E-commerce systems will soon change how shops conduct business and handle repair process transactions. While the basic collision repair process will not be transformed dramatically by the Internet, moving these transactions to the Web has the promise of reducing time and cost.

Customer Relationships

The introduction of Internet-enabled claims management systems-based upon transaction standards developed by the Collision Industry Electronic Commerce Association (CIECA) eliminates the burden of using a specific system to communicate.

Many repairers hope that these systems will limit the number of in-house estimating systems they must use. This would translate into major cost savings for repairers and insurers, who would no longer need to license and train their staffs to support multiple estimating systems.

Shops and insurers will find they can select estimating systems more upon the basis of database accuracy, estimating system features, and cost and support instead of the ability to communicate electronically.

Improved Shop Communication

Beyond insurer relationships, the Internet will aid shops in their communications with individual vehicle owners. Numerous service providers enable shops to market their facility directly to customers via a shop Web page. In addition, these Web pages are often tied to insurers' Internet-based claims reporting systems, giving the consumer the opportunity to learn about repairers when they report a loss to their insurance companies.

But this Web-page marketing benefit is small compared to the benefits of speedier communication offered by Web-enabled appointment scheduling and repair status updates for the vehicle owner. Though this is not critical today, consumers will come to expect the 24/7 service (24 hours 7 days a week) and information they receive from other businesses via the Web as their use and acceptance of the Internet grows. This demand will make it necessary for shops to Web-enable much of the communication that currently takes place between shops and their customers.

Insurer's hope to speed the repair process through online claims reporting systems. A consumer who has an accident on the way home from work at 5 p.m. will soon be able to report the claim online that very night via the insurer's Internet claims management system (ICMS). Many insurers will provide their customers with the ability to search a list of preferred repairers in the customer's area using criteria such as their customer satisfaction indexing (CSI) rankings. If they decide to use one of these facilities, they will then schedule an appointment online for the estimate or repairs.

A few insurers have already implemented online claims reporting. During the next few years, all major insurers will offer these systems, which they will use to increase the percentage of their claims being handled by approved facilities. As consumers begin reporting claims online, the potential for non-approved facilities to get a shot at the jobs will be reduced.

Repair facility operators will need internal management systems that are fully Web-enabled. Appointment scheduling systems coupled with the ability to report the shop's available repair capacity and the latest results of their customer satisfaction research via the Web will place powerful marketing tools at repairers' disposal.

Beyond direct repair, the need for systems that provide this function for the industry at large is crucial for the ongoing success of independent repairers. Insurers will still attempt to steer work toward those facilities they believe provide high-quality work and high customer satisfaction while exercising cost containment practices.

These systems can also provide a level of electronic audit capability that will enable repairers and insurers to communicate their differences more quickly and with more specifics regarding repairers' procedures as compared to the insurer's payment policies.

While there is the promise of improved shop/insurer relationships through e-commerce, there are also potential problems. On the downside, the growth of electronic communication can eliminate the benefits shops receive from maintaining good personal relations with those involved in the claims process.

For all repairers, the possibility of reduced personal contact with insurance company personnel may mean that problems, when they arise, will not be solved as efficiently. But the fact remains that the Internet will offer opportunities and challenges for maintaining and improving customer relationships.

Supplier Relationships

The impact of the Internet on a repair facility's relationship with its suppliers may amount to greater transaction savings for individual repair facilities. Ordering parts and materials online, coupled with electronic bill presentment and payment may drastically reduce the transaction cost for shops and their suppliers.

Today, the use of fax machines is ubiquitous in collision repair facilities' communications with their suppliers. Internet ordering systems, tied to repairers' internal management systems, will further reduce the time and cost to conduct transactions. Repairers will benefit from parts and materials systems that allow them to specify the items they need, check availability, schedule delivery dates and times, receive billing statements, and pay the transactions.

Parts ordering, in particular, has seen a tremendous amount of activity from hopeful Internet providers. Internet-enabling the parts transaction with a bridge to the shop's management system will provide greater value to the repair facility, reducing the need to print and fax multiple orders to the different vendors on each job.

With an Internet-enabled ordering system that ties to the shop's management system, repairers will be able to pull their parts data directly from their estimates and send their orders automatically to their preferred vendors. For paint and materials transactions, the ability to manage inventories and communicate electronically will also speed order fulfilment and eliminate many problems associated with out-of-stock items.

The greatest benefit from Internet-enabling the shop supplier relationship comes from the area of billing transactions. When suppliers are ready to deliver their products to the repair facility, an invoice can be transmitted to the shop. The repairer can then print this invoice out to check the accuracy of the delivery when it arrives. Or better yet, the invoice can be transmitted to a handheld wireless device. The completed delivery can then be marked for payment in the shop's accounting system. Finally, electronic statements and funds transfer will complete the procurement process with little manual labour in the front office.

An additional benefit to repairers of Internet-enabled ordering systems will be the increase in transparency when comparing different suppliers of the same products. Shops will be able to use the data generated by these electronic transactions to compare the price and service levels of suppliers.

Much like repair facilities' use of CSI, suppliers may start marketing their products not just on price alone but by the quantifiable impact of their service. Marketing based upon price, speed and accuracy will become the norm in the Internet-enabled supplier industry.

What's a Shop to Do?

These benefits serve chiefly as a guide for the potential impact Internet-enabled transactions hold for repairers, their customers and their suppliers. During the next few years, many new Internet-enabled systems and processes will succeed and fail.

Repairers, faced with a sales pitch for the latest Internet-enabled product or service, should judge the product or service on the real benefits they will see from the technology today, while weighing the future impact on their businesses. Customer, insurer and supplier relationships are based upon many factors beyond just the transaction cost and speed.

Repairers must balance the cost of any new technology with the benefit to their internal cost of doing business, the benefit of the new system upon the productivity of their shop and, finally, the overall value the shop provides to its customers.

The increased competition and wider variety of e-commerce opportunities will improve the operations and profitability of those repairers that implement these technologies in their operations.