The Parts Ordering Process Needs To Be Accurate
The auto recycling industry has always had to deal with the issue of returns and credits, especially since we are dealing with a used product. This is tolerable since the benefi ts far outweigh these issues. However, as the cost to do business rises and newer vehicles become more complex, it is important to all stakeholders’ bottom line that parts ordering process is as professional and accurate as possible.
Returns are a major drain on the profitability of any business, including auto recycling facilities. We understand repairer issues such as cycle time, and we know that our reputation is at stake as we attempt to accurately describe our parts. Our profi tability is based on our relationships and continuing business with each collision repair facility.
The “profitability drain” has hit recyclers so hard that many simply can’t afford to keep up with the best practices in the industry and compete. This is a major problem for the industry; and the net result will be fewer recyclers and less local used parts available.
The single most frustrating fact in the auto recycling industry is the mediocrity at all levels in the parts ordering process. It can usually be traced to misunderstanding on the terms of the deal or interchangeability issues.
The average “return rate” is about 20 percent of sales. This is true of highly professionally-run businesses as well as smaller facilities. What is really interesting is how many salespeople have return rates around 10 percent, while others have return rates pushing 30 percent! This highlights the importance of human element.
Here is a brief synopsis of my “credit reasons” for the last 90 days: The “Parts Returned / Not Needed” credit reason tops the charts at 23 percent. Second highest at 18 percent, is because the “Wrong Part” was sold. Third is “Damage Bent” at 15 percent, fourth is “Customer Refused” at 11 percent, and fi fth is “Billed Wrong” at nine percent. These above statistics, excluding the “Customer Refused” category, tell me that the human element of process is at fault and that many of these returns could have been avoided.
Costly misunderstandings are the result of busy salespeople who do not press for the hard facts from their customers, especially when it comes to getting the crucial VIN. I’ve heard that many new parts dealers do not sell parts unless they get the customer’s VIN number, and I applaud them for that. In previous years parts interchange-ability was not as big an issue as it is today. Determining whether or not a part was going to fi t was pretty seamless with or without various manuals or computerized interchange programs. I remember when I would simply go to the shelf and match up a General Motors (GM) alternator, knowing I could always rotate the casing of another GM alternator. Those days are long gone.
Alternatively, I remember selling my first Grand Prix door about 15 years ago. I checked the interchange and determined that he had the top of the line wide molding style with the ground effects and then made the deal. I made sure the part was the correct one since there were various options for that door and it was a $900 sale!
The parts business is so technical and specific these days that every effort needs to be made to identify what part is really required.
How is it that 23 percent of all our credits are for a part that is “not needed?” Our industry is alarmed by this statistic and yet we have not been able to implement a system for this issue.
It is also troubling that 18 percent of our credits are for the “wrong parts.” I still see sales people allowing customers to guess what it is they need. Purchasing parts on a hope and a prayer must not be tolerated.
We should accept nothing less than complete accountability. The first thing management looks at when deciding how to adjust discounts is the overall company return rate.
Today auto recyclers have many programs to check for order accuracy, so don’t be surprised if you are asked to provide VINs. It is easy to share digital photos and many of our websites have all the details listed for your review. Please take advantage of them.
Let us all not be too caught up in the rush to order the parts if the vehicle repair isn’t solidified or if the part type required isn’t 100 percent clear. Being a part of this industry is tough enough without having sold and delivered parts wind up at our facility again for re-inventory. Getting it right the first time works better for everyone.
David Gold is the owner of Standard Auto Wreckers (www.StandardAutoWreckers.com), a large buyer of used and older vehicles for parts and recycling purposes with locations in Toronto, Ottawa, Ontario and Niagara Falls, N.Y. David can be reached at 416-286-8686 or at firstname.lastname@example.org.