SCRS executive director responds to PartsTrader letter
July 3, 2012—Shops and parts suppliers who have used State Farm’s online parts ordering program through PartsTrader say the new process has caused greater levels of inefficiency and increased concern over profitability, said Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), in an open letter to the collision industry.
Schulenburg release_notesd the letter in response to PartsTrader CEO Rob Cooper, who last month issued a letter to repairers to counter negative industry reactions to the program. Cooper cited inaccurate comparisons to the New Zealand program, which is similar to PartsTrader. In response, Schulenburg said that SCRS professionals visited New Zealand to talk to repairers about the process, which launched nearly a decade ago.
New Zealand repairers told the SCRS that the program was originally pitched as a way to improve parts procurement practices. But shops say they saw a reduction in efficiency, and a diminished profit margin on parts, with some carriers paying as little as a 5 percent markup on parts, according to the letter.
“There was not a single shop that didn’t regret accepting the new process in their business in 2003, nor a single shop that did not feel it opened the door to further insurer influence over their business,” Schulenburg wrote in his letter.
Schulenburg also wrote that many repair shops currently use electronic parts ordering directly through their management systems. He questioned that PartsTrader is more efficient, because the system that shops use now is often a one-click process. Switching to PartsTrader means dealing with unfamiliar vendors, which requires administrative research, reading reviews and comparing ratings to see if saving money at the cost of service or quality makes sense, Schulenburg said in the letter.
“With State Farm previously claiming that one day of rental on their claims costs them an approximate $43 million, it is hard to fathom why there would be support, let alone mandate, of a process that is so counterintuitive to ‘lean’ work flow, unless there were a more significant gain to be had elsewhere from the process,” Schulenburg wrote.
He said PartsTrader, with the intention of dispelling negative reactions and convincing repairers of the value of the service, still failed to outline a distinct benefit for repair facilities.
“The biggest question to be answered still remains,” Schulenburg wrote. “Is there any value to be had for repairers, and if there are, do the benefits far outweigh the burdens?”