Mike Kunkel, consultant at a Texas-based company, Profit Team Consulting, which aids auto recycling yards to buy better and sell more through streamlining their operations, provides Auto Recycling World with his thoughts on the year ahead for the auto recycling industry.
2023 has arrived, and with it, brings a full cup of optimism. The world is a scary place, and it seems to be getting scarier by the day. In reality, we are experiencing things that are unprecedented in our lifetimes but not necessarily in the history of the world. Auto Recyclers have historically led the way in showing that good times are feasible regardless of the circumstances. Nothing like a great big pile of lemons leading to the best lemonade stand ever!
There are a number of challenges that we will be forced to deal with. That is always the case. What are some of those challenges? The world is getting smaller. Electronic parts sourcing, multiple middlemen and overall quality and accuracy of the part description versus the actual part are all things that we have been facing, and we will continue to see more people trying to become third-party vendors representing our parts or our interests. The parts and the data about the parts are tied together and need to work towards the industry’s benefit, not detriment.
The OEM is going to get involved in the insuring of vehicles. That will have an impact in a number of ways as well. From placing salvage with designated partners to placing orders with those same recyclers, all become options. OE will want to spend time building vehicles, not stocking warehouses with parts for vehicles that they have already built. They can make a profit by saving money/expense and have a system in place that is beneficial to our industry as well as being the environmentally friendly thing to do. It is always best when business interests and the environment align with each other.
Why is the OEM going to get more involved? A number of reasons. First, developing electric vehicles is very competitive and expensive; – They need to reroute money in that direction, so it has to come from someplace. Carrying less part inventory is a way to fund some of the development. Changes to the distribution model have them looking for cost savings opportunities as well. They also have a need to harvest certain components of the salvaged vehicle for reuse at the OE level. They will need to partner with the industry in order to accomplish most of their needs.
Is this good for the industry? It should allow us to sell more parts per vehicle. If we can do that, we will be successful. Is there fear? The OE are going to be bossy and very opinionated on what and how we should be doing things. I can live with that if they are selling/using lots of parts that belong to me.
What will they be looking for? I would guess that consistency of performance would be a really big deal. The OE is consistently accustomed to the same level of high-quality performance. That means that a higher level of professionalism is needed from us. We need to embrace the fact that our industry is becoming mainstream. For a variety of reasons, we are being recognized as the big businesses that we are.
What does being a professional really mean? Doing the right thing, accountability, training staff and getting consistency from the product and service that we give. Stop and think about how simple that sounds but how truly difficult it is to get. We need to strive for better. We need to understand that together we can move our industry forward while individually prospering for doing it.
It takes a cooperative effort and listening to outside coaching and advice and how to make improvements. Please keep me in mind for how I can help you get there. You can contact me at mike@profitteamconsulting.com
