I, for one, like new ideas and change. I'm also a strong supporter of the utilization of technology to improve our lives. In this case, if the intent of the test was to improve the process that is a central cause of production inefficiencies in parts departments, I'm for it 110 percent.
I have to ask what this test was truly all about. The initial explanation State Farm presented prior to the November 2007 rollout of this test was that it would gather data and feedback on the feasibility of a new parts procurement process. The key objective of the new procurement process was reducing part errors and inefficiency, with the end goal of reducing car rental expenses by at least one day.
However, based on observations and discussions from shop owners in the Indianapolis market, this test was flawed. Very little regard was given to the impact of the parts procurement system on shops. Observers questioned the accountability of the software providers to create a product that reduces our overall time requirements instead of increasing them.
Another concern was the response to feedback on the system. Attempts to provide feedback in any constructive method were immediately answered by the local soldiers with, "Well, you can always get off our program if you don't like it." This type of "intimidation" adds to the skepticism of the real motive behind the system.
I recently watched an interview with George Avery of State Farm, for whom I have great respect. The interview noted that State Farm was pleased with all those who "volunteered" to participate in this test. I cringe hearing "volunteer" in this case. It seems to parallel someone volunteering to sign a confession with a gun to his head. Maybe this test is in itself a test of how much one industry can do to an entire local industry that can't say "no."
What is wrong with the State Farm program?
The current processes and the required software have large deficiencies in reliability and usability. They create additional time requirements for shops and suppliers. The software does not interface with current collision management systems and the suppliers' parts systems. It requires double processing for those that have collision management systems and offers no time gains to suppliers.
Two different systems are required since Toyota would not agree to the same software as others. Both systems are slow and at times unreliable. The user interface needs changes. However, software vendors appear to be more concerned with having an opportunity to collect data that should not be transmitted to them than with fixing the usability and reliability of their product.
Again, this brings into question the motivation behind this system. The latest version seems only to benefit the OE manufacturers by providing them with the opportunity to sell an OEM part at the matched price of a listed reconditioned or aftermarket part. It's been reported that this process of "bidding" may take up to three days. How is this going to save a rental day?
On the supplier side, I've talked with many parts departments and found there's been very little effort to reduce their processing. The system does not integrate into their parts system, and the processing of the orders requires re-keying as it would with faxed, telephone and e-mail orders.
Additional setup requirements worth mentioning include the need to set up individual estimating system profiles for each vendor (an administrative nightmare) just to gain an automatic 2.8 to 3.4 percent discount from the participating OEs. This is designed to be a pass-through directly to the participating OEMs, and not a discount that shops currently are giving to State Farm. If that's so, why is it handled this way? If a relationship is made with a participating manufacturer for a rebate, it should be handled in the background instead of indicating on the estimate that the shop is providing a discount.
What is the solution here?
I believe technology can improve process inefficiencies within the parts area of our businesses, but only if the technology is designed to benefit the end user of the product instead of the developers and a third party. The technology must integrate into the supply chain systems. This requires standardization and acceptance of the integration from all manufacturers.
The software also must integrate with current collision and dealer management systems and take into consideration the privacy of the transmitted information. Today there are already XML standards in place developed by the Collision Industry Electronic Commerce Association to eliminate this concern. Information providers must change their estimating export to implement them, and the industries involved must use them.
The key component to making this type of system successful is having everyone involved work together to define the software needs and user concerns. The system shouldn't be developed in a vacuum to benefit a single participant with very little input from the rest in the industry. Insurers need to design a system that can benefit everyone so that manufacturers like Nissan will stick with the program instead of dropping out after seeing no benefits.
What has this test proved? Where are the results of reduction of the cycle time? Did the system reduce the number of rental days? If so, how were the results measured and compared to a base line? Was this reduction caused by the system, or was it just a result of participants knowing they were being measured?
Unfortunately, the real "proof" simply may be that the collision repair industry will do whatever it is told by an insurer in at least two areas of the country. What will your area do?
