The Life Cycle of Used Auto Parts and Wrecked Vehicles
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I am often asked questions about my business when people find out what I do for a living. Most people don’t have a lot of interactions with owners or employees of salvage yards. I thought I’d take a few paragraphs to take any interested party through the process that our parts go through before they end up at a dealership, body shop, or neighborhood garage.
Today’s sales world is highly customer driven, competition has created shorter windows of time, lower prices, and hopefully better products. Consumers expect to be able to get a product immediately, especially if it is in stock. But with used auto parts, there is a “reverse manufacturing“ process that has to take place before a part is ready for the consumer to put it to use. Automotive salvage yards are not like Wal-Mart or an electronics store, which uses a “Built to Stock” production model. This model allows the manufacturer to produce the product before the end customer is identified and stock X units that are ready to sell. Do to warehousing and human resource limitations; salvage yards must use a “Built to Order” production model. This model allows for the production of the product after it has been ordered. There are simply too many parts on every vehicle that may or may not sell to have them all removed, cleaned, and stocked for sale. The cost of a process like this would bankrupt any salvage yard that attempted it within months. This is the reality of dismantling wrecked vehicles and selling used auto parts, sometimes it’s not easy to communicate this process to the retail public but maybe this blog will help.
So you’ve been in an accident, the insurance company has cut you a check or you have sold your vehicle to a salvage yard. Hopefully, you did some research and got the vehicle to a reputable recycler who will recycle and dispose of it properly. This is the first step in the process, we have to get our “raw inventory” from somewhere before we can begin our “reverse manufacturing” process. I am using “reverse manufacturing” because our process is one of disassembly and removal as opposed to traditional manufacturing that is based on assembly of a product. The procurement process is of paramount importance to automotive recyclers. Do it poorly, and you will suffer. Do it well, and you will thrive. We have a dedicated employee to this specific component of the process and we use the most cutting edge software available to aid him.
Now that the “raw inventory” has been acquired and is at our facility, we need to physically inventory the vehicle and it’s parts. We’ll actually assess the damage to every part that we put in stock and assign a grade to many of them to help our salespeople understand the condition of the part. We inventory fewer parts than most people would think. This is based on the value of the parts and our historical sales data. We use a hand held computer to electronically enter the parts with descriptions into our yard management system. This allows our sales people to easily look up parts when they’re requested and access all the information about the vehicles and their parts. Once the parts are in our inventory, they’re broadcasted real time over the internet to hundreds of other salvage yards, shops, and even to the retail public on various websites.