On Sept. 12, State Farm released a bulletin to its Select Service shops updating them on their electronic parts ordering initiative. Here is the bulletin in its entirety:
As our electronic parts ordering pilot continues, we wanted to provide you with a brief update and answer some of the common questions we’ve heard so far.
Why is State Farm Getting Involved in Parts Ordering?
State Farm believes technology is changing the driving experience and customer expectations. While we don’t know what the future holds, trends suggest changes are ahead for insurers and repairers.
State Farm believes our customers will benefit from competitive pricing, high quality parts and a strong parts supply chain for auto repairs. This will ensure that we can work with repairers to fix more cars rather than total them.
We understand that the ideal ordering solution for repairers will leverage the benefits of technology to provide the opportunity to locate the highest quality parts, at the most competitive prices, as quickly as possible.
Select Service Network
As we introduce electronic parts ordering, it may be helpful to review the tenets of the Select Service program. As you know, the pillars of Select Service are quality, efficiency and competitive price. Select Service repairers are encouraged to balance these three important considerations in serving our shared customers.
The electronic parts ordering pilot does not change the basic components of Select Service; in fact, we believe the process will aid repairers in optimizing performance and repairing more vehicles. Now and in the future, measurements of performance will continue to weigh these important considerations in evaluating repairers, who will continue to manage their performance to demonstrate this balance.
With several billion dollars of policyholders’ premiums spent on repair costs every year, we continue to manage our business effectively and efficiently by seeking out those repairers who will work with us to meet the needs of our customers.
Electronic Parts Ordering
As you know, State Farm has chosen to work with PartsTrader as a technology vendor for electronic parts ordering in Select Service facilities in four pilot markets. Feedback from these markets continues, and discussion of the pilot has spread industry-wide.
Along with PartsTrader, we are working with many collision industry participants on further development of the application, addressing concerns and making improvements. We look forward to many resulting enhancements. While we believe the pilot demonstrates our commitment to meeting changing marketplace conditions and customer expectations, we also understand that this process has resulted in some misunderstanding and misgivings on the part of many. As a further update, we invite you to consider these common questions and answers.
Frequently Asked Questions
Does State Farm see pricing information in the PartsTrader tool?
No. State Farm cannot see repairer cost or part margins.
How does PartsTrader increase my efficiency when I’ve heard it’s inefficient and actually takes longer to order parts?
We believe what you’ve heard is inaccurate. The process to create a quote takes only a few mouse clicks. While there is a waiting period to allow suppliers to submit their available parts and pricing to the tool, that time is not “active” for the repairer, unlike the phone calls, faxes and follow-ups common to the industry today.
Like many new technologies, it takes time to gain efficiencies. A racecar may not turn its best time on the first lap. When computerized estimating first appeared in the industry, many thought it would take longer than handwriting an estimate – and for a time, it did. In time, electronic estimating technology increased efficiency. We are convinced that over time, repairers will also gain efficiency with the use of the PartsTrader application.
How long of a period of time do suppliers have to quote pricing and availability of parts?
The default quote time is two hours, although repairers currently can reduce this to one hour. Future enhancements based on feedback from pilot participants will allow repairers even more flexibility.
Does State Farm require me to use certain suppliers?
No. State Farm will not require Select Service repairers to use a certain supplier and there are no requirements to simply purchase the lowest priced parts. The repairer will always maintain control over which supplier(s) is (are) selected for parts purchases. Among the many options available in customizing the tool, you can include or exclude suppliers as you wish, including selecting a single supplier with whom you prefer to do business.
Can I use a supplier that is not signed up with PartsTrader?
Yes. The application provides an option to send a fax to any supplier(s) you designate. This fax serves as a direct order for one or more parts from any supplier who does not participate in the program.
Will my use of PartsTrader impact my Select Service scorecard?
Overall performance of Select Service repairers will continue to be monitored using our existing Repairer Performance Management (RPM) report, which emphasizes quality, efficiency and competitive price. To the degree that repairers utilize the PartsTrader application to improve these elements, the technology can improve their overall performance.
Can suppliers see one another’s price quote and availability information?
No. Suppliers cannot see information beyond what they provide to repairers. Further, repairers can only see the pricing information after the quote period has closed. Protecting the integrity of the quoting process is an important aspect of the program, and at no point does the PartsTrader tool involve a “reverse auction” or bidding process.
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