Ask Bill Edleman if his shop, Big E Auto Rebuild in Seattle, has found effective ways to reduce the number of supplements
it must process, and Edleman does something fairly unusual: He credits an insurer for pushing a positive change in his business.
"We have to give Farmers Insurance some credit there, for wanting us to tear these vehicles down up-front to prepare the estimate,"
says Edleman, whose 17-employee-shop participates in the Farmer's direct repair program. "Sometimes that's not always convenient.
But they have convinced me over time that it's absolutely the most efficient way to do it. Supple-ments are a giant waste
of everyone's time."
Edleman is hardly alone in his assessment about supplements. A 2007 study by Mitchell International found that supplements,
regardless of what necessitates them, can add an average of 1.5 days to the cycle time for a repair.
The Collision Industry Conference (CIC) Business Management Committee developed this chart comparing the traditional process
– that generally requires supplements – to what it calls a "complete repair process" that generally makes supplements unnecessary.
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Although supplements are always likely to be part of the process on at least some jobs, some shops and insurers are working
to find ways to reduce the frequency of supplements. Getting more shops and insurers on board, they say, will require a widespread
understanding of the costs for both sides that processing supplements generates and more awareness of how the need for supplements
can be reduced.
Calculating the costs
Starting last year, the Collision Industry Conference (CIC) Business Management Committee set its sights on documenting not
only the causes and costs of supplements, but also to create a model for reducing the need for them.
Mike Quinn, CEO of Arizona-based 911 Collision Centers, which this year opened its eighth location, co-chairs the CIC committee
and said that no one in the industry will likely be surprised at the committee's list of the primary causes for supplements:
- Vehicle design and complexity play a role as the speed of change in technology increases.
- Both insurers and repairers face a shortage of qualified staff.
- Mistrust between insurers, repairers and consumers has led to systems and practices that practically necessitate supplements.
- The estimating databases frequently have outdated parts prices or incorrect parts numbers.
- Insurers ask shops to write visible damage only.
- Processes are not standardized from shop to shop or insurer to insurer.
But perhaps the biggest and most avoidable cause of supplements, Quinn said, is that initial or preliminary estimates – whether
written by shop or insurer – are not a complete repair plan.
"I think 'preliminary estimates' should be struck from our industry some day," Quinn says.
Though the industry might agree on the causes of supplements, most might be surprised at the actual costs to produce and process
one. That may be hard to pin down precisely, but the committee's best estimate is $737.50 per repair.
"We're not proposing that every supplement costs $737.50," Quinn is careful to point out as he shares a detailed breakdown
of those costs. "But we did a lot of research. A lot of insurers gave us input; repairers and vendors gave us input. What
I am proposing is that there is a lot of waste."
The $737 estimated price tag includes about $239 in hard costs for the shop: time for the estimator to review the vehicle
at the technician's stall, prepare the supplement and contact the insurer; time to make a subsequent parts order and reconcile
the second invoice; time for additional communication with the customer; and lost production time for the technician.
Posted 2008-10-09 14:46:56.0
