Industry legend Mike Anderson is striving to get bodyshops and parts vendors to understand each other’s perspectives.
Mike Anderson of Collision Advice, a US-based training and consulting firm, has recently conducted more than a dozen meetings around that country, bringing shops together with the regional wholesale parts managers for a particular automaker.
“There has been one goal in my mind for these meetings: To better understand each other’s perspective, and to share information with one another that would give all of the participants a better understanding of how the parts processes work between the various stakeholders,” Anderson says.
He says the meetings helped him realise that the one voice often missing in industry gatherings are these dealership parts managers. So shops (and insurers) aren’t always aware of their perceptions and views – just as the parts vendors may not understand all the dynamics in the industry and how they can help.
Anderson says at each meeting, for example, he posed a scenario to shop representatives attending the meetings.
“Imagine you had a car you are repairing as part of a direct repair claim for Insurer ABC,” Anderson says he told the shops. “Your parts wholesale dealer doesn’t have the part but could get it from another dealership – they just can’t do so and give you the same discount they do on parts generally.”
At meeting after meeting, Anderson says, shop representatives generally say they’d almost always buy the part even if at a lower discount.
“‘I need it fast, regardless of money,’” Anderson quotes one shop owner.
“At the end of the day, cycle time often trumps discount. This can be true in many circumstances, but in some shop-insurer agreements, if a shop doesn’t meet cycle time and customer satisfaction metrics, the shop has to give the insurer a designated percentage rebate over a specific period of time. So a single long delay even for a single part could skew the shop’s average and cost them a significant amount of money.”
This is one reason why honest communication between shops and parts vendors is so important, he says, particularly about parts availability. Based on what a shop is told about parts availability, they are making decisions about which vehicles to bring in for repairs and when. They are making decisions about which vehicles to disassemble. They are making decisions about promised completion dates to customers.
“If a parts vendor gives them bad information and they make a decision on that, it could possibly cost them tens of thousands of dollars,” Anderson says.
Anderson says he also conveyed at the meetings another experience he heard about that highlights the need for good communication between shops and parts vendors.
“I was in a dealership bodyshop in Florida that had recently told a customer that a part for their vehicle was on backorder,” Anderson says.
“But that vehicle owner actually found the part at another dealership. He called the shop and said, ‘You told me this part was on backorder, but this other dealership says they have it.’
“So, the bodyshop called that other dealership, but that dealership wouldn’t sell them the part. That’s a hard conversation to have with a customer. They don’t understand why the shop can’t get that part from another dealership – often because they want to have that part on hand for their regular shop customers. But that hurts the OEM brand, and it makes the body shop look bad. So dealerships need to learn to play nice in the sandbox together. They need to help each other.
“If there’s added costs to a wholesale dealer getting that part from another dealer – the time and money involved in physically going to pick that part up, for example – talk to the shop customer about that, Anderson says he advises parts vendors.
“The shop may be willing to pay a delivery fee added to the invoice for that,” he says. “Again, it comes down to good communication.”
At each meeting, Anderson asked shops for what they are looking for in a best-in-class parts vendor. While “a good discount” always made that list, it was not the first expectation mentioned by shops at any of the meetings, he says.
“It was usually the fifth, sixth or seventh thing that made it to the list,” Anderson says. “Parts order accuracy and quality service were always ranked higher. The best discount in the world doesn’t matter, for example, if the part is wrong or it takes forever to get the part.”
Likewise, the wholesale parts managers at the meetings shared what sets some shops apart in terms of being among their best customers. They want customer that submit accurate and preferably complete parts orders. They want to work with shops that aren’t regularly hitting them up with last-minute orders. They want to work with shops with a low return percentage. Anderson says he advises the shops he consults with that they should be able have a return rate of less than four per cent, excluding any core charges.
“I believe any shop returning more than four per cent has an issue,” Anderson says. “They’re not doing complete disassembly, they’re pre-ordering parts on potential total losses, they’ve got some process problems, or they’re ordering just what they only think they need.”
Not surprisingly, he says, parts vendors want shop customers that pay their bills on time.
One of the key take-aways from the meetings that shops and insurers need to know, Anderson says, is that parts vendors are under tremendous pressure on their margins, with the increase of delivery driver wages, having to subscribe to multiple software electronic ordering platforms, etc.
“It’s important we all understand: If we do not listen to their voice, you may see dealerships getting out of the wholesale business if it no longer pencils out,” Anderson says.
“This is not good for any stakeholder in our industry. This should be a wake-up call to the industry.”