Parts procurement software alone won't fix all the issues

Spending just a short time reading blogs, posts or viewing YouTube videos about parts procurement can only leave you shaking your head. Every attempt is being made to convince the industry how "efficient" PartsTrader and other bidding part procurement programs are and how much better off we will be utilizing them.

Many of the propaganda videos are locked and no comments can be added, or even "Like" or "Dislike" – heaven forbid that someone challenge them. If efficiency is the real reason behind such programs, then why are we focused on the software that's being used and not the real problems?

For more than 15 years I have worked with shop owners worldwide in many areas of their businesses, including improving processes and efficiency. One of the most important aspects on this improvement cycle is to determine the "root cause" of the problems, and not allow superficial causes to be the focus.

The Japanese Kaizen approach to continuous improvement demands that you determine the root cause. So lets look at what the real issues are and what we are doing when it relates to parts.

Most of the shops doing 80 percent of the collision business are using some form of technology already to process parts. The United States OEM parts distribution is by far the best in the world. Shops have established solid relationships with specific vendors they trust and do business with. These relationships have been established over time. Most of this industry group processes parts through a management system electronically, using Collision Link, or through their own parts department (dealer shops). OEM parts are not the issue for efficiency, and have no place in any "parts bidding" software.

Now lets move to alternative parts, specifically used parts. That does impose issues in efficiency, but again not where the focus on software being the solution is currently being placed. Believing a bidding online system is the real issue, the root cause, is as close to a solution for efficiency as taking an aspirin for appendicitis attack.

For years, shops sourced used parts, received them, negotiated the price, added the necessary repairs to the part on the estimate and delivered the vehicles back to the customer efficiently. Then came in the "priced as new and undamaged" era.

Even though there is a huge gap of understanding that "New and Undamaged Pricing" does not mean the part will appear with no damage, the real concern is how this masks the real issues that kill efficiency every day. If insurers really were interested in efficiency in this process, they would not turn their heads and ignore the real cycle time bandits that occur just about every day when dealing with used parts.

First, to ignore the damages that are being repaired with no indication on the estimate or the repair order is a disservice to our mutual customer. Why is this ignored by insurers and placed on the shop to be locked in with a price for "new and undamaged" and then attempt to negotiate a new wholesale price, yet not be reflected on the estimate or repair order, providing the true picture?

Is it that if insurers began to recognize the fact that some used parts that are being received by repairers are often closer to "junk" than acceptable, that this may not be "acting in good faith," or would it expose the root causes for efficiency loss with "used parts?"

But it goes further than this. I recently taught the I-CAR Recyclers Program. This program does a great job outlining the ARA Damage Codes and Grading System. It is amazing that the majority of the industry, insurers and repairers, had no idea what they were and what to expect. During discussions and activities in which they examined and graded used parts, suppliers of used parts didn't know much about the grading system.

One part in particular had a label on it that only said, "Grade A." In the ARA system Grade "A" represents a sheet metal part that only has one unit of damage or less. One unit is damage that does not exceed a credit card size in one location. This hood had at least 28 hail dents and at least 10 scratches and chips. No ARA Damage Codes and improper part grading led to a three-day delay for this job.

In my next column, I will discuss additional root causes of efficiency losses when dealing with used parts and also address other alternative parts.

Tony Passwater, president of AEII, has been in the collision industry since 1972.