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Collision Repair Software Alleviates Critical Parts Selection Challenges

POSTED August 1, 2019

Insurance carriers and collision repair shops have long focused on parts selection because replacement parts are the single largest expense on the average estimate.  According to Mitchell, today’s average estimate is around $3,200 and 46% of that is parts. Without using collision repair software, the estimating labor itself accounts for 43% of the expense, with over half of that time accumulating from the estimating guide. The remaining portion of the estimate is charges for paint and materials and other miscellaneous items.

What’s in the estimate?

How are you measuring parts performance?

Let’s look at the current collision parts selection processes and performance measurements the industry uses today.  Collision repair software can help gauge parts selection performances that have been historically measured in two ways by insurers

  1. The dollar amount allocated to part type as a percentage of overall parts spend.
    (For example, 70% on OE parts and 30% on alternative part types.)
  2. The number of parts by part type as a percentage of overall number of parts.
    (For example, 35 parts are OE parts and 15 parts are alternative part types.)

Historically, insurance carriers have measured collision repair shops on the first metric.  This can be misleading.  If shops are measured and rewarded based on the percentage of dollars spent for alternative parts, then the use of higher-priced alternative parts can and will drive up the alternative spend percentage against overall parts spend. 

The second method shows the impact when alternative parts are selected instead of new OEM parts, as an overall money saving strategy.  The insurance carrier then needs to delve deeper into each estimate on an individual part basis to evaluate if the optimal combination of quality, part price and delivery of that part has been realized.

Let’s now focus on the parts selection mechanism.  Estimating platforms have their proprietary static part price ‘electric catalogs’ from their participating suppliers that may surface alternate parts at a fixed retail price.  Availability of the part is not assured, and the pricing is only as valid as the last time the electric catalog was updated. Some stand-alone vendors offer an integration with some basic collision repair software or estimating platforms to conduct searches and report back a fixed retail price. 

The weakness of these minimal collision repair software or estimating platform solutions is twofold: many of these systems are set up so that users can only search for the most obvious parts available and not search each part on the estimate.  Second, but most important, competitive tension on every part in the estimate does not exist.  When using an online marketplace like Amazon, Priceline or Ebay, many vendors supplying the item are available to choose from and the user determines the best combination of quality, delivery and price. However, the user must search each part individually.

Virtually everything we buy, from plane tickets to paper towels, can be purchased using online mechanisms to search and select the best combination of quality, price, availability and delivery.  In today’s collision parts market, only PartsTrader provides this type of purchasing experience through a robust collision repair software that assures the right part for the right price at the right time.  

Steve Messenger - AUTHOR
Group Chief Executive Officer, PartsTrader