Thursday, 23 February 2012 17:12

State Farm’s Testing of Parts Ordering System Among News, Discussion at CIC Meeting

Speaking at the January Collision Industry Conference (CIC) in Palm Springs, State Farm’s George Avery said that PartsTrader, the electronic parts ordering system the insurer expects it will eventually require its Select Service shops to use, is currently being tested at one repair facility and soon will be at another location.

He declined to identify the shops, saying that it is too early in the testing “to put those folks under the microscope and ask, ‘What do you think of the new system?’”

The announcement was just one of the parts-related issues discussed at CIC. The CIC “Parts and Materials Committee” shared the results of a preliminary survey of 11 of the companies offering electronic parts locating and procurement systems to the industry. Committee member Mary Lou Lubrano of Car-Part.com reported, for example, that about the same number of those companies said insurers pay for use of their systems as those that said they are funded by parts vendors; two of the companies said shops pay for the systems.

“I would argue that shops pay for all of them, because having nine disparate parts systems, some of which may be mandated by their insurance partners, may require shops to train their people on potentially nine different methodologies to order parts,” consultant Matt Ohrnstein of Symphony Advisors responded during the committee’s question-and-answer period.

Ohrnstein suggested the committee could help communicate to industry constituents that, just as the banking industry settled on a standard way to transfer funds worldwide, this industry would be better served by standardized parts-related electronic commerce systems.

CIC Parts and Materials Committee member Aaron Lofrano also reported in Palm Springs on his admittedly informal survey of more than 120 people in the industry asking how use of different types of parts benefit or hinder their business operation on a daily basis in terms of job performance and profitability.

Lofrano shared some representative comments from the various constituencies included in his survey. He said non-OEM parts vendors, for example, expressed concerns about the number of parts returned, and questions about whether those parts really did not fit as the shops returning the parts might indicate (often without providing any specific information about the problem with the parts). Such returns occur, Lofrano said he was told, even though other shops in the same markets return few if any parts. The parts vendors also expressed frustration with parts being returned without boxes or packaging.

Following Lofrano’s presentation, Oregon shop owner Ron Reichen said he’d like to have more detailed information about the vendors’ reported parts returns rates.

“We are repeatedly told by the carriers that it’s about 2 percent,” Reichen said, saying that doesn’t seem to match up with Lofrano’s assessment of what he heard from parts vendors.

Info Providers Discuss Data Sharing
The “Big Three” estimating system providers offered some response at the recent Collision Industry Conference (CIC) to a joint statement by three repairer groups earlier this year voicing concern about collection and use of shop data.

In that statement, the Alliance of Automotive Service Providers (AASP), the Automotive Service Association, and the Society of Collision Repair Specialists, said shops wishing to use any of the estimating systems have no choice but to agree to allow their data to be aggregated and sold or reported to third-parties, potentially “in ways that may ultimately be detrimental to the (shop) who generated the data.”

The estimating system providers pointed out the benefits to the industry of having aggregated data from which all shop-identifying information has been removed.

Greg Horn of Mitchell International noted that the associations are among those who have at times requested such aggregated data, and that it can help shops understand how they performing relative to their market.

Jack Rozint of CCC Information Services said his company takes every effort to ensure it isn’t releasing information that “could be used to the detriment of our customer.” He said, for example, that CCC would never share shops’ profitability data - such as gross margins on profit or labor - that it has access to through clients using its shop management system, even if a shop gave its permission to do so.

“Because we recognized that ‘permission’ in this industry is not always ‘permission’ (because) it’s sometimes (given) when someone has a program being held over them (and) if they don’t do it they aren’t going to get any more cars,” Rozint said. “So we walled off that data and said it’s not going anywhere from our system.”

But Rozint said even if the system providers gave shops a way to opt-out of having their estimate data aggregated, little would change.

“Most of the work in this industry is paid for by insurance companies,” he pointed out. “If the insurance companies want that data aggregated, they have access to it because they paid the claim, so it will be aggregated. The only data you could exclude as a shop if that permission existed would be customer-pay data.”

EMS vs. BMS debate continues
The discussion came during a CIC Data Privacy Committee panel discussion related to when the industry will shift to a newer technology standard for the transfer of a shop’s estimate data to third-parties.

The associations have been among those calling for a shift by the information providers away from using the older “EMS” standard for transferring estimate data to using the newer “BMS” standard, in large part because BMS gives the shop more control over what aspects of the estimate data are shared. If a shop, for example, orders parts electronically, the parts vendor receiving the parts list via the EMS file gets not only what parts are needed but information about the customer and his or her insurance. A rental car company  also might be getting all this information even if all it really needs is information on when a customer’s car will be repaired and the rental returned.

CCC’s Rozint and Rick Tuuri of Audatex said more fully implementing BMS will require significant development resources for the information providers. And Tuuri said even if a shop could export data using the BMS standard right now, it would be a little bit like being the only one with a phone or fax machine in that you couldn’t use it unless the other party was prepared to communicate that way as well.

“If there’s no one prepared to receive BMS and understand it, there’s not much impetus to develop it,” Tuuri said.

But Fred Iantorno of the Collision Industry Electronic Commerce Association (CIECA) said EMS is built on technology introduced in the 1980s; most programmers working today, he said, aren’t even familiar with it. He said there’s been no resources spent on the EMS standard since its last release a decade ago.

“So yes, you will have to spend money to move to BMS because you’re not spending any money today,” Iantorno told the information providers.

John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@SpiritOne.com.

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