Lower profits coupled with increasing demands for electronic data from insurance partners are pushing collision repair shops toward industry-specific shop management software. This kind of software monitors and manages every corner of the business to provide the data needed to make proactive, intelligent decisions.
"We believe the estimating system is the backbone of the shop, but a management system is the life blood," states Brian Kelleher, of Mitchell International. "Management is the centre of the universe at the shop level right now."
Frank Terlep, president of Summit Software Solutions, reports that his firm is experiencing growth in both its top-end products for larger collision repair businesses, and in its entry-level products for those new to management software.
"At the top end, there's a phenomenon caused by many of the large multi-store repair businesses which invested in management software five to ten years ago when they were single-store businesses. Now they need the multi-store functionality. So we'll see a bubble soon in that market. As well, a lot of smaller stores are realizing they need something to help manage their business."
Terlep says this is especially true in Canada, where the market is network-driven, and the networks can offer measurable results (in the form of KPIs) to insurers.
Reinforcing the multi-store phenomenon, John Kotsopoulos of Audatex reported a few months ago that his company's data reporting tool, Shop Reports, was generating a tremendous amount of interest in the market. "It's relevant to anyone who has any amount of DRP relationships."
Not just for the big players
A number of Canadian software suppliers are taking groundbreaking steps to make entry-level shop management tools available to smaller businesses. Autoprise is planning to launch a free, web-based shop management program in August. Fleetchek.com is expanding its web-based product line to include claims management functions, a vehicle status monitoring tool that bodyshops can offer to clients, and on-line purchasing from selected PBE distributors. (More details on both of these products in the sidebar "Entry-level tools".)
Proactively manage your DRPs, or pay the price
Speaking about trends in direct repair programs in an on-line presentation for the U.S. magazine ABRN recently, Tony Passwater of the consulting firm AEII warned that punitive actions are on the horizon. He foresees insurers requesting guaranteed delivery dates, punishable by penalties, and repairers being obliged to absorb the costs associated with their administrative errors. Regarding KPIs, Passwater envisions that the expectation of productivity (as measured by technician hours per day) will be refined and raised. Alternate part usage will be scrutinized, and labor for repairs vs. labor for replacement will become a more standardized measurement.
Reducing the number of supplements and increasing estimate accuracy are also goals of the insurance industry, Passwater says. The number of claims which are "out of profile", meaning they don't conform to the insurer's procedures or its DRP specifications, "is one of the KPIs that will quickly become looked at very often."
Put simply, its time to get your paperwork in order or pay the price.
"Over the next five to ten years, those that don't use [reporting and auditing] tools will find it difficult to compete," says Passwater. Reporting and auditing tools include Mitchell's Estimate Review and ShopMetric Basic, Audatex's Shop Reports and Estimate Check, DSS' EMSReview, and Summit Software Solutions' Estimate Profit System.
Larry Jefferies, executive vice- president, CARSTAR Automotive Canada, is also a believer in reporting tools that make profitability data and KPIs available on a single-store and multi-store basis.
"If you wait for the insurance carrier to provide your performance metrics, the data will be incomplete, and trailing behind reality."
Jefferies says CARSTAR considered building its own reporting tool, but decided it wasn't a sustainable or affordable idea.
Currently, CARSTAR is using Audatex's Shop Reports tool, and finding it serves as both a sales tool and a map for self-improvement. "Information is power. For the first time repair facilities have access to the same data that insurers have used for years to manage the industry," says Jefferies.
"We're now more confident and comfortable with our ability to manage our relationship with our insurance providers. As a sales tool, it lets us prove that we outperform. It also gives us leverage when buying aftermarket and recycled parts, because we have the data to back us up."
At the store level, says Jefferies, CARSTAR can monitor repair vs. replace percentages, and alternate parts usage. In addition, Audatex Shop Reports provides benchmark data for the entire industry, so CARSTAR can see how it is doing relative to others outside of its network.
"If you are focused on building your business, I don't know how you can do that without knowing your place in the queue," says Jefferies.
Audatex's Pinna Gallant suggests a reporting tool should:
* present trends over time, with a minimum trend period of one year;
* permit reporting per insurance partner;
* allow both an industry comparison and comparison to only the local market;
* be easy to use, with automatic updates and on-line documentation.
Multi-shop tools come of age
The newest iteration of Mitchell's long-standing management product, ABS, is ABS Enterprise, a web-based version for multi-shop companies. An owner can use ABS Enterprise to manage all shops under his umbrella.
"Sales of management systems are up, and ABS Enterprise is taking off," says Kelleher. "It's what the market was looking for in a multi-shop and large shop management tool."
Mitchell is also introducing a product that calculates metrics (measures performance) based on information from the shop's estimating system. This allows businesses to benchmark themselves with other shops in their region, or across North America. One benefit of deriving metrics from the estimates is that the metrics are then coming from the same source insurers use to calculate their metrics.
On the estimating side, version 6.0 of Mitchell's Ultramate Premier Suite estimating system incorporates on-line data delivery. In this configuration, the estimating system can use web-based technology to update parts pricing daily, while the estimating software and the estimate data are retained locally at the shop. With daily pricing updates, "we are trying to reduce supplements to have more accurate estimates," explains Kelleher.
Quality control built in
With the rise of the lean manufacturing movement, Summit adapted its management system to incorporate process control functions. "When lean became a big trend in the U.S., we added many functions that address throughput and lean thinking. Ours is unlike most management systems," says Terlep of Summit Software Solutions. "Most other applications are geared to data collection."
"Our software drives the way people do business. We've built an in-process quality control system. I think that's going to be on of the key requirements for insurers, the ability to generate in-process quality control."
By in-process quality control, Terlep means built-in quality checks that must be performed as the vehicle moves through the repair process, as opposed to a single quality-control check performed before the vehicle is released.
"In our system, someone has to check off various items as the vehicle moves from one stage to another," he explains.
While estimating software and procedures are strongly influenced by the insurance industry, shop management tools are not. What a shop chooses to do within its own four walls to reduce costs or boost efficiency is entirely in the owner's control. And the data from a shop management system can give an invaluable overview and astonishing detail to guide policies and procedures.
"As it gets tougher and tougher to make a profit, the shop focus has changed to more of a management focus," says Kelleher.
Entry-Level Tools Make Shop Management Software Accessible to All
"If the barriers to using shop management software are cost and difficulty, then if we lower both of those, would more shops participate?" That's the fundamental question which led Autoprise to launch a free shop management software for the Canadian market. "When we talk to shop owners about management software, they tend to cringe," admits Cameron Kerr, strategic accounts manager for Autoprise.
"We want to give collision repairers the freedom to know their business data, to track KPIs. For a shop that is currently guessing at cycle time, severity, parts utilization, and business volume per insurance partner, this lets them look into their business in a time-sensitive way."
Autoprise's Reveal PE shop management software will be available on-line, at no cost, beginning August 1.
The software uses data gathered from estimates for its metrics, so the data should be consistent with insurer's data. As well, management software that incorporates estimates minimizes re-keying of information.
"The more people we can get on some type of management system, the better it will be for industry benchmarking," says Kerr. "Reveal PE breaks downs the previous barriers to the world of electronic data capture."
Reveal PE is similar to Autoprise's Reveal SE product.
Collision repair portal offers multiple products
From its solid base in business-to-business fleet management products for national car rental companies, Fleetchek.com is undergoing a methodical shift to become a bilingual collision repair portal with a suite of economical software tools to assist with shop management.
One element of the new product offering is a tool that lets shops easily track vehicle status and make that information available in a self-serve manner to both consumers and business partners. "Our research shows that 70% of inbound call to a collision repair facility concern vehicle status. We reduce that number of calls by 50%," explains Andrew Lindsay, vice-president of marketing for Fleetchek.
Updating the vehicle status tool requires about 20 to 30 minutes a day, says Lindsay. A junior person on staff can be trained to take digital photos, upload photos and update the system. Then, anyone with the vehicle tracking number can view the vehicle's status. "For the consumer, we hope to reduce their stress and de-mystify how things unfold during the repair process."
Fleetchek's web-based software also has claims management functions, and facilitates parts ordering.
Using the e-commerce capabilities of Fleetchek and ordering from suppliers who sell through the portal will help shops to better manage their purchasing costs, says Lindsay. "Users will be able to easily track their purchasing volumes and trends, and request volume discounts based on their usage. They can also plan larger orders and request drop shipping."
Fleetchek also offers bodyshops an easy package to launch an Internet presence. Any collision repair facility can be listed on Fleetchek's national database of shops at no cost. For a minimal fee, a shop can have a basic web-site and email addresses within the Fleetchek portal. "This is an affordable way for a not-so-tech-savvy business to get on-line," Lindsay comments.
Carrus Technologies also offers direct ordering capability for several suppliers, including Uni-Select and Delco, from its shop management software. The company has upgraded several features of the software: search parameters have been enhanced, the system can now export reports to Excel and new email features improve communication functions.
What Next for Audatex?
Now under the ownership of Solera, the former ADP Claims Services Group has become Audatex, and refined its role as a provider of systems to streamline the workflow for physical and material damage claims.
"The most important thing we can do for our bodyshop clients is enhance straight-through processing, so we can remove friction costs," comments Tony Aquila, president of Audatex. He estimates that in the collision repair industry, 38% of every dollar is lost to inefficiency. "At the most simple level, we're focused on minimizing that 38% inefficiency. We are going to drive the complexity out of our business."
"One of our visions is to open up transparencies. We encourage insurance carriers to share transparencies and performance with shops. If the information transparency was there, you could look at a trend in performance, rather than just one job."
Aquila also says Audatex will be a centrally managed company, with local control. "One of the things that we are very focused on is getting 70% to 80% of what we do to be global. We want to be centrally administered for the product road map, with local amendments. For example, there are some solutions in Europe that I think North Americans would love to get their hands on."