A standing-room-only crowd was on hand at the Collision Industry Conference (CIC) on July 17 in San Antonio, Texas, to hear State Farm Claims Consultant George Avery and PartsTrader CEO Rob Cooper give an overview of the controversial parts procurement system.
Avery, who has weathered significant criticism since the details of the PartsTrader program were first revealed, started with some comic relief by joking that he had a button made up for himself (and extras for anyone else who wanted them) that said, "I Love My Job, I Love My Job, I Love My Job." Then, he explained why there has been such a demand for information on the parts program.
"There are 158 stores using the program, so lots of people are starving for information," said Avery. "We give repairers $3 billion per year to purchase parts. We process 35,000 claims per day. We’re not interested in the short term for our stockholders; we’re in this for the long term."
Avery then listed things State Farm didn’t expect from introducing the new parts program:
• "We didn’t expect an overnight drop in cycle time, but it probably will happen."
• "We didn’t expect open arms. We know change causes ripples, but there is no standard platform for parts, and we think it will benefit the insured."
• "We didn’t expect e-mails, calls and faxes with misleading information."
• "We didn’t expect press releases mentioning non-Select Service repairers who we didn’t have contact with."
• "We didn’t expect to lose 17 facilities in one pilot area that never tried [the new parts program]."
• "We didn’t expect statements from Select Service shops who never used [the new parts program]."
Avery emphasized that State Farm is still in pilot mode, concluded the feedback phase from all the pilot shops during the week of July 9-13 and are now in an evaluation phase.
Avery concluded his talk by saying, "It boils down to trust – those who repair cars making a decision about who they want to partner with. State Farm is driven by the customer. Those who fight to maintain the status quo will become irrelevant fast. I don’t think we were No. 1 for 90 years by beating up our business partners."
PartsTrader CEO Cooper opened up his presentation by saying, "We’re 100 percent committed to making this product the best for parts procurement – and making it a win for repairers."
Cooper then ran through a demonstration of the product. A couple key points he mentioned were:
• The suppliers in the system are in there because the repairer invited them to join.
• They have integrated with the three information providers (CCC, Mitchell, Audatex). The files they get from them are EMS, but they convert them to BMS. Therefore, they’re not seeing any information that is not directly applicable to parts.
"The two functions of PartsTrader is parts sourcing and ordering," says Cooper. "You can do direct order now if you want, but if you do have time, the expectation is that you’ll get quotes. But it’s completely under the repairer’s control."
Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, was the first person from the audience to address Avery and Cooper. He emphasized that the backlash against PartsTrader isn’t so much about the product as it is how it entered the market.
"Companies here choose to compete: here’s our product and here’s what it does," said Schulenburg. "The real issue here isn’t that PartsTrader has a solution; it’s about how it came to the market. The largest insurer hired [PartsTrader] to come up with a solution for them – that’s the problem.
"We won’t refuse [the product] for the sake of refusing. We don’t oppose innovation. We have yet to see the benefit for repairers being forced to use it. When insurers mandate solutions where there is no tangible benefit for anyone but themselves, I think it’s a step back for State Farm. It appears you entered into the market knowing what you wanted to do regardless of repairer feedback. The need doesn’t seem to be there on the repairer side, but it does seem to be there for insurers."
Dan Hunsaker, owner of Dan’s Paint and Body in Tucson, Ariz., introduced
himself as a “Select Service-aholic.” He said his shop was one of the
first to pilot the program four months ago, and since then he has
realized it doesn’t work.
“I feel like the donkey that got dumped into the Kentucky Derby,” said
Hunsaker. “It’s not efficient. How can I improve on a one-click
efficiency? I currently electronically upload my parts order. I have my
vendors. Everything is done instantaneously. Now I have to wait for an
hour and monitor the program. My big problem is that my parts guy is on
that [PartsTrader] screen six hours a day off and on. That represents
$50,000 a year out of my pocket to administer that program.”
Hunsaker concluded his remarks by saying, “It’s sad that this has
happened. In our industry, [State Farm] was the one insurer we could
count on. Now, we don’t trust State Farm like we did.”
John Mosley, owner of Clinton Body Shop Inc. in Central Mississippi who wrote Avery in May to
express his concerns over the parts program and thank him for unifying collision repairers over their opposition to it, was at the CIC meeting representing repairers in his area. He professed continued confusion over the program details even after Avery and Cooper’s talk.
"I’m still as uninformed and confused as when I got here," said Mosley. "Is this something that we’re going to have in all states? Have you already signed a contract?"
Avery responded, "To me, there’s a difference between a test and a pilot. You test something to see if it will work; you drill a pilot hole before you’re going to drill. So a pilot does suggest that your intent is to continue to move, but you have to make sure that pilot hole is in the right place and is right. We’re going to continue to work the pilot in the four pilot areas and fix these things that are clearly deficiencies, and then we will evaluate whether that will be something company-wide for Select Service repairers."
More information:
New Zealand News Source Reports New Details on PartsTrader-State Farm Deal
