by Mark Johnson
NACE Online Daily News Contributor
"The trend toward using aftermarket parts in on the increase. What's causing that to occur," asks Keith Manich at the beginning of Friday's seminar "The Use of Non-OEM Parts."
The answer, he says is the increase in totals. Insurers want to cut the number of totals and one of the ways to do that is to cut the cost of repairs.
The prices of original equipment manufacturer (OEM) parts is one of the things making aftermarket parts more viable, says Manich, vice president of collision industry development at Entela. But the quality of aftermarket parts is still an issue.
One reason the quality of aftermarket parts is often lower than OEM parts is because parts distributors demand low prices from aftermarket manufacturers, which keeps quality low. You get what you pay for.
"What commonly occurs - and this happens in the OEM sector as well - is that not updating tooling, for example, happens often. The OEMs and the CAPA certified parts meet a lot of qualifications, but in non-certified parts it's anything goes," says Manich.
Manich also explored the issue of the extra time that is often involved in making an aftermarket part fit. "If you examine the part and actually do a fit to see if the part is going to work, then you are losing money on that part," says Manich. "Shops really want insurers to pay for that extra time. If they are going to ask us to be somebody's part tester we deserve some kind of benefit."
Manich explained some of the ways to deal with bad parts, whether they are aftermarket or OEM, and he also took some time to explain how the Europeans are dealing with the same issue, "In the European sector the distributor is the one who actually certifies the part," says Manich. "It's a conflict of interest because it's not an independent third party saying if the part is good or bad, itās the distributor who is trying to sell the part."
The solution the Europeans are seeking is to do something similar to what CAPA is doing in the United States, Manich says.
"Everybody is looking for the best price, but that doesnāt mean you're going to get quality. I think the repair facilities can help themselves with a service level agreement. If I'm a shop and I have a service agreement with XYZ distributor for aftermarket parts, I tell XYZ that I want all my parts to be of a certain quality and if they don't meet the standards we agreed that there will be penalties they will have to pay," says Manich, explaining one method he suggests shops can use to ensure they are getting parts they can use.
The agreement details the compensation that will be required for substandard parts and that, says Manich, "Interlocks with the service level agreement the distributor has with the parts manufacturer." That "interlocking" means that a distributor is compensated for substandard parts by the manufacturer, just as the shop is compensated by the distributor.
"The good thing about these service level agreements is that a shop can develop them and implement them at any time with any distributor," says Manich.
One example Manich gave is that when a shop orders a certified part, but that part is not available the distributor will substitute a non-certified part. The service agreement prevents that substitution, says Manich.
As the cost of raw materials are going up, but the customer - whether it's the OEM, aftermarket, insurer or shop - doesn't want to pay more for parts. That's leading to a need for shops to better understand the issues and Manich answered those questions and with the service level agreement idea, offers one potential means of solving the quality issue.
Mark Johnson is senior editor for ABRN.