Driving Insight - Supplier Relationships
Building relationships of trust for the future success of the repair industry The fleet industry continues to polarise as companies realise that future success is based on adopting a professional and consultative approach to business. As a vital link in the chain, repairers must also seize the opportunity to demonstrate their commitment to progression and professional development. This can only be achieved if all parties abandon feelings of mistrust and move towards working in partnership, sharing best practice and building relationships based on collaboration, compromise and commitment.
The repair industry is going through major change. It has long been under the scrutiny of government bodies, driven by a lack of trust from both consumers and commerce; questions surrounding quality and value for money have led to significant reputational damage. An increase in legislation, reduced job volumes due to greater vehicle reliability, the lack of skilled workers coming through the employment pipeline, and a shift to safer driving have all placed even more commercial pressure on the industry. Striving for professional recognition is now driving the UK repair market forward, and will be the inevitable catalyst for the transformation from a fragmented industry, consisting of small widely dispersed companies, to a more concentrated industry of larger companies that offer a complete range and greater quality of services to customers.
This is substantiated by the steady decline in bodyshops forecast by the Paint Research Association, from 10,000 in 1995 to 6,000 in 2000 and 5,000 by 2007. Furthermore, in 2005, a report by market analyst Trend Tracker highlighted that fleet service volume has declined by 27% since 1994 and that the value of the market has plummeted by 23%, despite the presence of more company cars on the road.
Legislation plays a significant role in defining the repair industry. The issue of roadside fatalities is rightly on the agenda of the Health and Safety Executive, and the European Union is playing its part in encouraging the reduction in emissions. However, at the recent IBIS 2006 conference (International Bodyshop Industry Symposium) its chairman, Chris Mann, made a controversial plea for greater co-operation between the industry, government and their environmental agencies, arguing that much of the legislation currently impacting on the repair industry is ill thought out and ineffective. It is clear that there needs to be a balance between legislation that develops the industry and the red tape that threatens to stifle progress.
Most significantly, and what lies at the heart of change in the industry, is the transformation of relationships between repairers, insurance companies and fleet management companies. Opinion formers like FMG Support believe that where a lack of trust and willingness has been the tradition, the future success of the industry will be determined by collaboration, compromise and commitment.
This changing relationship, and the demand for the repair industry to become more professional, is largely driven by the expectation being set within the fleet industry. As the two sectors work hand-in-hand, one cannot afford to be let down by the other. Fleet management companies have been forced to become more professional and business-focused as a result of increasing legislation and the changing view of fleet as a key contributor to business performance and profitability. They have appreciated that survival depends on the ability to communicate the importance of fleet in the boardroom as a fundamental part of the business performance improvement process. Forward-thinking companies have recognised that the challenge of professionalisation represents the best opportunity for growth and increased profitability. This same challenge exists within the repair industry; those that rise to it will realise significant benefits.
Repairers must look at the trends that are driving the fleet industry, understand how they fit in and what value they can provide. For example, one of the biggest issues in the industry, and one that is on the radar of most responsible organisations, is safety. Fleet management companies have identified the importance of fleet within the whole safety debate; using technology, they can identify where risks lie, based on driver profiles and the continual analysis of the daily actions of a fleet. Solutions can then be provided and tangible improvements measured by continually monitoring the progress of each fleet.
Similarly, bodyshops have a clear role to play in the safety debate. For example, structural repairability is a safety problem: the more complex the repair, the greater the likelihood that structurally damaged vehicles will not be repaired correctly, therefore posing significant risk once the vehicle is back on the road.
Rising to the challenge of the increase in vehicle complexity and the developments in technology are key industry issues. But it is also an opportunity, and an example of where progressive companies can stride ahead of the competition. New vehicle advancements present issues with training; repairers must have the appropriate skill sets and capabilities for fixing specific problems, be it high-tech airbags or new run-flat tyres. This can also present issues with getting vehicles back on the road, due to the time that it can take to obtain certain spare parts and the potential increase in repair time and costs. The solutions to these issues are manifested in repairers ensuring that they have the correct training, as well as fleet managers understanding the implications (time and potential cost) of repairing vehicles with advanced technology.
The issue of training has been identified as one of the biggest hurdles for the industry to overcome. The Institute of Motor Industry’s (IMI’s) Body Repair Automotive Technician Accreditation (ATA) scheme is due to be launched in January 2007 to coincide with a new national standard for vehicle repairers, set by agencies such as Thatcham and the British Standards Institution (BSI). Not only will this provide the opportunity to develop advanced skills and expertise to repair modern cars safely, it also sets a benchmark of what is acceptable. It provides assurance that repairers are trained to a high level of capability, which will go some way towards improving the industry’s reputation. These types of schemes should be embraced by the repair industry: this should be seen as an opportunity to self-regulate (rather than submitting to forced and potentially damaging legislated regulation) and to demonstrate that the industry is committed to raising and then maintaining the highest quality of standards.
Fleet management companies and insurers must also take on some responsibility for helping to improve standards in the repair industry. Relationships between these industries have often been strained. Mutual distrust has traditionally been at the heart of the rules of engagement. Repairers have felt like the ‘poor relation’, and beholden to the insurance companies. Some have suffered at the hands of certain fleet management companies, who have used repairer fees as working capital, delaying payments - or going bust, and leaving a trail of debt. Conversely, repairers’ quality and cost of service have often been called into question. Insurance companies fear that higher profits for repairers will mean significantly increased repair costs for them; fleet management companies survive on having a reputation for getting vehicles back on the road faster; shoddy workmanship and slow response times have a massive impact on their business and their ability to meet their promises to customers.
What is clear is that this dynamic has to change, as each party is dependent on the other; a model of confrontation is simply not sustainable. But this change cannot be achieved in isolation by the few; there must be a major sea-change with commitment from all parties.
Success is realised by basing this change on an appreciation of the tangible impact mutually beneficial relationships with repairers can have. The return on investment gained by working with repair companies that are committed to continual improvement and appropriate methods of working are significant. An increased level of transparency will go a long way towards alleviating feelings of mistrust, and an improved service has a positive impact on decreasing vehicle-off-road time and delivering associated bottom-line benefits. The return and pay-back that repairers should expect must be an investment in time and commitment from fleet management organisations; they must be provided with technological support, such as web-based training, and be provided with an insight into the IT systems that fleet management and insurance companies are now using (either from an understanding or compatibility perspective), such as invoicing, job tracking and measurement and evaluation of performance based on clear and defined KPIs. Centres of excellence must be created where best practice can be shared amongst all parties (fleet management and insurance companies must also be willing to learn), and where issues can be discussed, be it the impact of incoming legislation or rising operational costs. Most of all, repairers’ commitment to excellence and improvement should be rewarded with a regular volume of work.
Building relationships based on trust and commitment is the key to prosperity and future success for repair companies. The fleet industry is continuing to polarise. As those who adopt a more professional and business-focused approach outstrip companies that fail to evolve, quality repairers become an ever-more vital link in the chain. It is inevitable that some will not be either willing or capable to meet the demands of increased professionalism. However, with the necessary support from fleet management networks, manufacturers and industry bodies, repairers that are willing to demonstrate a commitment to continual improvement and working in partnership will reap the benefits; both profitably and by adding their weight to the profile and professionalism of fleet.
