Does this sound familiar? A car is on the frame rack, set up and immobile until repairs can be completed, when your technician walks into the front office and says he's out of work. Once you digest the painful news, you ask: "Why go home? The car on the rack has plenty of hours and we need it off the rack ASAP." The technician then informs you of the root problem: (a) Wrong parts or (b) We only received half of the parts we needed.
Parts. They're critical. They represent about 40 percent of the average repair order today, according to national benchmarking data. Parts are the single largest item on the estimate, which also means they are one of the largest headaches for your shop.Estimatics and parts go hand-in-hand. And like most things in the collision repair business, a single action affects multiple processes simultaneously. Timing must be optimized across every step of the estimating process. How you plan and manage the estimate now affects everything downstream later.
When you create an estimate, the choices made on parts directly affect cycle time, production flow, CSI – and ultimately, profits. Identifying the right part the first time and knowing the availability, margins and alternative sources are the estimator's job.
Today, fewer new car dealers means longer lead times for OEM parts. Many OEMs have changed their return policies, not allowing dealers to return incorrect parts to the warehouse. Tougher floor planning (credit) has resulted in lower local OEM inventory levels. Demand has lowered stock levels at the OEM distribution centers. Economic pressure is affecting discounts. Each of these trends affects your shop at the time of the estimate. Understanding them enables you to make the right decisions and set the correct level of customer expectations about cycle time, also known as "when will my car be done?"
So now we have expanded the role of the estimator to procurement and logistics agent. Finding the right part the first time, maximizing the profit on that part, and getting it into the hands of the technician before it's needed, results in happy employees and customers. This holistic approach also helps you increase efficiency, accuracy and CSI, while growing your business.
Choosing the right part the first time can be challenging. Yet technological advancements in estimating software – the most recent examples being color and 3D intelligent graphics – are making a difference. Those shops already using the new 3D estimatics systems are reporting vastly improved cycle times.
More real-time sourcing for LKQ parts and better, internalized aftermarket vendors' catalogs also are helping simplify estimator choices. But once the right part is found, further choices must be made concerning OEM, LKQ or alternative manufacturers. Factors to consider include vehicle year and mileage, state laws regarding parts type and repair quality. Profit also must be considered. You can complete a pre-accident condition repair and still consider profit as a factor in parts sourcing. Understand that OEMs have "Crash Part" programs or offer "Crash Kits" and "Cooling Module Assemblies" that reduce severity and may offer increased margins.
LKQ suppliers are buying overstock inventory and complete parts departments from closed OEM dealers. The OEMs sell large quantities of parts surplus directly to LKQ suppliers. Having quick access to accurate LKQ inventory as part of the estimate process opens options and saves calling the customer to explain the changes in the repair plan.
With some parts, the aftermarket manufacturers are the same as the OEM suppliers. Buying parts directly from such aftermarket manufacturers may offer better margins and faster availability. For example, this may be true, especially, of coolers and mechanical components.
How well do you really know your parts suppliers' inventories? Margins and availability must be considered when you create the estimate or repair plan. Make sure you have the opportunity to explain your choices to each customer upfront rather than after the fact to provide greater opportunities to delight them and score a higher CSI. Think about the repair plan as it relates to quality as well as production cycle and profits, and you'll stay on the right path.
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