Towards an Excellent Vehicle Damage Centre - Improving internal operations based on measures intended to increase customer satisfaction

Examensarbete för masterexamen
Quality and operations management (MPQOM), MSc
Säre, William
Johansson, Tobias
This project has been performed in collaboration with Bilia AB, which sells vehicles and offers aftermarket services. The topic for the thesis is within their damage centers that repairs vehicles damaged in collisions or due to vandalism. The dominating customer for authorized damage centers are insurance companies. The amount of labor that insurance companies pay for a repair is based on time studies from similar damages. This means that for a damage center to be profitable they must work efficiently. In essence, a damage center's processes and their performance are vital for profitability as they get compensated for a fixed amount of time. Insurance companies often have agreements with several competing damage centers. Meaning that a damage center also needs to satisfy the insurance companies needs in order to get an inflow of damaged vehicles. Each damage center is operated by a manager who has a high autonomy when it comes to how the damage center is run. This relates to how the daily work is conducted and organized, what metrics that are used, and how the damage centers performance can improve. This can partly be explained by the different prerequisites in terms of shop floor layout and the investments that have been made in equipment and technology. This has resulted in a non-standardized process among the organizations' damage centers. Due to the differences, it is difficult to gain insight of what the key factors are that result in a high profitability. Currently, the company is monitoring the process symptoms (economic measures). Meaning that it is difficult to gain an understanding of what causes that have led to those economical results. The purpose of the project is to expand the current knowledge about the damage center process and express what the driving factors are that result in a high-performing damage center. During the project, improvement opportunities and best practices are intended to be identified. To achieve the purpose the project consisted of a literature review, 21 semi-structured interviews with the organization, nine damage center visits, and one workshop. In addition, process data and current economic measures have been analyzed throughout the project. Based on the results of this study, it is not currently possible to be certain that the main factors that result in a successful damage center have been identified. This can partly be explained by the result of the measurement system analysis that showed that it did not capture the process performance, and that the data is unreliable. It can also be explained by the lack of operational KPIs that exist today. However, based on theory and interviews a set of new operational KPIs is presented that are intended to explain the difference in performance between damage centers. An important finding is that the managers and employees of the damage centers are unaware of the importance of the customer needs (especially repair lead time). The developed operational KPIs are intended to help damage centers to decrease the repair lead time, while increasing their efficiency. Repair lead time is a customer need that insurance companies use to evaluate damage centers performance, meaning that it affects their hourly wage and presumably also the inflow of vehicles. The analysis showed that there are no clear trade-offs to achieve high resource efficiency and a high flow efficiency at the same time, rather the opposite. Meaning that decreasing the repair lead time will likely result in a higher resource efficiency. Lastly, best practices are proposed based on both the project's findings and theory. However, these have not been tested.
Damage Center , Lean Six Sigma , Efficiency Paradox , Customer needs
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