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ASA continues research on State Farm’s parts bidding program

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June 4, 2012—The Automotive Service Association (ASA) has continued to research
State Farm Insurance’s online parts bidding and ordering platform through PartsTrader by conducting interviews and discussions with representatives from State Farm, PartsTrader, dealer suppliers, independent suppliers, manufacturers, recyclers and participating pilot shops.

ASA said its research, which is focused on the effect that State Farm’s new program could have on the repair segment of the collision industry, has identified several pieces of new information:

• Prior to any registration or use of the application, 17 Select Service network shops in Birmingham, Ala., removed themselves from the program.

“The majority of repairers making comment are not in favor of the new State Farm application,” ASA said. “While the majority of sentiments are coming from non-participating shops, the actions of some of the Select Service shops removing themselves from the program also demonstrate lack of support for the application.”

• Shops participating with the pilot program are experiencing roughly 30 minutes of additional administrative work daily.

“PartsTrader states that this is true with any new system, but over time, it will be more efficient and save time,” ASA said. “PartsTrader intends to contract an independent study to validate this.”

• The PartsTrader application fee structure is currently under development, which PartsTrader said will be applied to suppliers.

“With its focus on repairers, ASA understands that any comments on this program directly affect the more than 10,000 shops currently in the program (approximately 25 percent of the repairer market), and indirectly affects the 75 percent that are not in the program,” ASA said. The ASA said it has obtained the following additional information on State Farm’s program thus far:

• Participation
-Approximately 10 percent of State Farm Select Service shops are participating in the pilot.
-Participation in the PartsTrader program is a supplier decision.

• Suppliers
-Suppliers are recommended by Select Service network repairers only.
-“Default OEM Suppliers” are the primary OEM dealership that shops would like to source parts from the majority of the time.
-Repairers select their “Default” list when setting up their facility in PartsTrader.
-“Preferred OEM Suppliers” are the secondary OEM dealers that shops would like to source parts from on occasion.
-Participating shops can request quotes from their “Default” OEM dealer by selecting that option when sending out a request for quote. This is the default selection on each request for quote.
-Participating shops can request a quote from their secondary OEM dealers by selecting the “Preferred” supplier option.
-Participating shops can request quotes from all participating OEM dealers by using the “Any” button. This expands the pricing option to all OEM dealers listed in the market area.
-When a participating shop requests quotes, all relevant alternative suppliers will be invited to quote.
-All suppliers recommended by all Select Service shops in the market area can take part in parts pricing if that option is selected by the Select Service shop.
-There is a “fax only” ordering option for suppliers that choose not to participate, or that are unable to communicate electronically.

• Pricing
-Select Service shops can go directly to any of their preferred suppliers for the purchase of all parts without entering into the parts pricing process. The direct buy option can also be used for the supplement process or for drive in estimates. But this decision could affect the net results on a repairer’s Select Service Scorecard.
-State Farm does not have access to any facility’s buy price or parts margin data of new or alternative parts, except for recycled parts.
-State Farm can see the MSRP list price. This is the same as the process in place prior to the application.
-State Farm can see the quoted buy price of recycled parts. This is the same as the process in place prior to the application.
-State Farm can see the discounted MSRP prices provided by dealerships.
-Suppliers cannot see price quotes made by other suppliers.
-During the part selection process, shops can see both the list price and the shop buy price of each part.
-If the Select Service shop selects “all,” then all suppliers recommended in the market area can elect to take part or not take part in the price quoting process of each estimate uploaded.
-The price quoting process remains open for the allotted time, and shops are unable to execute on the estimate during that process.

• Parts Selection
-Parts selection is made by the collision repair facility.
-Impacts on a shop’s Select Service Dashboard are affected by what other Select Service repairers are selecting in the marketplace, including part type, part list price, cycle time, overall estimate total, customer satisfaction, Select Service pricing, photo quality, supplements, audits and inspections, average labor rates, repair versus replace percentage, and paint and materials.
- A line item comment has been added into the recycled parts area, which allows repair shops to record any repairs to recycled parts. The line item comment does not include a value amount associated with those repairs.

• Data Privacy
-PartsTrader uses CIECA BMS data extraction. The system only extracts data that is related to the parts procurement process.
-PartsTrader does not sell, read or provide data to unrelated parties.
-PartsTrader has a privacy policy and will provide that to the industry.
-PartsTrader will not share buy price data with State Farm, with the exception of recycled parts.
PartsTrader will notify the industry of any changes to its privacy policy.
-PartsTrader has contracts with participating suppliers and participating repairers. It is an online agreement that participants review and accept as part of the registration process. All users must accept the agreement electronically before they can log in to PartsTrader.

The ASA said it is yet to be determined how State Farm’s program will affect the overall bottom lines of participating repairers and the collision repair industry.

“ASA is striving to provide as much verified information on this pilot application as possible,” said Denise Caspersen, collision division manager of the ASA. “While this pilot is underway, it is vital for ASA to continue to engage with as many industry segments as possible, collect the concerns, verify the research and communicate directly with State Farm and the collision repair industry to ensure this application benefits collision repair shops and the motoring public.”

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