INDUSTRY CASE STUDY
By Jeff Schroder, CEO, Car-Part.com
In 2017 and 2018, there has been a lot of activity in the Collision Repair Industry regarding open interfaces to estimating systems. Mitchell committed to providing open interfaces to its estimating system when it announced its Program Freedom. CCC introduced its Secure Share network which seeks to improve data security by controlling the interfaces with its estimating platform. AudaExplore announced that it is going to support CIECA (Collision Industry Electronic Commerce Association) BMS interfaces in 2018. BMS is CIECA’s newer interface standard, designed to replace the popular CIECA EMS standard. When measured by dollar amount, recycled parts represent the third largest part type used in the collision industry: OEM (66%), aftermarket (18%), and recycled (10%). Being the smaller parts provider in the marketplace makes it harder to get interfaces that allow recycled parts marketplaces to integrate with collision estimating systems. The estimating system is the place where the insurance company and the repairer interact in the process of repairing a vehicle. Openly competitive integrated parts marketplaces provide collision buyers choices regarding where they source and procure their parts. This is especially important when selling recycled parts into the collision repair supply chain, because recyclers face many barriers when pursuing collision industry sales, and marketplaces optimized for the use of recycled parts can have a profound impact on recycled parts sales.
Cycle time is very important in the collision industry because car owners are happier when their car is fixed quickly. Insurance companies spend a lot of money advertising for new customers and don’t want to lose existing customers due to a slow repair. As more advertising dollars are poured into the insurance industry, this factor becomes more critical. Barriers to the use of recycled parts in the collision industry have included delivery times, quality, availability, and the fact that the collision industry is centered around component parts (whereas the recycling industry tends to be organized around part assemblies, which are more cost effective to recycle and represent a better value than the individual components).
To increase the use of recycled parts in the collision repair industry, it should be easier to source, procure, and use recycled parts than OEM or aftermarket parts.
The Car-Part Model
The 2017 launch of Integrated Car Part Pro (iPro) was designed to go a long way towards meeting that goal. iPro is integrated into all three estimating systems to allow a one-click launch of the Car Part Pro marketplace. iPro’s Mitchell integration is a two-way bridge allowing the replacement of OEM and aftermarket parts with recycled parts directly from within the iPro marketplace. iPro simplifies the process of sourcing recycled parts within the collision repair industry by defaulting the part search to assemblies instead of components. It also allows a one-click search of components when assemblies are not satisfactory for use on the estimate.
This technology is powered by over 5 million component-to-assembly mappings performed by Car-Part in the last 5 years. iPro solves the cycle time, availability, and quality problems with its supply chain technology (which provides real-time delivery information with all parts from recyclers who are configured, including the parts recyclers sell from their supply chain). The result is a 600% increase in the availability of recycled parts from Car-Part certified recyclers. This allows insurers and repairers to filter part choices using ARA “A Grade” parts, Car-Part Certified recyclers, and delivery times. Most iPro buyers use these filters, and 48% of the iPro parts added to estimates are supply chain (or brokered) parts.
iPro 2017 has been deployed to over 10,000 repairers, insurers, and independent appraisers (IAs).
We looked at iPro users’ part usage before using the iPro marketplace and after using the iPro marketplace during the 4th quarter of 2017. This graph (above) shows the percentage of various part types sourced on the estimate prior to using iPro (blue bars), and after sourcing with iPro (green bars).
Recycled parts utilization increased 72% (6.8 points), which shows the impact of our assembly-optimized workflow, large quality part availability, and easy recycled part sourcing. The aftermarket parts increase of a half of a point shows the power of the iPro distribution network (and the supply chain impact). Many auto recyclers are brokering aftermarket parts and have optimized their parts listings for iPro. The key to optimized iPro listings are real time delivery and part verification, Car-Part Recycler Certification, part images, Car-Part Pro Brokering, ARA part grading/damage codes, and accurate descriptions.
It is also important that a sales team understands how to take electronic messaging (IM) and phone requests for the parts you are brokering on iPro. Car-Part has had complaints from iPro buyers that recyclers don’t understand their brokered part listings. This reduces the credibility of brokered parts and the entire industry. Considering that 48% of the parts added to the estimates from iPro are brokered parts, it’s critical that your salespeople can respond properly to requests for parts you have brokered on iPro.
Car-Part is continuing to simplify the process of sourcing recycled parts in the collision industry and has donated technology to CIECA to upgrade the BMS interface standard (CIECA 2018 BMS Release 1), allowing a more robust bi-directional estimating system interface that further simplifies adding recycled parts back into the estimating system. It is important that collision estimating systems adopt this new BMS release to further increase the use of recycled parts.
CIECA is the primary source of collision industry data communication standards. Their vision is for the collision industry to be eCommerce-enabled, allowing all industry segments to communicate electronically, independent of platform or software used. Car-Part.com is the 2017 CIECA Electronic Commerce Company of the year, and a member of the CIECA executive team. ARA and CIECA also work closely together, incorporating ARA part grading standards into the CIECA BMS. ARA regularly attends CIECA board meetings and CIECA regularly attends ARA conventions. CIECA, collision industry standards, and open marketplaces like iPro have an important role in recycled part sales in the collision industry.
Jeff Schroder, CEO, Car-Part.com presented this information as part of his session at the 74th Annual ARA Convention & Expo.