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

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