Paul D’Adamo (‘Core Hunter’), at Rebuilders Automotive Supply (RAS), based in the US, provides his expertise on why it is important to check your shelves for old or overstock inventory in order to maximize the profits of your auto recycling business.
Are Your Shelves Overflowing with Parts? Are they Overstocks or just Old?
When was the last time your Inventory Person ran a report on your loose parts inventory? This report should be run at least twice a year, and old or overstock inventory turned into cash, either for scrapping or Core Value. I just ran a report for a yard that showed 53 parts worth USD$1,800 (average USD$34) from vehicles over 1,000 days old (2.75 years). Most Recyclers could invest in an additional vehicle for USD$1,800, auction fees included.
I often tell the Landlord’s story, who complains that their tenants aren’t paying rent. Technically, you are correct that they aren’t paying rent; however, as Landlord, aren’t you paying the rent?? Monthly bills do not go away, and you are the one left holding the bag. The same is true of your loose parts inventory.
There is a cost to holding inventory on the shelves, and the longer it stays, especially if your system is telling you that the part is not requested any longer or you have multiples, the more it is costing you. I have visited yards where there is so much inventory, the parts are stored in the aisles on the floor.
Wow! So now you are paying employees to climb over your newest parts to get to your oldest parts. Let’s pray no one takes a fall reaching for hard-to-get parts. There seems to be a high correlation between overstocked shelves and the inability to find the parts you are looking for. Bottom Line: Overstocking Costs You Money!
What is the Cost of Sending Employees To Find MIA Parts?
My experience is that it usually takes 2-3 people to find parts that have been misplaced, and unfortunately, those parts are missing 50% of the time. Be honest with yourself; how often does this happen in your shop, and what does it cost you in time and labor?
Words of Wisdom from My Father-in-Law
My Father-in-Law, Arthur Murphy, would often sum up complex problems with quick phrases. He would say “don’t get emotional” about the cars or parts regarding inventory. Being new to the industry, I would often observe Owners stashing vehicles and tying up valuable space with the intent of restoring said vehicles. Or maybe someone offered a lower price on a part, and they couldn’t stand to discount the part, preferring to pay to put it back on the shelf and continue paying its rent. Stop Choking on your inventory! It’s time to Perform the Heimlich Maneuver on your inventory.
What is the Fail Rate on Mechanical Parts Over Time?
We all know that auto parts like to be in motion, so when they sit on the shelf through seasonal weather shifts, drying gaskets and seals on parts can cause real damage when installed and asked to perform at 100%. Consider this when you look at your reports, and you have A/C Compressors, calipers, motors, and transmissions on the shelf for 3+ years.
Delegate the Authority and Responsibility for Inventory Control
Sometimes Owners are the worst ones to scrap or core out old, or overstock inventory. Your Inventory Guy/Gal should be given the authority and responsibility not just to enter parts into stock but to manage and purge old and overstock inventory. RAS has the software to analyze your inventory and expertise to assist in this process.
Questions on QC Counts for Cores? Contact Paul at firstname.lastname@example.org