[Editor's note: This piece responds to a request from Independent Glass Association President Donovan Trana. We felt it deserved circulation beyond that reached by The Beacon, IGA's publication. We hope, too, it will encourage readers who aren't IGA members to join IGA and benefit from its work. Rizzi owns ACR Glass in Alliance, Nebraska. He may be reached at email@example.com or 308/762-3526.
By Mark Rizzi*
At a November 1999 IGA discussion group meeting in Columbus, Ohio, conversation briefly focused on quality vs. quantity. I have strong feelings on this subject, and Donovan Trana, chairman of IGA's board, asked me to put them to paper. I first made some statements I'd written in response to Dick Strom's "Prozac or Proficiency" (BP&E, 11/98).
Mr. Strom hit some elusive nails on the head in his article, dealing mostly with the impact of outside sources on the collision industry. These ranged from management and training and information sources, to, of course, the more obvious pressure from insurers. I strongly recommend you obtain and read this article, available from BP&E, which first printed it.
In the glass industry, we face many of the same teachings: the "Walmart" way of business is being increasingly pressed upon us, trying to convince us the future requires higher volume and productivity above all. As State Farm's Bill Hardt said, we have to be "lean and mean in a highly competitive environment."
While this view has some merit, it also has major flaws. Walmart is a retail industry, not a service industry. In retail, quantity measures performance; in a service industry, quality, not quantity, should be the measure of performance. Quantity is desirable to gain market share, of course, with adequate staff, properly trained, but never when quantity comes at the sake of quality.
"Quantity" not the Answer
In our industry, we're being slowly, systematically brainwashed into competing on quantity alone to survive on the discounts insurers want. The problem is, cars are becoming more complex daily, and glass an increasingly critical structural part. The $6 million award in the case involving PPG and Solaglass in Colorado a few years back (Super. Ct. No. BC107689, in the Court of Appeal, State of California, Second Appellate District; decision 9/30/96) should have been a wake-up call to our industry about the multi-million dollar liability involved in penny-saving practices surrounding the known requirements of the Department of Transportation (DOT) and car makers. I fear, however, that this decision fell on far too many deaf ears.
Those who want better pricing based on quantity have no concern for our liability; they've neatly cost-shifted liability to us, and too many of us haven't noticed. Even those who have noticed, may not fully realize the ramifications of assuming more liability and trying to account for it with increased quantity, or, possibly, lesser quality or non-OE-approved parts and materials.
To me, this is like trying to compensate for a major fuel leak with higher octane fuel. Will the spark of an injury ignite a fireball that races through our industry, much as imitation parts suits are now doing in the collision repair industry? Insurers don't tell shops to use imitation or non-OE approved parts; they only state what they'll pay; if cheaper parts and materials aren't truly equal, as the State Farm case decided, who carries the liability?
Remember, insurance policies generally promise to restore pre-loss condition. The State Farm decision didn't outlaw imitation parts. It said that if they're used, somebody better be able to prove they're of equal quality to original parts. Who has the proof? We must try to answer these questions.
Quantity isn't the answer. Courts have ruled on question of quantity and quality involving auto glass (BP&E, 6/99). Glass Service Co. (Minneapolis, MN) won $14,974.59 plus costs and disbursements from Progressive, which had been shorting payments to GSC since April 1997. Critical court conclusions:
Glass Service established that its prices are within a reasonable range given the quality of materials it uses and the caliber of its installers.
. . . Progressive breached its contract with its insureds by failing to pay all reasonable costs to "repair or replace the property with other property of like kind and quality." Progressive contemplated neither the quality of materials nor the quality of installers in determining the reasonable cost. [Underline added.]
The State Agreed
Minnesota's Department of Commerce followed quickly with Bulletin 99-1 directing insurers to repay insureds for all reasonable costs to repair or replace windshield glass.
The bulletin described how Progressive's surveys were flawed:
The survey was seriously flawed and not reflective of the market (for example, the survey made no inquiry into the quality of the glass or adhesive to be used, the breakdown of materials or labor rate charged or whether the quoted price was for glass that meet OE standards for that particular vehicle.) Also, the court found that for the survey, Progressive called only glass vendors who had previously contacted Progressive's claims professionals and . . . marketed to Progressive.
The quantity point: no insurer has discussed with each of us national pricing based on national quantities, nor could they expect smaller shops to meet those quantities/prices even if they did. Therefore, it's not reasonable to expect the pricing bid by those who did, and may be expected to meet, those quantities, to become the prevailing market price.
One more thing: we'd better look closely at those who supply what insurers say are "low bids." Financial data available on the internet shows that these firms are almost all losing money, and are only now making major cost cuts, including a significant number of store closings. One company announced it would close more than 100 stores!
In short: we're being told that we, too, should base our business strategies on what are fast proving to be woefully bad economic models!
For now, the bottom line for us is: with too much emphasis on quantity, quality is suffering. The very thin line between customer safety and profitability is stretched to the breaking point.
I totally agree with Mr. Strom: those telling you how to improve your business practices are likely to be in it for themselves or selling something. Investigate thoroughly before taking their advice at face value.
Case in point: State Farm's Bill Hardt, recently interviewed by a national glass magazine, was treated as a "visionary" for the glass industry, yet his focus was on savings to State Farm; quality/safety of work was a very distant second, at best.
Another case in point: networks and insurers promise us increased "potential" business as an incentive to join their organizations, marketing alliances, or preferred provider plans; quality is always specified in contracts, right before prices. Exactly where lawyers told them to put it, no doubt.
But when have you heard of any installer pulled from any program due to poor quality workmanship?
We all know poor installers exist; we've had to repair the damage due to their "five-minute" installations. Yet their performance never seems to catch up with them; networks keep sending referrals. Why? One reason may be that average consumers don't know they've received a poor quality installation until, literally, their lives depend on it. But by then, it's too late.
Still one more example: some new programs, like CARS, require you to be open on Saturday. While this isn't a problem for us, as we've always been open `till noon on Saturday, these days are usually quiet because we go to great lengths to satisfy our customers' needs during the week so that they can be with their families on weekends.
Of course we're available for emergencies, as most of you are, I'm sure, and our customers know this. Those who think customers want car repairs on Saturday are trying to get us to boost awareness of their programs. Why, do you think, we'd need to sign a contract stating we'll do such, when we all know customers want service and quality? So program promoters can say they have shops available on weekends—while ignoring the fact that most consumers would rather have teeth pulled than spend weekends on car repairs. They play on our dedication to service and quality to get their quantity.
This relates to Hardt's "lean and mean" comment. How many of you have put in 12-14 hour days, come in late and after hours, or gone way beyond normal bounds to do the extras that make customers very happy with your service and quality?
We all have!
I'm fully aware how to be efficient, and will always try to improve all aspects of my business, but I don't need a corporate suit telling me how to be lean and mean when he's never stood in my shoes and has no interest in my profitability, only his own.
A footnote on the fear of business being steered from us was best stated by Sam McEwen (Hedlund Glass, Erie, Penna.), president of the Pennsylvania Glass Association. He said: "If they can steer it to you, they can steer it away from you!"
Why, I ask, would you willingly give anyone else first contact with your customer? I can envision no situation, no program, and no marketing alliance where I'd willingly give up first contact with mine.
Whose Quality? Ours!
Some may criticize my stand. I don't mind, because my independence serves my customers well. It's here to stay. I know who my customers are, and I have many happy ones who return because they like my service and quality.
How do I know? My customers tell me. They know I look out for them first and foremost, and they appreciate it. My "independent attitude" and preloss education have very effectively countered steering efforts with consumers. We watch customer satisfaction closely, because in my market, we survive on 99% return customers, and we do it with three proven principles: quality, service, and competitive price.
The point here: be careful whom you listen to. Take advice
from people who care; many professionals honestly and completely want only to
better their industries. Seek them out! Beware of those who only hope to turn
the rest of us into nothing more than hired laborers who will assume all
quality control, customer satisfaction, and of course, the liability, for
[This version of this article and the one below have been reviewed by our corporate attorney. It may be reprinted only with Beyond Parts & Equipment's written permission, and only with this full notice attached and printed with the article: Reprinted with permission of Beyond Parts & Equipment, January 2000, © Millennium Publications, Inc. Other use or publication of this version is strictly prohibited.]