Insurance company State Farm will begin testing an enhanced automotive parts process later this year in an effort to improve the parts ordering process for collision repair shops. The tests will focus on electronic parts procurement systems.
State Farm will test repairers' use of electronic parts-ordering systems that provide access to vehicle information and help increase order accuracy and efficiency. The company believes this approach will improve the repair and estimating process.
"We believe the nature of the electronic ordering process will create a more accurate initial order and, to the extent that helps create fewer returns, that it will improve service," said State Farm spokesperson Dick Luedke. "We think the electronic ordering process will also allow for an enhancement of communication efficiency. Repair facilities can provide additional notes, delivery dates and status updates on the ordering process. We think the difference between this and what [the shops] are currently doing will provide us with a consistent, streamlined process for parts orders."
State Farm will begin a limited market test of the process in California and Indiana during the fourth quarter of 2007. The process will involve working with parts manufacturers and suppliers in ways that, according to a company press release, are "designed to enhance service to customers without impacting repairer's parts profits."
Parts procurement can be a complex and costly process for many repair shops. While electronic parts ordering can conceivably improve order accuracy and reduce supplements, adoption of these systems has been relatively low. In part, this is because many repairers don't trust the technology, and because of issues with incorrect information held in parts databases.
"While we recognize that this will represent a change for the repair industry, it is important to continuously look for ways to create efficiency in the process and provide value for our policyholders and shared customers," said State Farm Claim Consultant George Avery. "As this process developed, we asked for and considered input from members of the collision repair industry. We believe Select Service repairers will have an enhanced ability to obtain quality parts that allows them to provide customers with the beset combination of quality, efficiency and competitive price. And as always, our customers are free to choose which repairer will fix their vehicle."
According to Luedke, State Farm anticipates that all of the repair facilities participating in State Farm's Select Service direct repair program (DRP) in the two test markets (Indianapolis and San Diego) will take part in the project.
State Farm declined to name any specific software vendors participating in the tests.
Asked if State Farm would be investigating other shop methodologies for improving the parts ordering process—i.e., pre-estimate tear downs— Luedke responded that the current tests would focus on electronic parts ordering.
"To the extent an electronic parts ordering process can provide a more accurate order, we believe this will reduce supplements, and will reduce parts returns," he said. "If repair facilities are currently using other techniques to help create more accuracy, we don't want to disrupt that. "
In the press release announcing the tests, State Farm emphasized that it will maintain its current policy of not specifying aftermarket crash parts during the test. "However, State Farm continues to believe that policyholders benefit when repairers have access to all sources of quality collision repair parts," the release said.
