Collision Industry Conference committee working on new 'cycle time' formula

Jan. 14, 2016
At the Collision Industry Conference (CIC) in Las Vegas in November, a CIC sub-committee announced that over the coming year it will work with any interested insurers on developing a new formula for estimating cycle time (or “length of rental”) on initial repair estimates.

At the Collision Industry Conference (CIC) in Las Vegas in November, a CIC sub-committee announced that over the coming year it will work with any interested insurers on developing a new formula for estimating cycle time (or “length of rental”) on initial repair estimates.

A panel discussion at CIC in 2014 focused on the challenges currently posed by the wide-ranging formulas some insurance companies use (or require direct repair shops to use) to determine length of rental, some of which set unrealistic expectations for consumers. The committee cited examples of formulas that various insurers require shops to use to list an expected delivery date on the initial estimate; they ranged from one day for every three hours of labor on the estimate to one day for every six hours of labor on the estimate. If the insurers’ goal is to drive performance, one panelist said, that’s one thing, but when it establishes unrealistic expectations for the consumer, and requires multiple adjustments to completion date information by the shop and rental car company, that impacts efficiency and customer satisfaction.           

At the Las Vegas meeting, Pat O’Neill of the CIC Insurer-Repairer Relations Committee said some insurance companies – he named only Allstate – were planning to work on a new formula, so the committee “felt it would be very important that as an industry we had input into that and were able to participate in whatever that outcome may be.”       

O’Neill said the sub-committee welcomes involvement by insurers or any others; those who have confirmed participation include Darrell Amberson of LaMettry’s Collision in Minnesota, Mike LeVasseur of ABRA Auto Body, Frank LaViola of Enterprise and Aaron Schulenburg of the Society of Collision Repair Specialists (SCRS). O’Neill said the goal would be to develop an alternative formula by the end of 2016 that could be tried by some insurers, but he cautioned that the sub-committee can only offer input on the subject.

“This doesn’t mean that the result that might come up at the end would be something that CIC would completely condone, but I think it behooves us to at least be involved in what might be something that we’re going to have to deal with,” O’Neill said.

Are parts procurement systems helping?

CIC’s “Parts and Materials Committee” throughout 2015 focused on the role that electronic parts procurement does – or could – have on improving shop and parts vendor efficiency. At the meeting in Las Vegas, long-time CIC participant Frank Terlep (now with Summit eMarketing Sherpas) questioned – somewhat rhetorically – how much the systems developed over the last 15+ years have actually benefitted any segment of the industry.  

Terlep is not involved with parts procurement today, but in 1999 was with CarStation.com, a “dot.com company” that raised $67 million to build the first parts procurement platform in the industry.  

“It failed miserably,” Terlep said. “We spent $47 million in eight months. We went from 13 people to 200 people and never got a product out the door.”           

But one thing CarStation did do well was gather data, Terlep said. The company commissioned a very detailed time-study that found the average shop then spent about 13 man-hours per day on parts procurement. 

“What we found back then, and I assume it’s very similar today, is that some of the biggest areas for improvement were checking on parts availability, re-ordering of parts, parts labeling, parts inventory, invoice posting into shop management software, and return and credit reconciliation,” Terlep said.   

He suggested the industry might benefit from a similar study today, to quantify exactly where there is still room for increased efficiency. But he said he believes the segment of the industry that needs the most help in terms of parts procurement efficiency is shops – which he said are “the entity that has the least amount of power but touches more parts than anybody else.  

His opinion: “Let’s eliminate shops from having to manually import or post parts in their shop management system,” Terlep said. “From what I’ve seen over the years, that’s one of the most labor-intensive and error-ridden parts of the procurement process.”

Need for ongoing training stressed

CIC’s “Education Committee” in Las Vegas continued its string of panel discussions on the importance of developing more of a “learning culture” within shops and the industry. Dustin Harrier, a regional director of quality assurance for Service King, said technicians and shops that don’t keep up on training are going to increasingly find themselves unable to repair certain vehicles.       

“I think everyone in the room is aware of how fast things are moving from a technological standpoint,” Harrier said. “You look at the different mixed material platforms that many manufacturers are gravitating toward. You look at the electronics systems. Think about how many fewer things the average technician may be able to fix as the OEMs continue to move forward with all this technology. The individual’s ability to flag the hours that he may be accustomed to begins to diminish.”

Harrier said he’s seeing more technicians reach that level of awareness and start to seek out more training and certifications.           

“I think as we move forward in the industry, we really need to embrace that,” he said. “Because as individuals and shops owner and an industry as a whole, we’re going to watch that pool of dollars continue to shrink down.”           

Panelist Paul Maiersperger of Axalta Coating Systems said his company is working to address the growing need in the industry for technical education by trying some “virtual training” for painters. Maiersperger said an earlier discussion at the CIC meeting on some of the tri-coat and other unique finishes being used by automakers offers a good example of the need to get training to a technician at the appropriate time.

“The chance of getting a guy into a training class to learn about that when the car is actually there in the shop is slim-to-none,” Maiersperger said. “He may learn it and forget it [before such a car comes in] or have that car come in but he’s not been to the training.”  

He said Axalta is experimenting with using a trainer at one location to broadcast topic-specific training out to a half-dozen shops; the paint company’s local representatives are in those shops at the same time to help with the hands-on portion of the training.           

“We’ve done two such experiments,” Maiersperger said. “We can then record these so anyone can access it at any time to review the content.”

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