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Where's the Gold?
Is Data Mining Relevant to the Auto Recycling Industry?
When most people think about mining they picture men and machines working in gold mines, diamond mines or even coal mines. However, today the most valuable mining that happens isn’t in metals or fuels, it is in data,  

Data mining is the process of analyzing data from different perspectives (different sources) and summarizing it into information which can be used to increase productivity, eliminate waste, cut costs, and most importantly, increase revenue for the business seeking the data and conducting the analysis.

Data mining enables companies to determine relationships among “internal” factors such as product, price, or staff skills and “external” factors such as economic indicators, competition, demand and customer demographics. Information gained from this analysis can be used to recognize historical patterns and utilized to predict future trends, or develop product lines, services, and processes needed to expand business.

Recently, I had the pleasure of moderating a panel of executives from various segments that support the collision industry and the insurance industry. This panel included individuals representing information providers (Mitchell and Audatex), salvage auctions, and recyclers. Each individual articulated the role that data mining plays in expanding opportunities and the growth of their organization.

As the panel members discussed business models and the future of each organization, a common theme developed. Individual organizations looking exclusively at their own data may not be sufficient to take them to the next stage in their evolution. Data from other industry segments is needed to expand their knowledge, and help innovate their personnel to develop new processes and product lines for the future needs of the collision industry and the consumer.

Our industry possesses a wealth of knowledge in the form of data. The data begins to accumulate at first notice of loss to the insurer, through each phase of the process until the vehicle reaches its end of life. Throughout each stage, data elements are shared between parties to facilitate the claims process. As the claim matures each business entity touching a part of the claim resolution process utilizes the shared data and also begins to develop proprietary data for internal analytics.

As one thinks about the data being collected they may start to question whether this data is proprietary, to only be utilized by the entity collecting said data. Is it time for the industry segments to start working together to determine what data, if shared or consolidated could benefit the industry as a whole? Our collective industries have common goals. They are:

• To produce products or services to help facilitate the vehicle repair process.
• To establish efficient automated processes for sourcing and procuring automotive parts of all kinds.
• To aid an insurer in appraising vehicle damage, establishing a vehicle’s value, and determining if the vehicle is a total loss, concluding a settlement with their policyholder and disposal of the vehicle salvage.

Throughout the claims process, data obtained by each of the participants, if shared, could increase opportunities for every business segment to mine the data and develop business analytics to help accomplish common business organizational goals. Simply put, to increase revenue, cut costs, or both.

For all industry business segments involved to continue to grow and expand their products and markets, a significant portion of their strategic initiatives will be the expansion of data mining and analytics. Predictive modeling/analytics will be used to create statistical models of future behaviors which will lead to the development of new product lines and processes.

For our industry to survive and grow in today’s economic times, we must begin to work together and remember that we are all business partners. Sharing data, when appropriate during various stages of the claim process, may provide the information a business needs to develop a better product or service to be utilized by one or all of their business partners. By doing so we can build in efficiencies, lower costs and increase revenue potential for all involved.

As auto recyclers, we need to understand the important role we play in various stages of the claim resolution process. Our commitment to quality and service helps reduce costs in the collision repair process and ensures that insurers have a ready market for end of life vehicles.

Ultimately the vehicle owner is the winner and becomes the beneficiary of a more efficient process, receiving quality repairs at a lower cost.

With upwards of 34 years in the insurance industry, Don Porter most recently served as a Property and Casualty Claim Consultant at State Farm Insurance Company’s corporate office in Bloomington, Illinois before retiring in August this year. He is currently involved in a number of collision, recycling, and salvage industry associations and industry committees. His passion for the recycled parts and salvage industries makes him a valuable contributor to industry information providers. Don is now working with United Recycling Group and is providing consulting services through his business, Porters Consulting Solutions. 

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