Bud Karakey, vice president of operations for BEI Services, visits plenty of dealers in any given year. One thing he’s noticed during these visits and in the benchmarking data that BEI Services collects from dealers are the hundreds of thousands of obsolete parts and parts bordering on obsolescence taking up space in dealer warehouses and stockrooms. It’s not unusual for him to see parts that have been sitting unused for as long as 10 years.
Some dealers claim they’re hanging onto those obsolete parts for a rainy day—a day when they may miraculously need them again. Others take those obsolete parts and try to sell them, often with little success before sending them off to their final resting place in a landfill. Now there’s a better alternative. The recently launched BEI Services Overstock Parts Network (OPN) identifies overstocked and obsolete inventory in dealer’s warehouse as well as technician car stocks and looks for dealers around the world who are still using those parts throughout the BEI Services network. It’s sort of like a Match.com for dealer’s and overstocked parts.
Bud Karakey
Karakey sees this as a win-win-win for BEI Services, dealers with obsolete parts to sell, and for dealers who need those obsolete parts. “The goal is to help dealers avoid parts obsolescence, that’s first and foremost, and for those parts that become obsolete, sell them to dealers still using them throughout the network, and keep them out of a landfill,” explains Karakey.
Dealers who participate in OPN are paid for selling their obsolete inventory to OPN and also have the opportunity to purchase inventory at discounted prices. It’s a free service and includes access to BEI Services’ Advanced Inventory Management (AIM) reporting package. AIM helps dealerships understand, control, and prevent parts obsolescence by identifying parts that are overstocked, nearing obsolescence or obsolete. Information is presented in a dashboard-style report. Other reports are also available to help reduce part cost and improve service performance, including vital part yield reporting to aid in identifying part warranty opportunities and hold for part response time reporting to improve service response times.
BEI Services is partnering with RecycledParts.US to make this program a reality. RecycledParts.US provides the logistics, including storage, shipping, and manpower to handle the inventory while BEI Services is responsible for collecting all the data.
The program was rolled out on June 1, 2013 and has already purchased thousands of dollars worth of inventory. That inventory can be viewed at www.overstockpartsnetwork.com. Parts are available at wholesale prices while dealers participating in the network who are actively using BEI Services products and sharing data with them every month receive pricing below wholesale. “There’s very significant price discounts,” states Karakey.
Not only is this program available at no charge to BEI Services dealer customers, it’s free to any dealer interested just as long as they can provide the info BEI Services needs through the dealer’s ERP system. Dealers need to supply BEI Services with at least two years of data to ensure these parts are still being used.
Karakey estimates there’s still a wealth of parts in stockrooms and warehouses waiting to find a home. “From the $90 million of parts used in the past 90 days from all our dealers, we see about $20 million in parts of that inventory nearing or at obsolescence.”
BEI Services data indicates that obsolete parts are an issue for every dealer. Consider the numbers: 7 percent of dealers have aged parts or parts that have not been in use in 6-12 months; 4 percent have parts that have not been used in 12-18 months; and 36 percent have parts that have not been used in 18 months or longer. “Dealers who have those [parts] on the shelf have a huge opportunity to make money,” says Karakey who has been making offers from $500 to several thousand dollars. “Our hope is if parts haven’t been used in over 18 months, get rid of them.”
And what does he say to those dealers who are hesitant to sell those parts because some day they may need them again? “It’s better to sell a bunch of obsolete inventory and have to buy some pieces back than not sell anything at all,” he responds. “If I’m going to buy $3,000-$4,000 worth of parts from you and you have to turn around and buy $500 back, there’s no loss there, you’ve made $2,500.”
