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State Farm Revisiting Electronic Parts Ordering

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Jason Stahl has 28 years of experience as an editor, and has been editor of BodyShop Business for the past 16 years. He currently is a gold pin member of the Collision Industry Conference. Jason, who hails from Cleveland, Ohio, earned a bachelor of arts degree in English from John Carroll University and started his career in journalism at a weekly newspaper, doing everything from delivering newspapers to selling advertising space to writing articles.

State Farm is exploring the possibility of establishing
an electronic parts ordering process but made it a point to say this latest
initiative is different than the pilot program it started in 2007.

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"In the pilot program several years ago, we were
facilitating a parts discount through the OEs," said George Avery, State
Farm claims consultant. "This one will be a more complete electronic parts
ordering process that will include all part types." All, he said, except
aftermarket parts.

Avery says State Farm was encouraged by the results of
that pilot program and saw that electronic parts ordering "has some
advantages." This latest endeavor, he says, is simply the next step, but
he emphasized it is in its very initial stages.

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Avery believes that electronic parts ordering will
benefit all parties involved in collision repair transactions: shops, insurers,
customers and vendors. But top of the list, he says, is the vehicle owner.

"The focus is the customer," he said. "We
have a clear message from the customer: ‘We want efficiency.’ That happened
early on in the Select Service agreement and is why we asked the shops to give
the customer a promise date. The customer said, ‘If you’re going to tell me my
car will be done on a certain date, then I want it done on that date.’ So
[electronic parts ordering] will
get them back in their car quicker."

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As far as how State Farm will benefit, Avery listed
savings in rental costs, cost of repair and less time "touching the claim."
For repairers, he said efficiency means more profit.

"[Repairers] continue to tell us that more
efficiency and moving more cars through their shop equates to more success and
profit," he said. "Plus, it makes things go more smoothly."

If State Farm moves forward with the electronic parts
ordering program, all Select Service shops will be required to use it. Asked if
it would factor in to the "scorecard" unveiled by State Farm last year to allow Select Service shops to measure their
performance, Avery said it could.

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"If [electronic parts ordering] does make repairers
more efficient, then those efficiencies will come out on that score," said
Avery. "This could be a tool to allow them to be more efficient and
perhaps impact their competitive price and quality – because we want
[electronic parts ordering] to allow them to get quality parts as well."

Avery emphasized that this program was not conceived to
control what kind of parts repairers should get or where they should get them from.
He said State Farm puts that decision and others in repairers’ hands.

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"The thought was, if you’re going to hold a repairer
accountable across the board for the scorecard, you should allow them to make
those decisions on those individual repair jobs that make sense," he said.
"That’s our message: the choice will be in their hands. State Farm has a
deep desire and commitment for repairers to be able to make those
decisions."

Avery did add, however, that if technology changes or a
new system comes along that is mutually agreed upon by State Farm and the
repairer, that scenario could change.

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Asked if there would be a cost to shops related to this
new program, Avery said he didn’t think so but admitted it was too early to
tell.

"Our intent is to have agreements that fit all
stakeholders. I don’t think that our desire is to put an additional load on
repairers," he said. "But as technology goes, you might find a
repairer who says, ‘I’m willing to do this because it helps me get to my goals
and is totally worth it.’

"We’ve worked very hard to not be disruptive to the
repairer. We don’t require them to use a certain software program, CSI vendor,
education process, etc. That’s a signal from us to them to try not to be
disruptive to their business. That spirit will carry forward in the parts
environment."

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Avery said there is no timetable in place yet for
establishing the program and no particular region or area selected for testing.

"We are just beginning and have a long row to
hoe," he said. "You’ve got the testing process, identifying shops in
certain areas, performing the test, analyzing results and rolling it out. I
hope that the industry sees that, in the past, State Farm has been consistent
with trying to communicate as much up front about what we’re doing and where
we’re going.

"We don’t know where we’re starting. Obviously, it
will be our Select Service providers. Knowing what we did in the last test,
there was a lot of work putting the program together before reaching out to the
zones and saying, ‘Hey, we want to try it in these areas because it makes sense
for us.’ We are so far from that right now."

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