How To Broker Parts From The Right Network
When we started this our new facility two years ago, we knew that it was very important that we started with the correct yards to trade with. Not just the best prices, but the best quality, business practices and warranty along with the highest ethical standards. When looking to build a trading network I have found the most important keys to success are communication, trading agreements and evaluation of trading partners.
Does your trading partner have the same quality of service that you currently provide to your customers? If they don’t, how you are going to get their parts to your customers in the same fashion? What is your time worth to make sure parts look like they came from your facility? Should you have to put time in to working other people’s parts to keep them sold for you? Here’s an example. Let’s say you purchase a door from a trading partner for $500 and you have it sold to a good customer for $650.
Here are the extra costs involved:
• Washing: $10
• Prep: $10
• Delivery: $50
• Credit: $10
• Sent back: $50
• And, fight to get the credit: $10.
What did you really make? It cost you $150 to purchase a door from a sub-par yard, just to not make the sales and possibly lose a customer.
When exchanging inventories and having true trading agreements there should be established trading rules for both parties so that everyone involved knows their role and what he or she should be responsible for, such as:
• Delivery times.
• Quality standards of parts purchased.
• Core charges negotiated up front.
• Warranty issues / what happens when an engine or transmission has an issue?
• Payment, when will you pay each other (be specific on by a certain date)?
• Discount parameters (is it deal-by-deal or across the board)?
Trading partners can help or hurt your current growth. The right partners are an extension of your facility and build value in your hard work. The wrong trading partners are a drain on your soul and take a profit from your check book little-by-little.
Here are a couple of ways to evaluate a good trading partner:
• What percentage of PO returns or credits do they have?
• Do you have trouble getting payment from them or do you have to call over and over again asking for your money?
• Are they always asking for a better deal on your parts, but never can help you on theirs?
• Is there issue with getting credits, do you have to ask and ask and ask for the same credit?
• Make sure you have them on exchange, not just a locale.
Exchange will increase your sales people’s chance of selling each other parts by 100 percent.
With these simple steps you will know if these people are true trading partners or really parts enemies. Remember when looking at trading partners, it’s not all about the price. It’s about doing good business on both sides buying and selling.
John “J.C.” Cahill is the co-owner of Brown’s Auto Salvage in Winchendon, Mass. (www.brownsautosalvage.com). He regularly speaks at industry events and has worked in auto recycling facilities across the country.