Monday, 11 June 2012 14:02

ASA Issues Revised View on State Farm's PartsTrader

The Automotive Service Association (ASA) issued another press release about State Farm's plan to mandate use of the PartsTrader parts bidding system, sharing the findings of ASA's research into the topic.

ASA reports that there were 17 Select Service shops in Birmingham, AL, that removed themselves from the program last month.

ASA also reports that shops in the 4-city pilot are experiencing an estimated 30 minutes a day of increased administrative costs. "PartsTrader states this is true with any new system, but that over time, it will be more efficient and save time," ASA states.

"PartsTrader intends to contract an independent study to validate this." ASA also said repairers are particularly concerned that the system allows State Farm to see the discounted manufacturers' standard retail price being offered by dealerships using the system. "State Farm was made aware of this during the pilot process and reports it is seeking ways to address this," ASA states.

The Automotive Service Association’s (ASA) Collision Division Operations Committee also conducted an interview with Rob Cooper, CEO of PartsTrader, as part of its fact-gathering research on State Farm Insurance’s new electronic parts bidding and ordering pilot program through PartsTrader.

The ASA said its interview questions were focused on addressing the supplier selection, order process and data privacy through the program.

During the interview, Cooper highlighted various improvements that will be made to the PartsTrader platform in the near future, including technology integration with various segments of the industry, automatic estimate updates, a two-way rating system for repairers and parts suppliers to rate one another, parts returns tracking, and proactive updates regarding changes to privacy policies. He also addressed the development of a fee structure for the program that will apply to participating suppliers.

Cooper stated the following (in part):

“PartsTrader LLC is a privately funded company with a private group of shareholders who are private-equity backed. No one has an interest in the supply chain of parts or insurance companies. PartsTrader LLC’s goal is to deliver a unique value proposition to the repair industry to increase the efficiency of the market with supply chain improvements and to make sure that it is a ‘win-win’ for both suppliers and repairers.

“PartsTrader LLC has been working with State Farm to build an application to support the State Farm parts initiative. During the process, consultation has occurred—and continues to occur—with various segments of the industry, including repairers, suppliers, dealers and recyclers.

“Previously, PartsTrader LLC developed a product in New Zealand for parts location, which is different from the ordering application being piloted in the United States. The New Zealand system is for parts location and has a cost element visible to the insurer. This is not the case in the United States. State Farm is not able to access the buy price or cost price.

“Typically 85 percent to 90 percent of the supplier choices made by repairers have chosen to participate by registering and agreeing to PartsTrader’s terms and conditions in the first three [test] markets. The exception is the Birmingham market where there has been less adoption based on circumstance.

“PartsTrader LLC is currently in process of building ability for repairers to ‘rate’ the suppliers based on suppliers professionalism, accuracy of the information provided by the supplier, delivery time, quality of the part, good faith negotiations and part returns. This is also restated on the PartsTrader LLC website at partstrader.us.com. PartsTrader LLC also has the ability for the suppliers to rate the buyers (shops).

“[Fee structure] analysis is currently underway and whatever the fee structure, it has to work for the industry. The fee structure will apply to the suppliers, always free to the repairers.

“I wanted to reiterate that it is our intent and desire to ensure that PartsTrader delivers positive outcomes to the collision repair industry. To that end we are very open to feedback, and would like to work with ASA and other stakeholders in a positive way so that we may learn and address concerns as they are raised.”

Autobody News will be publishing much more on this subject in our July issue.