The relationship between companies and their supply chains is evolving. Previously transactional and sometimes even adversarial, peace is breaking out as the industry adopts a more collaborative stance to tackle current challenges.
Issues around parts and repair capacity have underscored the value of partnerships and, in the longer term, no organisation will be able to meet its targets around sustainability if similar standards are not being met in their supply chain too.
Here we speak to Michael Golding, LV= Network Manager, to find out what impact the pandemic had on supply and how its relationship with its repair network has changed.
Can you explain the motivation for introducing the Green Heart Standard?
We wanted to provide our LV= customers with a repair solution that was aligned to our own environmental and corporate social responsibility strategy whilst adding value to their own business. The key elements of the Green Heart Standard create multiple benefits and we want to make sure our customers know that the sites are looking after their cars and the environment at the same time.
How are you working with supply partners to help them achieve it?
Many of our supply partners were part of the Green Heart Standard from the outset and helped us shape its present structure. Therefore, we understood what developments typically created benefit to a bodyshop business. We wanted to achieve a balance between what is feasible and possible now and stretch targets to introduce new measures and making a positive change. It’s these new measures where we can share ideas and provide help utilising our own experiences in some of the key areas such as mental health and awareness and diversity and inclusion.
We also apply a financial scheme that helps support the transition to the Green Heart Standard. This helps cover the cost in areas like carbon offsetting costs and EV courtesy cars and other areas where additional funding is required.
How far have you come, and what is the next step?
We have 27 sole sites and 22 are already PAS2060. Out of our entire LV own network, we have 64 of our 145 repairers achieving the standard and carbon neutral. At present 47.3% of our repairs now go through a carbon neutral PAS2060 network repairer.
We also have eight sole sites that are fully Green Heart Standard. Our next step is to grow that and we are already working with a number of sites as they progress through the Green Heart Standard requirements.
How have the supply chain challenges changed from mid pandemic to post pandemic?
As volume has returned we have seen a strain on the whole supply chain. This includes parts shortages, cost inflation, energy costs, staff shortages, courtesy car shortages and longer cycle repair times. The whole supply chain is having to adapt to those challenges and we are all ensuring the customer claim journey is managed effectively to mitigate any disruption.
What are the cost implications?
The cost inflation within the supply chain is undoubtedly an ongoing concern. In addition to further financial support we provide our network through labour rate increases, we are also helping with other areas like covering Audatex fees, minimising aged debt and fast payment terms, PAS2060 and Green Heart Standard financial support. We have also recently introduced a Outperform + rate scheme for network repairers who go above and beyond with their performance. Obviously, this may not be the answer to all cost implications but it helps towards extra financial support.
How are you ensuring capacity within your repair network?
We are fortunate enough to have a robust network with some of the best repairers in the UK. They are a combination of groups and the more traditional independent family-run type of businesses. This blended approach allows us to adapt volume to meet the repairers’ own requirements along with very close capacity management. Weekly monitoring of target repair volumes and being able to forward predict volume by area is very important for repairers to help meet demands.
How have you had to adapt your processes and strategies to allow for supply disruption?
Predominantly we have kept our processes in place but helped support the network and our customers in additional areas when required. Our network of repairers is already very good in managing many of the common disruptions and the implications to our customers.
How are you working with partners to overcome disruption?
Continuous engagement with our network partners is fundamentally important to ensure we understand the challenges. This is done on a regular basis where we share information and help overcome problems that are faced. We take pride in our approach for open and transparent information and being easy to do business with.
We also operate with a flexible model within our network agreement to ensure repairers can operate within the market without restrictions. This helps repairers select the best options for them and our customers.
How is technology helping to streamline supply?
Our commitment to automation continues with a focus on benefit and efficiencies to the network and our supply chain. This may vary from automated invoicing, data supply, total loss identification and live chat systems for easy claims communication and decision making. We are constantly looking at ways to use technology to its best effect and ensure our supply chain gains benefit so we can all remain focused on what is really important to the customer.
How do you see the supply chain evolving?
It will continue to evolve as market demands adjust and businesses continue to adapt. This means greater focus on people, training, technology, the environment and of course customer needs. Many of our network repairers are ahead in this area and already investing in their futures and understand the importance of progressing their business.
The accident repair industry may continue to shrink with less new businesses starting, but this can be offset by expansion of additional sites within group models. With greater capacity demands, many bodyshops may also become more selective with work type and provision, and that will create greater importance on selected partnerships.
