The next time you get rear-ended at a red light, give a thought to what goes into fixing your car. Each insurer has its own ideas about how much a particular repair should cost, and that's made even more complicated by the policy you may have on your car, and the age and condition of your car before the fender bender.
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That left repair shops and insurers looking to find the least expensive and most readily available part to fix your car. So, say your Porsche broke down 300 miles from Phoenix, or your 1993 Cadillac blew a gasket, it could take days or weeks for the repair shop to find the right part at the right price.
Until recently, most garages would have to pick up a telephone and call around to their usual suppliers - from junkyards to carmakers - to find the right part. That's all changed with the advent of an online system called APU Solutions that plugs right into the parts databases of scrapyards and dealerships across the country, creating an online marketplace.
"So instead of a mechanic having to use the phone and manually ID parts to a vehicle we connected supply and demand over the internet," said Scott Westbrook, APU's Vice-President of sales, and founder of the company.
And since insurers pay the repair shops to buy the parts, the shops are interested in finding the cheapest parts they can. But insurers may have strict rules about where and when used parts or new parts can be installed, and they usually want snappy results, especially when your policy includes a replacement rental car. The APU software embeds all those rules, so only the parts that insurers allow come up in a search.
APU's software is entirely Web-based, so repair shops and insurance adjusters can price the cost of a repair even at the site of an accident.
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The beauty of this system is that it lets parts owners maintain their own inventory systems, while APU merely builds a bridge into the systems via the Internet. "I electronically go into their inventory management system in real time and hand that information to a body shop and the appraiser who's writing the estimate,” says Westbrook. "That lets the insurer control costs even further, by finding out what parts are available and when they can be delivered, before a decision is made on how to make the repair."
For insurers, the system helps oversee the claims process and control costs. For repair shops, it makes them more efficient by helping them locate the right parts in their local market. And for auto parts suppliers, it helps increase sales by putting their inventory in front of shops and insurers and offering transparent pricing. For drivers it helps keep down premiums as well.
APU is used by more than 5,000 repair shops and about as many suppliers in almost every U.S. metropolitan area, and is used by seven of the top 10 U.S. auto insurers, on about 15 million claims a year, with an average of seven parts per claim.
One thing APU does not do is get involved in is financing the sales. Users pay a subscription fee, and keep their own business relationships in place for billing. The whole idea, says Westbrook, was to use the power of the internet to cut costs for everyone involved.
"We want our customers to be able to click a button and have that part show up in the shop," he said. "The big challenge is automating that process and getting humans out of the way, to increase the speed of getting parts where they need to be, and to increase profitability."