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Do all your staff understand the commercial objectives of your business?

baled cars
Which cars to keep - which ones to scrap - Steve has the answer.
One of the things I have noticed about dismantling businesses is that there are often staff who have “made their way up through the ranks”. This is generally a good thing and these reliable and company orientated men and women are an asset to the business.

But their reliability and application doesn’t necessarily mean that they have commercial “nous”. And this commercial sense is particularly important in the person you have in the inventory role. Certainly a good sense of process and an eye for detail is important, but your inventory person is entrusted with turning the vehicle you bought into the parts you will sell, and therefore the profit you will make. And there are things about that process that he or she needs to understand.

Most businesses wreck a variety of vehicles; different by make but also by year and cost. When we process a vehicle there are two competing objectives; one objective is to maximise the return from the vehicle, the other objective is to minimise the cost of processing.
There is a different process for each objective
Let's assume that the way your business works is that you have cars in the yard and also parts in the warehouse. Or in other words, you dismantle each vehicle at some point and use the recommendations from your inventory software to choose which parts to pull off. The vehicles that stay longest in the yard are the high value late model ones whilst the cheaper “End of Life” cars get processed and scrapped quickly.

Steve Tapner
Steve Tapner is as a past owner of a dismantling business in Australia but more recently (since 2004) he has worked with Actual Systems which then became Hollander International Australia, following its acquisition by Solera Inc. This period saw the introduction of the Pinnacle inventory and management software to the Australian market - from the first sites in late 2004 to 100 plus sites in Australia and New Zealand by late 2014. Since that time Steve has been working as a trainer and independent consultant to the industry.

Steve will be presenting at CARS 2016 which will be a great opportunity for us all to benefit from his experience. If you have any questions or would like to ask Steve anything, then contact him by email here.
Now sometimes it is easy to tell which vehicle is which and we want to know this even before we start the inventory process. For the low value car we will inventory only a limited range of parts and they will be the parts we remove when the car is dismantled. For higher value vehicles we will enter many more parts into the inventory but many of these will be “Y” status parts to be left on the vehicle in the yard even after it has been through the dismantling process.

So how do we know, or importantly, how does our inventory person know which vehicle is a “keep” car and which is a “scrap” car? Which car warrants more effort and which needs to be processed simply and quickly?

The answer is not always obvious. An older car in good condition may have many parts your customers want – it may be worth keeping in the yard. A late model car may have been a bargain to buy with few parts currently in demand – it also may be one to keep even though it was cheap. On the other hand a poor example of a main stream model may not have been cheap but keeping it longer isn’t going to make any of the parts more saleable and so processing it quickly eases the pain!

To get this right every time (or almost every time) requires your inventory person to see each vehicle through your eyes and through your customers’ eyes to understand its worth to your business. Your inventory person actually requires a very high degree of commercial “nous” to understand your business model and make the right choices.

If the person you have in the inventory position doesn’t have this understanding what can you do? Well, it will always be hard if they don’t, but one easy way to get started is for the car buyer to flag the cars to keep and the cars to scrap. This can be done on the documents for the car or on the actual vehicle itself. In Pinnacle some sites have different “Custom PDRs” for the two classes of car and the car buyer selects the correct one when the MVR is created.

The other thing that I find works well is to give the Inventory person some exposure to the job of car buying; let him work with the car buyer sometimes. Apart from anything else he will now see how hard it is to find good stock for your business!

July 2016

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