Electronic Parts Locating

Like a lot of people, I know enough about the current computer technologies to break things and call someone who knows what they are doing to fix it for me. That is a major handicap to try to overcome in today’s world where everyone is striving to go electronic for locating parts.

I have spent most of the last 6 weeks talking to and working on various programs and our positions on the electronic data providers. During this time, I found several things to be generally accepted facts. The first is that insurance companies are looking for ways to search for more parts. The thought process is that the more parts that are searched, the better the chances of finding the parts. If they find more parts, they can buy more used parts to install on the vehicle. It also allows them to promote a competitive environment that will help keep prices in line and provide financial savings to the insurer while helping maintain reasonable premiums. The key word in that statement is installed, but I will get to that later.

The second fact is that all of the estimating software companies and several other companies are working feverishly to provide electronic parts locating methods that are easily incorporated into the estimate while giving the opportunity to measure the availability of used parts in comparison to the number that are being installed on the vehicle. There’s that installed word again.

The third fact is that this is a very difficult issue for the used part providers. On one side, you would think that having our inventory displayed to as many people as possible would increase the chances of selling parts. The recycler could gain greater exposure to potential customers that they would otherwise not necessarily have the opportunity to sell to. It also stands to reason that the easier it is to put used parts on the estimate, the more they will be used.

The flip side of that issue revolves around the integrity of the data and of the other recyclers. Everyone who is associated with the repair process has been bitten by these two issues. How many of us have dealt with a part being placed on the estimate and then not be available or be damaged beyond the point of use? While this is not a general practice with the progressive recyclers, it still occurs on a regular basis with a large percentage of my industry piers.

It expands further into a pricing nightmare. Recyclers that have a parts grading system and only allow the premium condition parts to be used in the estimating process tend to be perceived as the high price leaders. In reality, the other recyclers that are allowing sub standard merchandise that the majority of the repair facilities would not consider installing to be placed on the estimate at discounted prices do nothing but hinder the repair process. In many cases, those parts are accurately priced for what they are but they are not close to the price of an insurance quality part. That creates a problem for the reputable recycler who provides and services the progressive repair facility who gets asked to provide our quality part for the other guys junk part price. This in essence becomes a downward spiraling price auction.
 

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While the financial savings to the insurance industry are desirable, they could be erased by delayed cycle time and an increase in the supplement rate. The repair facility is subject to those same two negatives that are magnified by the fact that these are some of the key performance indicators that they are being judged on. The quality recyclers will be damaged by the black eye the industry will receive from the bad apples associated with it. This is similar to what insurance companies and repair facilities battle. A small collection of individuals tend to spoil the entire industry by their lack of moral and reasonable business practices.

In any given market, there appears to be less than 6 used part vendors that are capable of consistently providing parts that the repair facility will install on the vehicle. Everyone can list the best and worst performers in our markets. The repair facility feels better when a reputable recycler is listed on the estimate and the repair process tends to go smoother.

While this is a difficult issue, everyone must keep in mind that getting the vehicle repaired and back to the customer takes more than putting information on an estimate. It takes parts and people to complete the process. Without the parts, the process is hindered and that is what the downside of electronic parts locating.

Perhaps a grading system will be installed to relay good or bad experiences to help one another avoid the problems of a non quality vendor. The people involved may discover that a large percentage of parts are difficult to move large distances without a specific infrastructure to accomplish this.

While I am certain that this is the wave of the future, I am also certain that the issues of timeliness of the data and accountability on the recycler must be addressed before this method of parts locating leads to an increase in the number of used parts being installed is increased.