18 By Jim Counts Ask the Answer Man Automotive Recycling Answers to industry questions Signed, Jerry We are trying to increase our profit by selling more cores. In the past we had pretty much quit messing with most of them because they seemed to be more of a distraction than a profit center. However, the core buyer is now paying more than they used to so we have been keeping more parts. My question is how we should determine if a core is worth handling. Dear Answer Man, “How do we determine if a core is worth handling?” Thanks for your question, Jerry, This distinction means that surplus parts have a more value than core parts. Usually, if we keep these two categories of parts separate we can receive a higher per-part-price for the surplus parts. This usually entails us having surplus parts bins near the vehicle dismantling bays so our employees can place them in the appropriate bins. The customer’s exchange part (the core) normally would not be placed in the same bins with our overstocked (surplus) parts. What is a core? Before we get into the discussion of efficiently increasing what you refer to as “core” harvesting, I need to make sure I define what I’m talking about. A “core” is the customer’s old part, which is being replaced by the part we sold to them. A “surplus” part is an over-stocked part that we remove from a vehicle. Almost all surplus parts were operating at the time of the wreck and do not need to be repaired. Core parts are auto- matically assumed to be inoperative and, therefore, need to be repaired. You are on the right track because many recyclers are increasing their income per vehicle by $200-$400 by doing a thorough job of identifying and harvesting these parts. There- fore, it is worth the effort to explore and perfect this process. At the time of inventory Some recyclers charge each customer an amount to cover the value of, or assure the return of, core parts. This core-charge is designed to cover the assumed value of the customer’s old parts. In the past the amount changed had very little to do with the actual value of the part. Caution: Adding a core charge to every sale may cause you extra payroll so evaluate what you decide carefully. It’s best to decide which parts are surplus at the time of inventory and notate your paperwork or inventory pad accord- ingly. If you use a tool like the Inventory Buddy to inventory vehicles you have the current value of each interchange listed by buyer on that tool. It’s NOT efficient to make this determina- tion at the time of dismantling as this is additional labor. Keep in mind that some parts may not be economical to remove, even if we pay a flat rate per vehicle to have the vehicle taken apart, if it causes you to get behind or add personnel. Cost verses income Some parts may be worth several hundred dollars, like die- sel engines, while others have smaller or no real net value. We tend to keep track of how much money the cores sold for, but rarely add up the cost to process them! As environmental regu- lations increased this becomes more and more of a problem. We sometimes forget that our employees are getting paid while they process these parts. Let’s consider some of what is involved in dealing with a core part: We add an extra charge to the customer’s invoice, then we have to explain why we charged them, and that they will have to call us for a pickup, or make another trip to our busi- ness to retrieve their money. This means the customer has to keep the old dirty part around until we get around to picking it up, or they bring it back to us. If we pick the part up we should remember that, on average, this costs us well over $35 per stop. We may rationalize that we only pick up cores when we are mak- ing a delivery, but the reality is that we usually pick them up when the customer calls or tells us to. If we don’t, we risk losing a customer by not picking up the part and refunding the core- charge in a timely manner. Once the core is back at our facility we have to drain all fluids and store it in a place that is shielded from the weather to avoid EPA issues. Then, our sales staff or other employees are tied up handling core returns and credits instead of doing what we initially hired them to do. Then, how “We tend to keep track of how much money the cores sold for, but rarely add up the cost to process them!”