reduce our lead times by 43%, which means we were able to produce almost the same amount of products in half the time’
IMPROVED CUSTOMER HAPPINESS
‘Great results for our customers such as 72% decrease in customer wait times, 20% decrease in customer service times, 59% improvement in the number of customers served on time’
‘Reduced turnaround time of our sales and delivery trucks by 70%’
‘We were able to achieve something that we thought is beyond our abilities’
‘Final result was that our sales net promoter score increased by 25% and the service net promoter score increased by 5%’
The Perfect Store
‘Today, the entire Zohoor Alreef team has understood through Lean that the “Perfect Store” is a shared aspiration that can only be achieved through Kaizen or continuous improvement.’
‘We have completed implementation of the Lean principles on more than 50% of our machines. Our indicators are very positive with machine output varying between 17% and almost 90% improvement’
Improved manpower utilization
‘We have managed to avoid losses of over 300 productive manpower hours per month’
Sustainable cost reduction
‘We achieved product cost reductions of up to 7% and have also reduced our inventory over 60%’
FAST AND SUSTAINABLE IMPROVEMENTS
Average daily output increased by 119% and productivity increased by 109%