How a Panel Shop Actually Makes Money

Jump to section

• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. Market and Structure
• 3. Accreditation and Compliance
• 4. How a Panel Shop Actually Makes Money
• 5. SWOT and Competitive Position
• 6. Operations and the Capacity Build
• 7. Route to Market
• 8. Management and Governance
• 9. Financial Plan
• 10. Break-Even and Debt Service
• 11. Investment Analysis
• 12. Sensitivity and Scenario Analysis
• 13. Risk Analysis
• 14. Implementation Roadmap
• 15. Key Performance Indicators
• 16. Key Assumptions
• 17. Conclusion and Recommendation
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital and Capacity Schedules
• C. Appendix C: Funding, Debt and Working Capital Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

4.1 The two constraints

Every vehicle must pass through the spray booth, which has a fixed spray-and-bake cycle. That sets an absolute ceiling. But a vehicle also occupies a floor position for the whole time it is in the shop — waiting for assessment, waiting for parts, in strip, in panel, in prep, in paint, in assembly, in quality control. Floor positions divided by cycle time gives a second ceiling, and in most shops it is the lower of the two.

Booth capacity is 2 booths times 2.4 cycles a day times 245 days. Floor capacity is positions divided by cycle time. Throughput is the lower of the two, reduced by utilisation. In every year of this plan the floor is the binding constraint, which is why cycle time matters more than booth investment.

4.2 Why cycle time is the most valuable lever

The plan assumes nine working days. The relationship flattens below about eight and a half days because the spray booth then becomes the binding constraint and further reductions in floor time cannot be converted into throughput. That is the single most important operating fact in this document: capital spent on cycle time below 8.5 days buys nothing, and capital spent on a third booth above 8.5 days buys nothing either.

4.3 Where the days actually go

Cycle time is not primarily a labour problem. The days that accumulate in a South African panel shop are mostly waiting: waiting for the insurer’s assessment, waiting for authorisation of supplementary work discovered during strip, and waiting for parts. Each of those is an administrative process that can be compressed by systems and relationships rather than by capital.

4.4 Where the gross profit sits

The parts line is a pass-through with a controlled margin, and its main contribution is to cycle time when it is managed well and to delay when it is not. A vehicle waiting three days for a clip occupies a floor position worth more than the clip — which is why the parts controller and the stocked consumables line appear in the plan from Year 2, and why parts is treated as a cycle-time function rather than a revenue function.