Paul D’Adamo (‘Core Hunter’), at Rebuilders Automotive Supply (RAS), based in the US, discusses how getting core parts sold and moved out of the auto recycling yard as soon as possible can help toward maximizing profit.
There is no question that COVID has reshaped the labor pool in some not-so-business-friendly ways. Attracting and retaining qualified employees has become Job #1 for many recyclers, taking precious time away from acquiring quality vehicle inventory and running the business at peak efficiency.
Somehow, through this timeframe, some recyclers have seen “cores” as an extra function of the business versus part of the dismantling process. However, It is the only process that allows recyclers to trim overstocked parts right at the dismantling bay, as well as old stock on the shelves taking up scarce space on our shelves.
There is no better time to profit on cores than in the dismantling bay. Our YMS tells us our QOH (quantity on hand) and DOH (days on hand) for any given part on any vehicle. Granted, the vehicle is coming into the dismantling bay for a sale on the engine or transmission but think of the access to other parts at that moment – IT’S A BONANZA. We must re-tune our habits to identify and harvest core parts while selling off the big stuff. Do you want to put small parts on the shelf knowing you already have duplicates. . .and sometimes triplicates??
LOOSE PARTS ON THE SHELF
Overstock: The fact is that 99% of recyclers are overstocked. It is a matter of degree as to how overstocked they are. I am constantly pulling recycler data, which gives me “agita” to see multiples of parts sitting for not days, not months, but years. If you are buying extremely late-model vehicles, you might stretch the days on hand for maximum return, but you must balance out how many you already have as well.
There is a cost of having parts in stock for too long:
- Failure Rates Increase – Internal parts can dry up and fail when installed on a vehicle, driving up return rates.
- Unfulfilled Customer Orders – Overfilled shelves make it difficult to find the part you are looking for, creating inflated parts that are MIA.
- Safety issues – motors and transmissions stored between racks create a hazardous situation when employees have to manhandle parts.
CORES ARE MERCHANDISE FOR SALE
As mentioned in a previous article, we are in the sales business. I used to joke that I would sell the paint off the walls to make payroll. Very simply: We Dismantle Vehicles, and We Sell Parts. While we are living through trying times, let’s re-tool and use our scarce resources to sell every widget we can in a timely manner for the right price based on market conditions. Let’s work smarter, not harder.
I am NOT a Core Expert, but a Recycler working at a Core Company. This has advantages because I have become the Recycler’s “Inside Guy”. Let’s put a laser focus on your inventory in 2023.
How Can You Improve Your Core Program?
Contact me at email@example.com. Let’s make change together.