Monday, June 18, 2012

"And Like a Good Neighbor?"...One Parts Blogger's Opinion

Like many of you, I have recently been reading a lot of blogs and articles concerning the recent implementation of the State Farm Parts Trader Pilot Program. It has obviously created quite a stir in both the Collision Center service industry as well as for parts providers.

The State Farm Parts Trader Program is already in the pilot stages in a few markets in the United States in many Collision Centers. Many automotive dealer's parts managers have already dropped out of the program for obvious reasons. 

I’m not going to comment on the particulars of the program as many prominent industry “bloggers” and writers have done so well in getting the message out, but I have done my research and here’s “One Parts Blogger’s Opinion”.

Many of you may or may not know that I do a fair bit of travel throughout the United States and Canada, providing Service & Parts Training in automotive dealerships. When I started reading and researching the State Farm Parts Trader Program, it drew my attention quickly as this program has a lot of similarities to the collision industry in a couple of Provinces in Canada.

In these Canadian Provinces, the automobile insurers control the purchase, sale and distribution of collision parts to the collision centers, all the way to the eventual repair of the customers’ vehicle. 

As in the State Farm Parts Trader Program, collision parts are put up for bid for parts suppliers and the winning bidder becomes the area’s OEM parts supplier.

Even though the intentions of their program are similar to what State Farm is claiming to achieve, many of these concerns paint a different picture and goes beyond any article or blog that I have read thus far concerning the State Farm Parts Trader Program.

As expected in the concerns I have read, lead times and cycle times increased as well as the administrative time while parts profits decreased. 

What I did not consider is how these changes would affect the overall method of doing business in the Collision industry or what it may lead to in the future. It has already changed the automobile collision industry to some degree with our good neighbor to the north.

One of the areas, for the most part that has not been mentioned to my knowledge is the possible changes in the way the insurance claim is written in the first place. 

I personally know quite a few experienced insurance adjusters that are being replaced by lesser experienced, lesser paid adjusters to cut costs. This may also lead to even more supplements, longer cycle times and administration costs.

I believe there is a distinct possibility that we will also see the eventual elimination of the adjuster position as we know it, being replaced by digital imagery for authorization. 

Who knows? the near future we might even see collision centers having to perform “tear downs” prior to the initiation of writing the claim in the first place.

I also wonder if this direction in the parts end of the collision industry will eventually include paint and materials as well. To me, it only makes sense to include paint and materials in the overall equation right along with the overall control of the parts warehousing, pricing  and distribution idea.

In conclusion, I think we are definitely heading into a new evolution in the collision industry and it may be here to stay. Fewer Collision Centers, Satellite Repair Facilities, Central Parts Warehousing and Centralized Digital Estimating Centers are just a few of what I see coming in the future. 

The one thing that NEVER changes, but will be highly affected by all this is “Customer Service”. I for one believe that these evolutionary changes will impact the  ability to provide the excellent service to collision centers and ultimately, the consumer.

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM.  Dave can be reached at Cell 786-521-1720 or E-mail at Vist our Website at

Wednesday, June 13, 2012

Is Your Dealer Management System (D.M.S.) Telling The Truth?

Recently, I was asked by a Service Manager to perform an evaluation of his dealership's Parts Department. He  was very concerned because it appeared to him that they never seem to have the "right parts at the right time" and he was tired of putting his customers in rental cars while they waited for parts to come in the next day.

On top of that, his shop productivity was suffering because of all the technician "down time" going back and forth to the Parts Department, bringing vehicles in and out of the shop or just waiting for the Parts Department to chase down a part.

Unfortunately, I have heard this from MANY Service Managers' around the country and led me to the title of this month's "Smart Parts" article. It all begins with the Parts Manager's "belief system" and just how he or she is  reporting to the Dealer Management System. (D.M.S.)

In this particular dealership's Parts Department Evaluation, I first noticed that ALL D.M.S. parts orders were receipted as STOCK!...No "Customer Orders" reported, No "Emergency Purchases", No "Lost Sales", or as I refer to as "Potential Missed Opportunities".

The only "clue" or variation that I detected was that over 50% of the receipts were "Outside Purchases"! Aha!....a little bit of the actual truth is coming out now! 

In this case, less than HALF of the parts orders are being filled by STOCK, let alone the "Customer Orders" that are being ordered, receipted and classified as STOCK as well. These "Outside Purchases" are receipted differently because the original order was not generated by the D.M.S., they were purchases through other vendors or dealers to fill a potential "Emergency" situation.

Here's where the "Common Sense" of this evaluation is now coming to a head! Does it make sense that ANY Parts Department would have NO Customer Orders, Emergency Purchases or Lost Sales? Better yet, have you seen ANY Parts Department fill over 99% of their orders from STOCK, or at least, that's what this report indicates.

This would mean that over 99% of the time, this Parts Department fills the order from STOCK on the first demand for a 99% "First Time Off Shelf Fill Rate". I guess the old saying is true..."Garbage In, Garbage Out"! Remember, just because the information is on the report, it doesn't necessarily mean the information is true or accurate. 

Many Parts Managers report in this same way because in their minds, that's the way they order ALL their parts to get the best discounts and allowances. They don't realize, or often care about the adverse effects their reporting procedures have on CSI, additional expense, lost productivity and most important, profitability.

On most dealerships, Service Departments' lose at least 15% in shop productivity, not counting the added expense due to these improper reporting practices, which by the way, highly outweigh a little extra parts discount.

Lastly, many of these types of situations are becoming more common because of what I call the "Double Edged Sword" which is the manufacturers' "over night dedicated delivery service".

 It's obviously a good thing because parts are more available with shorter lead times, but the bad thing is that more and more parts managers are stocking less, overriding basic set ups and controls because they don't have to stock it now...they will just order it overnight!

The D.M.S. Parts Monthly Analysis Report can tell us a lot, or expose a lot. Bottom line is that we need to be reporting correctly and honestly in order to have efficient and proper "First Time Off Shelf Fill Rates" and a higher parts "Return on Investment"
Need to know more?....Contact us at

Dave Piecuch is the Vice President of Automotive Consultants Group Inc. and is the Head Coach for Smart PartsTM.  Dave can be reached at Cell 786-521-1720 or E-mail at Vist our Website at