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Collision repair industry members from the U.S. and abroad packed the final day of the Collision Industry Conference (CIC) on Thursday, Nov. 7 for a panel discussion by the CIC Insurer/Repairer Relations Committee on insurer-mandated parts procurement.
The panel was moderated by Committee Chairman Rick Tuuri of AudaExplore, a Solera company, and featured the following industry professionals:
Terry Fortner (LKQ Corp.)
Randy Stabler (Pride Auto Body)
Andy Dingman (Dingman’s Collision Center/SCRS vice chairman)
Jim Sowle (Sewell Lexus/SCRS national director)
Michael Quinn (uParts, Inc.)
Darren Huggins (Van Tuyl Group)
Nick Bossinakis (OPSTRAX)
The discussion began with each participant detailing his experiences and opinions on the procurement of parts. Dingman said that the current issue in question is not the viability of electronic parts procurement as a tool in the repair process, but rather its forced implementation by outside parties.
"I don’t think a repairer in this room today is going to say that they’re against electronic parts procurement,” Dingman said. “What it comes down to is the mandate. We’re always looking for solutions as an industry I know I am at my shop every day but in order to be a good solution, there needs to be tangible value attached. When there’s no value, just a mandate, I’m sorry but that’s not a solution. And it has nothing to do with change. I love change, as long as it’s for the better."
Sowle, who made headlines in July 2013 when Sewell Lexus was dropped from State Farm’s Select Service program after declining to participate in PartsTrader, explained that parts procurement in his shop is designed to help the customer first and foremost.
"We have a quick online process that’s set up to help us expedite the repair process, but more importantly to help the customer, regardless of who their insurance provider is,” he said. “It works independently of any specific carrier. We declined [PartsTrader] because it doesn’t align with our customer service mission. Ninety days in, it’s very early to tell what the long-term impact will be on our business, but initially we’re pleased with our decision."
Van Tuyl’s Huggins added that the value in parts procurement of any kind, like any other aspect of business, relies on the freedom to choose.
"Whether you fall into the repair sector, supplier, parts, whatever, it should be up to you to make the decision of what business tools you’re going to use. You’ve got to be able to choose what works for you," said Huggins.
As talks of the advantages and perils of parts procurement systems came to a head, Society of Collision Repair Specialists (SCRS) Executive Director and Insurer/Repairer Relations Committee member Aaron Schulenburg touched upon the importance of keeping the focus on meeting the expectations of those in the audience and the committee’s intent to discuss insurer mandates as applied to these systems.
"I think we’ve focused a lot on why parts procurement platforms may or may not be good, and I think the discussion may have gotten distracted by us as an industry focusing on where things work or don’t work,” said Schulenburg. “The reality here is that the market share is not being determined by who brings the best value proposition and who provides services that are needed by the consumer. I hear shops up here progressively looking to explore new solutions, and professionals who have gone down that road and found something to serve their needs and their customers’ needs. What happens if, after years of perhaps working with an e-parts procurement program and developing a system that works great, that shop is asked to use something entirely different if they want to continue to do work in certain areas? That’s the real issue here."
Attendees lined up for an open mic session following the panel discussion, and some raised their voices and directed their questions to CIC Chairman George Avery of State Farm regarding the insurer’s requirement that Select Service shops use PartsTrader.
Bill Burn of America’s Auto Body in Schaumburg, Ill., directly addressed Avery, asking him to find out why State Farm is asking shops to skew their numbers when it comes to PartsTrader’s effectiveness.
"The Chicago market has lost efficiency, which has clearly caused delays. So this is my question: why would State Farm ask the Chicago shops to change the upload of the repair, the disassembly time, to after all the wasted time trying to get parts, get them all in line and then we can start to take your ticket. What that’s doing is skewing the numbers and making PartsTrader look like it’s working and it’s not working. The delays are two to three days, and trying to get parts can take two to three hours. And these incorrect numbers are being communicated to skew the numbers and are effectively causing delays for consumers to get their cars. So why is State Farm asking the shops to skew their numbers?"
Industry instructor Toby Chess echoed repairers’ previous comments on the importance of choosing the best solutions that work for them.
"I’ve been to many body shops, and their continued growth and quality depends on performance. If the gentleman next to you in the shop does not perform, you get rid of him. You have that choice." Chess then strode to the front of the LVH ballroom and held up a part presented at the previous day’s CIC as an example of an inferior repair. "When we keep getting our profits taken away from us, this is what we’re going to get. This is what’s going to happen as you lose out on profits. We need choice!"
SCRS National Director C.J. Vermaak (Dan’s Body & Paint) posed a question to the panelists currently utilizing parts procurement solutions: "Have any of your vendors been forced to use the mandated procurement programs themselves in order to continue to provide you with the parts you buy?"
While Pride Auto Body’s Stabler replied that he has not, Van Tuyl’s Darren Huggins provided a different perspective. "I’m lucky in that regard because I do business with myself. I work with big metro markets, so it’s not a tough deal because I just do business with myself."
Schulenburg asked, "Darren, if your wholesale departments decided not to participate but your body shops wanted to, would you continue to do business with yourself?" Huggins answered that his wholesale departments are not all participating on that level, "but selling directly to me, it’s not an issue."
"I get this feeling as an owner and as a repairer that the impression of us is, if these so-called parts solutions weren’t mandated but put in place to be selected freely, that we as business people wouldn’t be savvy enough to pick them out on our own," said Past SCRS Chairman Barry Dorn. "I disagree with that perception. Look how intelligent and innovative we’ve been in the face of years of downward pressure. We take offense to that, because at the end of the day, all we want to do is operate our businesses in the most effective way possible. When we have third parties that come in consistently and constantly and try to explain to us how much better we can do, without us even going to them first, that’s unacceptable."
Addressing moderator Tuuri and State Farm’s Avery directly, Dorn offered his opinion on the real solution to the parts program dilemma.
"Rick, you say we need to discuss solutions. George, the solution is that your folks need to talk to your partners. And I’m one of them. You need to talk to them and explain to them why one stakeholder is taking away from the other two, how that’s fair, how that’s efficient, how that’s right, and frankly, how that’s not corporate greed. I don’t blame you, your company or any insurer for wanting to make profits. But if we are in fact partners, we need to sit down and talk. If we want to fix that problem, let’s talk about the issue and stop dancing around it."
The discussion on insurer-mandated parts programs will continue at the CIC in Palm Springs, Calif., Jan. 15-17.