Solving the Recycling Puzzle
I’m not too old to fondly remember the hours I spent in my teenage years trudging around the local “junkyard” in search of the perfect parts to keep my ’65 Pontiac Grand Prix running and looking good. It was fun looking through all those rows of cars and letting my imagination run wild as I wondered how those cars got there. I could see the unpolished diamond in all of them.
Imagination aside, I was there, rolling on the ground taking cars apart, because used parts were less expensive than new ones. I bought what I could afford. I didn’t care that the parts weren’t new, as long as they were in good condition. This simple scenario sums up why insurance providers want you, as a collision repair professional, to write for and use salvage (or in the vernacular created by the Automotive Recyclers Association [ARA] recyclable) parts as part of your normal repair methodology. It’s common sense. It’s also good for the environment. Using these parts is sound fiscal policy for all of us as consumers and policyholders. Having said that, are you aware of all that goes into effectively using these parts?
There are several areas of concern every time you consider using a recyclable part over a new part, whether it be OEM or aftermarket. In no particular order, these are:
condition/age of the vehicle you are repairing;
condition of the recyclable replacement part;
location of the recyclable replacement part;
integrity of the recycled parts vendor; and
cost effectiveness of using recyclable parts.
Let’s examine each.
The recycling option
The first step in using salvaged parts is determining if a damaged component is repairable or if a replacement is warranted. Our assumption here is that the component is beyond repair and needs to be replaced. As far as I’m aware, all of the collision estimating programs available commercially today have the ability to perform a cost analysis regarding repair versus replacement.
These systems cannot perform this analysis with regard to a recyclable part at this time, so this determination has to be done manually by the user. We have to determine if a replacement is warranted in this particular scenario.
Considering using a recycled part?
You will need to collect information not yet available from your estimating system. One consideration here is the condition of the vehicle being repaired. For the most part, you probably would not consider using recyclable parts in a repair on a brand-new vehicle. Not only would it be extremely difficult to find a recyclable part in this instance, most direct repair agreements call for the use of brand-new OEM parts for a specific time period or mileage plateau on a vehicle. In some cases, a recycled part might do if a newer vehicle is in poor condition (while a new part might be preferable on an older vehicle kept in pristine shape). Use your best judgment when making this determination. Always follow your DRP guidelines and local laws before determining what type of parts need to be used in the repairs you are performing. Some states have laws that allow vehicle owners to make the final decision regarding the type of repair parts used on their vehicles. If this is the case for your location, make sure you are aware of the owner’s wishes.
Determining cost effectiveness
Once you have determined that a recyclable part can be used, you must determine if it is cost effective. The first step here is to locate the recyclable part. The logistics of procuring the part have to play into your decision regarding its use.
A complete bumper assembly arrives. Before placing an order for a recycled part, check with the vendor for return policies and ask that hi-resolution photos of the part be e-mailed to you. For example, say you find through phone calls, Internet searches and estimating database searches, four of the same parts needed for your repair. One is local, and the other three range from 25 to 100 miles from your shop. The part you found locally is the most expensive on your list.
The other three suppliers will ship the part to you, which means you’ll incur shipping costs. Two of the sellers want to charge your credit card up front since you don’t have a relationship with them.
On top of these considerations, you also have to ask these questions: What if the part is in poor condition when you receive it, and the vendor won’t take it back? Is the vehicle owner using a rental car? Would it be cheaper to get the part faster than pay additional rental?
Note how these parts have arrived in good condition and properly packed. Be sure to work out any shipping questions or problems with your recycled parts vendor. My suggestion here is simple. Determine if the parts are equal in grade and quality. Ask the vendors to e-mail you clear photos of the parts. It’s possible the three vendors farthest away from your shop have lower graded parts than your local supplier, which would make your local vendor a wiser choice. You also should ask vendors about their return policies.
Lastly, call your DRP partner or customer and enlist their help in making this decision. It will make more sense to order the part locally if the cost is less when working in factors such as part condition, shipping and vehicle rental costs. In most cases, your DRP partner will agree with these decisions if you discuss them prior to placing the order. Clear, concise and timely communication is the key.
Communication: Using ARA grading system
Communication is, without question, the most important aspect of effectively using recyclable parts. Traditionally, repairers and recyclers haven’t seen eye to eye on some of the most important aspects of utilizing recyclable parts. These aspects include realistic grading of the condition of the part and the amount of damage on a part. These issues have been long discussed at the Collision Industry Conference (CIC). The ARA has produced a universal grading system that can clear up some of the miscommunication.
At the CIC conference in October 2007, the parts committee discussed the grading system at length in an attempt to inform repairers, insurers and recyclers. The ARA guidelines help standardize parts conditions through a parts description code. The parts code includes these basic important facts about the part: part name; three-character part code; and part description line.
With this code, a repairer should be able to get a clear description of the part, including the amount and type of any existing damage (in units and not repair hours) and the location of the damage. A unit corresponds to a damage area roughly the size of a credit card. Once the recycler determines the units of damage on a particular part, it grades the part with an A, B or C.
An A grade part has one unit or less of damage. B grades have more than one unit and up to two units. Any part with more than two units is a C grade.
The different types of damage are described by simple one-letter codes, for example:
B = Burn
D = Dent
F = Finish
H = Hail
J = Rip/Crack
P = Parking Lot Dings
R = Rust
S = Scratch/Surface
* = Not Specified
Use the standard ARA damage locater as your starting point. If you do not have a copy of this document, you can obtain one through the ARA Web site.
Let’s assume you just priced a door from a local supplier. The parts description code on the door reads as follows: Left front door shell 4P1 A grade.
Translation: The left front door shell is an A grade part, with four parking lot dings, covering one unit of damage.
If you do not receive a part as advertised, notify the recycler immediately and voice your complaints.
Study and have your staff study and understand the ARA guidelines. The ARA has a Web site dedicated to this training: www.arauniversity.com.
If repairing, returning or reordering the recyclable part will delay the repair process, inform your customer and DRP partner right away.
Choosing a vendor
Choosing a quality vendor to partner with is extremely important. Do not align yourself with a vendor strictly on the basis of pricing. A reputable vendor sometimes can help you get a quality recyclable part with less damage more quickly than an OE vendor could send you a new one.
Once a relationship is established, vendors often go to great lengths to find parts, even those they don’t stock. More than likely, they also will price match with competitors.
You play an important part in the success or failure of this relationship. Pay your bill on time. Be reasonable with your repair labor times (labor units). Be clear on the type of part you need when ordering. Offer to send photos of hard-to-describe parts.
To find a good recyclable parts vendor, start by asking your peers. Check with industry organization Web sites and insurance company appraisers. The ARA Web site offers a members link that lists all recyclers registered as ARA members. Call the Better Business Bureau (BBB), and ask about service issues with potential vendors.
When you order a part, track the “cycle time” of the order. Document that time, and compile a record that you can share with a vendor. Measure the performance of your vendors, and discuss it with them in regular meetings. Be proactive with problems. Admit when your staff makes an ordering mistake.
Conclusion: Communication is key
I can’t stress this point enough. Communication resolves many issues. Effective communication requires effort from everyone involved. There are significant rewards you will see. Bottom line: If you develop a solid relationship with a great vendor you won’t have to worry about salvaging your future or your customers.