Discouragement vs Imagination
Discouragement is the starvation of imagination. Does discouragement lead to a lack of imagination OR does the lack of imagination result in discouragement. Either way, we MUST remain imaginative during these times.
Since its inception, the Automotive Recycling Industry has survived every economic downturn in the history of man. As a matter of fact, our industry actually grows during downturns in the economy. Once the Lockdown of 2020 ends, we will see an economy that will slowly return to normal - over a two year period. But, during that recovery period, people will be very hesitant to spend major amounts of money. We will see a prolonged dip in new car sales which will generate a major upswing in the utilization of Recycled Original Equipment (ROE) parts in the mechanical repair process. We are also hearing that insurance companies have concerns about the New OEM supply chain being affected for months and months following the Lockdown of 2020. They, the insurers, are now looking to increase the utilization of ROE parts in collision repairs through changes pushed down from them to the repairer.
That sounds like a Win-Win for ROE parts! The question now becomes: Are you ready to meet the demand of these increased sales? Spend some time now, rethinking some of your processes and policies. Use your imagination to create processes that are more streamlined, more efficient, and may give you a higher ROI.
Let’s think through some of your processes:
If I can help any of you with strategy development or you just want to bounce around some ideas, you can reach me at Chad@WiseCounselGroup.com.
Chad Counselman
Melbourne, Australia
Since its inception, the Automotive Recycling Industry has survived every economic downturn in the history of man. As a matter of fact, our industry actually grows during downturns in the economy. Once the Lockdown of 2020 ends, we will see an economy that will slowly return to normal - over a two year period. But, during that recovery period, people will be very hesitant to spend major amounts of money. We will see a prolonged dip in new car sales which will generate a major upswing in the utilization of Recycled Original Equipment (ROE) parts in the mechanical repair process. We are also hearing that insurance companies have concerns about the New OEM supply chain being affected for months and months following the Lockdown of 2020. They, the insurers, are now looking to increase the utilization of ROE parts in collision repairs through changes pushed down from them to the repairer.
That sounds like a Win-Win for ROE parts! The question now becomes: Are you ready to meet the demand of these increased sales? Spend some time now, rethinking some of your processes and policies. Use your imagination to create processes that are more streamlined, more efficient, and may give you a higher ROI.
Let’s think through some of your processes:
- Buying
- Are you buying the right car every time? Is it time to invest in a tool to help you buy better?
- Is it time to delegate buying to someone other than yourself?
- Inventorying
- Are you inventorying the correct parts? Should you start to inventory a different number of parts? Evaluate demand trends and brokering trends to spot part types that you may be letting slip by you into the crusher.
- Are you pricing your parts correctly? You are not running a museum. Price to sell. Cash flow occurs when inventory turns increase. Make the parts move at the correct pace by pricing them correctly. Use some slow time to reprice stale inventory.
- Sales
- Are you motivating your sales team correctly? Is it time to evaluate your commission pay system?
- Deliveries
- Are you wasting money on excessive delivery routes? Is it time to look at revamping your deliveries completely?
- Is there a chance that a cooperative delivery relationship with another recycler could reduce your delivery expenses?
- Brokering
- What is your in-stock lookup ratio? 40%-50%? Are you saying ‘no’ to 50% to 60% of all requests because you are not brokering or are under-brokering?
- Increase your sales by filling in the gaps within your inventory by brokering those parts from fellow recyclers. It’s time to change your mindset on this, if you are not currently brokering.
- Trading Groups
- Is it time for you to step up and join a trading group? When I owned my yard, my top 14 customers were other recyclers.
If I can help any of you with strategy development or you just want to bounce around some ideas, you can reach me at Chad@WiseCounselGroup.com.
Chad Counselman
Melbourne, Australia
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