DIGITAL IMAGES LURE IN NEW BUSINESS

Dealership uses computer photos to show vehicle body damage to insurers

Dennis Martin, body shop manager at Lou Fusz Pontiac-Buick-GMC in St. Louis, MO, isn't convinced that "digital imaging" saves his department money. He is, however, convinced that it saves time - and has helped the shop bring in more insurance-paid repair work.

"We bought it primarily because one insurance company wanted us to have it," Mr. Martin says of the digital imaging system the dealership shop began using several years ago.

He adds, "When only one insurance company wanted it, we probably weren't justifying the expense. But now most insurance companies accept a printout of a digital image even if they aren't ready to have us upload the pictures electronically. And because we've had it, we were able to get on another insurance company's direct repair program."

That, Mr. Martin says, helps bring in the work that makes digital imaging more cost-effective.

Although digital-imaging technology has been available for more than 10 years, its use within the collision repair industry has been somewhat limited - until recently.

Two surveys by Collision Repair Industry Insight, a national industry newsletter, found the number of shops using digital imaging jumped by 30% in a single year.

"It was slow to catch on, but now I think we're starting to see that this is the way relationships between shops and insurers are going, and you're going to see digital imaging used more and more in the future," says Russell Thrall, an editor at Auto Body Repair News, an industry trade publication.

One appeal of digital imaging - for both shops and insurers - is instant documentation.

In six quick flashes with a digital camera, for example, Kevin Good, has documented the collision damage on a Ford Taurus in the Coliseum Ford body shop that he manages in Portland, OR.

Less than 20 minutes later, he is on the phone with an insurance adjuster in a claims center hundreds of miles away. Both Mr. Good and the adjuster are looking at their computer screens at the estimate and the images of the car Mr. Good just took.

"You can see why that hood needs to be replaced rather than repaired," Mr. Good tells the adjuster, who can zoom in on the image for a closer look. "Great, we'll get it going," he says when the adjuster gives him the go-ahead to repair the car as estimated.

"I couldn't even calculate all the time this saves, but it's a lot," Mr. Good says. "No more waiting for film to be processed, hoping the photos will clearly show the damage. No more sending Polaroid photos to the insurance company by mail."

Link Farrington, manager of Jim Babbitt Ford-Lincoln-Mercury in Flagstaff, AZ, says his shop made the move to digital imaging almost two years ago for much the same reason given by Mr. Martin: partnerships with insurance companies that require use of digital imaging. But he says there have been other advantages as well.

"You don't have to wait to film to be developed and then sort out which photos go with which job," Mr. Farrington says. "You can take the images, transfer them to the computer and attach them to the estimate and send it all electronically to the insurance company right away."

He says digital imaging has eliminated the time and costs involved with buying and processing film - and the problem of running out of film when you need it. You can immediately view the "photo" you've taken, eliminating the need to take multiple photos and "hope" at least one will clearly show the damage.

A first step in putting digital imaging to work is to choose a software vendor. While a number of companies offer digital imaging systems for shops, most insurance companies want their direct repair shops to use one of the systems offered by the major computerized estimating system providers. Some insurers specify one particular system; a few will accept any of the three.

Providers say that if you are using and happy with one company's computerized estimating system, you should stick with that company for your digital imaging. While you may be able to use one company's digital imaging system with another company's estimating system, it won't be easy or quick.

Providers generally charge a monthly licensing fee for use of their digital imaging system. Those fees range from about $100 to $300 based on what's included - such as software updates, technical support, the number of images and estimates transferred from shop to insurer.

No matter what digital imaging system provider you work with, you'll be responsible for purchasing your own digital camera. Your system provider can provide a list of the brands and model numbers of cameras they know will work with their software.

While you might not need a high-end camera selling for $1,000 or more, a $199 model may not offer all the features you want. Bill Davis, manager of the Tom Wood Ford body shop in Indianapolis, recommends choosing a mid-range camera costing $300-$500.

"I've used several different models of cameras," Mr. Davis says. "They all vary a little bit in terms of zoom and other features, but I've found we don't need the high-end features in this industry. One good thing I've found is that most of them are virtually indestructible."

Mr. Martin says of his store's digital camera, "Everyone we called seemed to like a particular model they were using so that's what we went with. I've seen newer models that are nicer but this thing has been a tank for us. It's got its war wounds, but it keeps tickin'."

Some features to think about as you shop for cameras include: - Resolution: The higher the resolution, the more sharp and detailed the image. But there is a trade-off: The higher the resolution, the more space each image will occupy on your computer hard drive, and the longer it will take you to transfer it from the camera to your computer, and from your computer to an insurance company. The standard resolution used in the industry now is "640 x 480," numbers that refer to the number of digital pixels (dots) used to create the image.

- LCD panel: Some cameras have an LCD panel that allows you to immediately view the image you've captured on the camera so you can instantly see if it shows what you want it to show or if you need to re-shoot.

- Storage media: Most digital cameras come with a cable that will allow you to transfer the images to your computer. This method of transfer, however, can be painfully slow. That's why most cameras "store" the images you take on a device you can remove from the camera and insert into your computer. Mr. Davis says he prefers a Sony camera that stores images on standard computer floppy disks. That makes it easy to transfer images using your computer's floppy disk drive.

"You can even print out the photos right from the floppy," Mr. Davis says.

One drawback to this system is that you can only store about 20 photos on a disk. Other cameras use "flash media cards," which can be purchased in a variety of memory sizes, allowing you to store up to hundreds of photos per card. Transferring the images from the card to your computer does require installing a "PCMCIA drive" - generally available for less than $100 - in your computer.

A third option - less commonly used - are "smart media cards," which are about the size of a quarter; once removed from the camera, they must be placed in a "carrier" that can then be inserted into either the computer's floppy disk or PCMCIA drive.

Unlike Mr. Martin, Mr. Davis says he believes the cost of digital imaging systems is offset by the drop in the expense for film and the time and cost of processing and sorting standard photos.

"And it's not tough to learn," says Mr. Davis. "It's something more and more insurers are moving toward, so it's an investment for your future."

To keep a tight rein on the valuable parts inventory, dealers should prioritize checklists in four basic control areas.

This recommendation comes from Dennis Puskaric, newly appointed director of the automotive services group of American Express Tax and Business Services in Timonium, MD.

"Parts inventory represents a significant dealership asset - often 20% to 30% of net worth and total assets," asserts Mr. Puskaric. "Correct inventory control and rapid inventory turnover are essential to dealership profitability."

The four areas in which the parts inventory should be checked are the monthly reconciliation report, security, physical inventory (if a monthly inventory is not feasible or cost-efficient) and documentation control.

Mr. Puskaric's check points for each of these areas are as follows: Monthly reconciliation 1. Price correctly all physical inventories in the parts system.

2. Establish a starting point for the reconciliation.

3. Reconcile monthly the manufacturers' parts statements, accounting for all parts.

"When the trend sheet and parts-management report vary, immediately perform a review to determine what caused the discrepancy," says Mr. Puskaric.

Security 1. Change the parts department locks periodically especially when an employee quits or has been fired.

2. Lock high-dollar inventory (such as stereo and car security systems) in designated areas with combination or padlocks.

3. Require bonds for employees who have access to physical inventory.

Physical inventory 1. Conduct physical inventories at reasonable intervals, but at least monthly.

2. Frequently and unannounced, select several items and compare their stated counts in the inventory records with actual counts.

3. Carefully investigate all discrepancies.

"Another efficient way to take inventory is to count a few different parts daily," says Mr. Puskaric. "Doing this over two to three months will insure all numbers have been checked. But, by all means, immediately investigate shortages."

Documentation control 1. Complete manual documents in ink.

2. Do not use correction fluid on any source document.

3. Use pre-numbered documents in all areas. If slips are computer-prepared, don't let the parts staff access the numbering program.

4. Insist that technicians present a hard copy of all repair orders when obtaining parts for specific jobs.