Wednesday, 25 May 2016
Green Recycled Parts - Delivery and Price Conundrum
‘We want our parts delivered in 1-2 days, maximum, if you can’t do that then we are not going to buy parts from you” a car bodyshop owner told me yesterday.
I hope that this is not the normal working patterns for the UK vehicle repair sector, but if it is then there are problems.
He went on to say that the data from their vehicle estimating system isn’t imported into their bodyshop management system until the vehicle has been stripped out, hence the need for parts to be delivered in 1-2 days because any longer and the repairs on the vehicle will pause due to lack of parts.
My questions here are; how does this repairer plan their work? are they working from day-to-day without knowing what they will be working on tomorrow because they haven't planned it yet?
This is a scary scenario because it doesn't allow them to plan ahead, give accurate completion dates, maximise efficiencies, put the right technician on the right job, plan their courtesy car programme, get the best discounts from their suppliers and more.
Is this the norm for the UK body repair industry? I hope not. I would like to think that the industry is smarter than this, that they are able to plan their work schedules, order parts with the best discounts and margins, and process repairs through their shops with the minimum of delays, at the highest quality and get the jobs finished on time.
In the same conversation the bodyshop owner also stated that some parts are too expensive “I can get a brand new part with no damage for near enough the same price as your green recycled parts”. This is a valid opinion because some UK vehicle recyclers haven't done the maths on customer service.
Bear with me, because there is a serious business case here.
If a brand new part has a retail price of £100 the repairer could expect up to 25% discount from the local dealer giving them a margin of £25.
The price of a green recycled part (an original equipment part that has come off a vehicle of the same age or newer than the one being repaired) has been calculated as follows:
Additional labour £16 (assuming hourly labour rate of £32 per hour)*
Repairers margin £20 (smaller than the brand new part)
The figures above are a real life example, and this is not even a near miss - in this case it was cheaper to purchase a brand new part that gives a bigger margin to the repairer and comes with a full guarantee. This case fails to give any margin to cover extra costs that may be incurred such as additional damage to the green recycled part that needs to be rectified by the repairer before fitment, or a mark up from a parts search company that facilitated the sale of the part.
The greater the retail value of the brand new part the greater the opportunity for significant cost savings through the use of a genuine green recycled part, and if the part doesn’t need a full colour change (panel of the same colour, a lamp or a trim etc.) then the additional labour can be removed from the calculation and increase the savings.
UK vehicle recyclers need to do the simple maths on their parts and delivery pricing so they can show real savings to accident damage work providers and vehicle repairers; prove the case for green recycled parts becoming normal practice for the UK vehicle repair industry and then have the ability to delight and amaze their customers.
*as an example fitting a red painted wing to a white vehicle will result in additional labour to change the colour of 0.5 hours.