PartsTrader CEO Rob Cooper has written an open letter to the industry in response to what he feels has been "one-sided or misleading information filtered to ensure only the worst is communicated" relating to State Farm’s new parts program.
In the letter, he states that saying New Zealand and U.S. PartsTrader offerings are the same is like saying that cricket and baseball are the same sport because they each involve bats, balls, innings and runs. He then goes on to list the differences.
Here is the letter in its entirety:
Dear Industry Colleagues:
As you know, PartsTrader is a new parts sourcing, quoting and ordering system currently being piloted in several markets throughout the United States. We have been in discussions with repairers and suppliers throughout the country for two years regarding the inefficiencies of the parts procurement process. This effort has included working groups and hands-on usability testing with both repairers and suppliers. We are continually enhancing the product based on the feedback from this collaborative process, as well as from the four markets where the platform is currently being piloted.
There has been a great deal of public commentary on this initiative, and much of it has been negative. Unfortunately, much of the commentary has been based on inaccurate information. We are working to rectify this through ongoing industry communications and product education to all constituent groups. This is one of the reasons we have recently launched our new web site at www.partstrader.us.com, and why I am writing this open letter to the industry. If you have not already done so, you may want to review the Repairer FAQ’s and Supplier FAQ’s that we have posted on our website.
PartsTrader’s primary objective is to provide a platform that positions repairers at the center of the parts procurement process. The PartsTrader process is quite straightforward:
Repairers choose which OEM dealers they invite to quote.
Repairers choose who to order from after considering quality, service, delivery time, part types, the reputation of the suppliers and price.
Repairers choose when to order.
Repairers choose if a job is so urgent that there is not enough time to seek competitive quotes.
Insurers do not have access to a repairer’s buy prices, so they cannot dictate choices to a repairer based on those buy prices.
Repairers are in control of the process, as they should be.
PartsTrader believes that all repairers, whether small or large, should have access to parts procurement best practices. If you are an independent repairer, we can help you procure parts in a way that enables you to compete profitably in the marketplace. If you are an MSO, we can help create a tightly integrated process that unifies the parts supply chain. Fully realizing this vision for each repairer business model will take time. But we are closely watching and learning from the pilots, and as a result we have many exciting announcements to come as we continue to develop our platform and our service.
Similarly, PartsTrader believes that all suppliers, small and large, no matter the type of part, should have a fair chance to win a repairer’s business. PartsTrader presents all quotes back to repairers in a consistent format that allows them to make informed buying decisions. We further believe that a quote from a supplier is a promise to deliver competitively-priced, quality parts to a repairer, and suppliers should be accountable for delivering on that promise.
There has been a great deal of commentary about PartsTrader’s origins in New Zealand (NZ), and many have drawn conclusions as to the relevancy of such comparisons. However, the reality is that the NZ market is very different from the U.S. market. And consequently the PartsTrader product being piloted in the U.S. is not the same product that has been in operation in NZ for more than eight years. Let me provide a few examples:
In NZ, insurers have access to a repairer’s buy prices; in the U.S., they do not.
In NZ, repairers must get insurer approval on every parts purchase choice; in the U.S., they have complete freedom to choose.
In NZ, insurance companies mandate a 24-hour wait time for quotes; in the U.S., that wait time is only one to two hours.
In NZ, the system does not support ordering and is not integrated; in the U.S., the product does support ordering and will be fully integrated.
In NZ, the majority of parts have always been priced by insurers on a cost-plus basis, well before PartsTrader existed; in the U.S., a different model exists.
Bottom line: saying the NZ and U.S. PartsTrader offerings are the same is like saying that cricket (NZ) and baseball (U.S.) are the same sport because they each involve bats, balls, innings and runs. In fact, they couldn’t be more different.
We urge all industry leaders to help their constituents become well-informed regarding this initiative. Many repairers and suppliers to date have received one-sided or misleading information, filtered to ensure only the worst is communicated. We would be discouraged if business owners were to make decisions potentially detrimental to their business without fully understanding all the available information.
PartsTrader believes in win-win relationships in the context of an open, competitive marketplace. This means we must deliver value to all stakeholders, including repairers and suppliers.
For repairers, we believe that a well-integrated, quality-managed platform that provides quoting and ordering for all types of collision replacement parts and suppliers will increase efficiency. All participating suppliers are recommended by repairers. We will soon be implementing both supplier and repairer feedback and ratings systems that ensure all participants maintain reliable and ethical marketplace practices. This will ensure that factors such as quality of part delivered, service, information accuracy, delivery time, negotiating in good faith and part return policies are taken into account when purchase decisions are made. This feature will be implemented once we have the level of volume required for statistically valid scores.
For suppliers, we believe that providing every supplier of every type of collision replacement part is a fair and open way to compete for all of a repairer’s business and will result in a long-term benefit. We understand that some suppliers stand to gain or lose business based on this competition. However, not competing is a sure way to lose business as has been demonstrated in every marketplace over time, whether traditional or online. Having said that, we respect that some suppliers may choose not to use our platform to compete in the PartsTrader marketplace. In such an instance, the system is able to forward orders via fax from repairers who wish to order directly from suppliers choosing not to quote.
PartsTrader is designed to be an efficient marketplace platform. As repairers move to more ‘lean’ processing, it is essential that they have a mechanism for improving the quality of the parts supply chain. As such, PartsTrader as a platform provides a mechanism for continuous improvement that we believe will benefit the entire collision industry. PartsTrader will also continuously improve. We are building interfaces to the platform so that all software systems (estimating and management) in use by repairers and suppliers can be integrated. While full integration with the wide variety of systems will logically take time, the interfaces are based on industry standard CIECA BMS standards to ensure that the PartsTrader platform is open and secure.
We understand that there is a great deal of concern in the industry about PartsTrader’s objectives and insurance companies’ involvement in parts procurement. However, we believe that our initial client is a good one based on their shared commitment to win-win outcomes. We have committed to the market that we will not allow insurance companies access to any repairer’s buy prices. Similarly, we will not enter into any insurer relationship that prevents repairers from making their own decision about choosing a supplier. We are committed to PartsTrader being a valuable tool for all repairers and suppliers moving forward. In short, we are committed to repairers being in control.
We believe that to the extent we succeed in implementing an open, competitive parts market, it makes active insurer involvement in the parts market unnecessary. This is an outcome that will benefit the collision repair and parts industry.
So where do we go from here? We are in this for the long haul. We will listen, we will learn and we will adapt. Change is hard and always causes uncertainty. It is human nature to react negatively at first and identify the positives only over time. This was clearly the case with computerized estimating when it first entered the collision industry many years ago. However, within a few years, repairers embraced the value of electronic estimating, and it has been the basis for positive transformation of repairer processes ever since. Today, our commitment is to make PartsTrader the best parts procurement platform possible, as quickly as possible, so that the positive transformation of repairer processes can continue.
Of course, we need constructive feedback to do that. We are actively assembling a group of industry professionals who will become our advisory board and ensure we don’t waver from our commitments to you. We will announce more on this initiative shortly. In addition, we have engaged established industry repairer process experts to assess how PartsTrader impacts those processes and to recommend improvements to us. We look forward to their feedback.
In closing, I wish to reiterate that we only win if all the stakeholders in the process have the opportunity to win. The very basis of the American free enterprise system necessitates that, for a business venture to be successful, value must be created for its customer base. As such, we look forward to building a platform that puts repairers’ and suppliers’ needs first, and in doing so, will improve the parts procurement process for all.
I look forward to working with you and continuing a very open dialogue.