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The Cycle of Recycle

global market
Reducing your returns rate can seriously increase your profit.
In this article, USA based auto recycler, David Vercauteren explains his concept of 'The Cycle to Recycle". Although written for the American market, this article, which we will run over the next three months is as valid for the UK auto recycler as his American counterparts. Read on, if you want to seriously reduce your returns rate!

They say you can’t judge a book by its cover, but in the business of auto wrecking, that’s what it all about. From beginning to end, we in the industry are challenged to deliver salvage that you can stand by, make a profit, and develop a trust that will keep your customer’s businesses running quickly and smoothly.

If you went to an cash machine and you wanted a hundred bucks for the night but it only gave out one dollar at a time, you might not go back to that machine unless you were desperate, right? We are by nature, creatures of habit and look for the most dependable and reliable sources to make our lives easier and in most cases, more profitable.

Andy Latham
With a background in Operations for the Marine Corps and Corporate Sales, David Vercauteren headed into Auto wrecking as a salesman with no experience. He says he found that his returns were way too high and couldn’t understand why. Later JC Cahill, his mentor at the time, would place David in the inventory department to learn more about the backside of the house. He noticed that salespeople, the front of the house, didn’t talk to inventory people and inventory people didn’t talk to salespeople. Why is that? With a background in international operations, sales, and business, he noticed quickly the pros and cons of the local operations for auto wrecking in the area; everything from small yards to corporate yards. David started to visit the yards to see what was working and not working. Today, David is writing a pamphlet called The Inventory Monster to help yards come up with a good foundation for inventory projections on parts and developing open discussions at sales meetings.
This is why developing the habits in this series of articles among your employees is paramount to becoming a dependable and reliable asset to another business that drives your products. In my opinion, the cycle of recycling starts with Physics. Now most of you that do business everyday in the recycle industry are probably saying in your ‘my way or the highway voice’,” what the heck is he talking about.” Well I’m going to tell you.

When a buyer looks at a piece of salvage he must think about the ultimate questions. What happened and where did you come from? An answer might be, “You came from a person that was going about 30 mph and was hit on the front right side and really liked the colour orange.” A person of Physics thinks in atoms and figures out what was destroyed and bent. They will also know what was probably slightly bent and not worth including in their projections of profits. The sparkly orange is far from a stock color and not exactly worth what others might think the sheet metal is worth. Don’t be distracted by the spinner rims that are too cool for school. Bottom line, that sheet metal is a hard sell if you are in the business of making money.

Then there is the question of; how bad do you need the high dollar items on the vehicle and will it be profitable to put in a high bid? A new 2012 Focus engine with 2k miles might not be needed for a few years, where as a 2002 Honda engine might move 3 to 4 times in one year. Do you want the engine that sits or the engine that you can sell?

Think of it this way, every spot that has a location on the yard needs to be rotated as quickly as possible. Whether the parts are new or old, they need to move. There is logic to this theory and a buyer must understand this before purchasing everything under the sun.

Hoarding parts is not profitable at all. So stop it, unless it’s your thing to leave money on the table for the rest of us. Know what sells and leave the slugs to other buyers. How much, how fast!

Next month we continue with what happens once the salvage gets to the yard.

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