|State Farm's PartsTrader lets shops choose suppliers|
|News - Collision Repair|
|Monday, 24 September 2012 15:18|
By Mike Davey
Toronto, Ontario -- September 24, 2012 -- State Farm’s PartsTrader program has been a hot topic of discussion south of the border, with a number of local and state collision repair associations speaking out against it. One highlight of the recent CSN Conference in Toronto, Ont., was a presentation by Chris Evans of State Farm on the details of this often misunderstood new program.
Evans has been with State Farm for 25 years, currently in the role of Claim Consultant, P & C Claims. He was employed at a collision repair facility in Ohio prior to joining State Farm.
PartsTrader is currently being tested in a number of markets in the U.S. After modifying the program based on the results of the tests, State Farm will likely roll it out in the U.S. and Canada.
It’s important to note that the program in question is significantly different than the program of the same name currently in use in New Zealand. Although they were developed by the same company, the PartsTrader being tested was specifically designed for the needs of the North American market.
Before presenting information on PartsTrader, Evans discussed the practical components of what’s going on at State Farm and with the company’s Select Service DRP shops, noting that collision repair centres that are part of that network now have access to exclusive content and reports at b2b.statefarm.com, and detailing the types of facilities that State Farm wants to work with going forward.
“In the first quarter of last year, we took a look at our index scores and used those to drive more strategic resource allocation,” said Evans. “It helps us to reward those shops that have high performance. We want the best performers, based on a three legged stool of quality, efficiency and competitive price.”
Evans also discussed a new program that the company tested in California in the first half of 2011. The test was designed to provide convenient service options for customers for desire fixed inspection times, or who may be undecided about repairing their vehicles.
In essence, some of the consistent, strong performers on the Select Service program are given the opportunity to have a State Farm inspection desk located inside their facility. The facility must provide a professional appearance inside and out, a dedicated desk and power supply for State Farm use, separate men’s and women’s restrooms and two parking spaces within close proximity to the office. State Farm then leases space from the shop.
“The benefit to the shop is that very often a customer will come for the estimate, and look around at the nice shop they’re in, and say ’Hey, what about this shop?’” said Evans.
Evans then introduced a short video, narrated by State Farm’s George Avery, on the details of the PartsTrader program.
In the video, Avery explains that PartsTrader is not a bidding process, but a quoting process. Parts suppliers cannot see the prices offered to the shop by other suppliers. He also notes that if the program comes to market, it will be after it is thoroughly tested, and it will be done in a way that benefits all parties involved.
Enterprise wide, State Farm spends about $3.5 billion on parts every year. Any savings the company could realize on this would provide an obvious benefit to State Farm.
Essentially, a shop using the PartsTrader program is asked to provide a list of preferred suppliers, including a default parts dealer. For example, if you regularly purchase Chrysler parts from the local Chrysler dealer, then you can name them as the default dealer. Other suppliers go into your pool of preferred suppliers. Only repairers can add to the list of default dealers. State Farm cannot.
The first step in submitting an estimate to PartsTrader is to write the repair estimate using all OEM parts. If you wish to use a recycled door, for example, you simply list recycled door on the estimate and leave the price blank. You then upload your repair estimate to the tool. You may then choose how long suppliers may take to respond. The default is two hours, but in the original version of the program, repairers could choose to only give suppliers one hour to provide quotes. Evans indicated later that, after testing, repairers can now drop that time to as little as 30 minutes.
The tool identifies best prices and delivery times, which you can then filter, based on what you feel is the best option. Which parts to buy, and from who, remain under your control.
Repairers can choose to filter using the “Any” button, which allows them to see all prices in the market, not just the suppliers they have entered. You can also filter by OEM, recycled or non-OEM and adjust a slider to select parts delivery options. The last step is buying parts from the suppliers.
In cases where customers want an estimate on a driveable vehicle, the shop writes the estimate just as they would today. If that customer then comes to that shop for repair, the estimate is uploaded to the tool at that time.
The video concludes with Avery noting that State Farm is aware that this constitutes a change to the way things are currently done, but that the company believes it will help to create transparency and promote improvement in the parts supply chain.
Evans followed the video by answering some of the more common questions about the new PartsTrader program.
“There’s some consternation that it isn’t currently integrated into estimating or management systems,” said Evans. “I can say that the estimating integration is almost done and we’re working on the management system end.”
The PartsTrader system was developed in consultation with a repairer advisory board. Evans recognized one member of the board, Ken Friesen of Concours Collision Centres ~ CSN, during his presentation, saying he was adamant that State Farm have solid representation from Canada on the board.
“We anticipate beginning a company-wide rollout following the pilots,” said Evans. “However, no specific plans have been established. It’s absolutely critical that we get it right before the enterprise-wide rollout. We recently moved the pilot into Chicago. We need scale, and Chicago will help to give us that.”
After the presentation, the floor was opened to question from the audience. Martin Monteith of Zenetec Collision ~ CSN in Barrie, Ont., asked a question that is likely on the minds of many repairers, “Does billing for the parts go through State Farm?”
The answer, according to Evans, is no. “The goal is to assist you more efficiently with more options than you have today.”
Evans also noted that the new PartsTrader program may have a knock-on effect of increasing service levels from parts suppliers.
“Do you know what the return rate of OE parts is? It’s about 14 to 17 per cent,” said Evans. “In some of the test areas, we’ve seen a reduction in that.”
© Copyright 2012 Collision Repair magazine
|Last Updated on Monday, 24 September 2012 15:58|
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