INVENTORY STRATEGY

the cars to what the cars will do in sales; capacity (number of vehicles they are buying); days to break-even (180-270 Back) give vehicles a chance to make some money; not in stock percentage – ability to fill orders; and projected COG %.” Gold says that training and follow-up with the buying team is essential to the success of the busi- ness, not only from a buying point of view but from the personal development of the employees too. “We meet with our team on a monthly basis to hear their concerns and suggestions and to review how they are doing,” said Gold. “Information is dis- seminated at that time to the buyers for review. Vehicles are assessed at the time of entry – what we put in stock versus what the buyer projected the vehicle for at the time of bid- ding. After the auction is clicked, buyers should be given the paperwork back to review (see how the bids went, what vehicles sold for, etc.) so they can learn from any mistakes they made and as a way to help train them on a continual and practical basis.”

How do you decide what auctions to attend? “There are several factors we look at when it comes to deciding which auctions to attend,” said Gold. “How do we transport our vehicles? How does transportation influence the buying decisions? Do we let transportation affect our buying decisions? How do we decide where to look (what auctions) and how do we figure our bids?

“First and foremost we attend the auctions that are local to each of our locations. We go where we have licenses to be able to bid in comparison to the com- petition. We expand out beyond local auctions based on geographical regions – we don’t jump from region to region. Finally, we consider the cost of tow- ing from auction cities to our facilities. We use brokers for all pick-ups in the U.S., and for many in Canada. The cost of towing also allows us to focus on auctions and figure out how competitive we can be based on the cost to move the vehicle.” Watson-Rons says transportation is a lessor issue for ABC Auto Parts that could effect buying decisions. “We do not let transportation costs affect our buying decisions,” she said. “We transport on our own in a 10- mile radius and contract out reliable transportation for the vehicles that are further out. We will try to buy to have a fuller load to offset the costs.

36 Automotive Recycling | May-June 2015

“We decide what auctions to attend by searching the inventory at all auctions in our area. We use Bid Buddy to figure our bids as well as past sales history and sales- man suggestions. We have many auctions in the Chicagoland area and will only buy the higher quality or hard-to-find vehicles at the further auctions.” Morrow suggests expanding your horizons when it comes to auctions.

“Another tip for buying is that you might have to step outside your normal comfort zones,” said Morrow. “We get stuck in going to X sale on Monday and Y sale on Tuesday and so on. Go a few miles more down the road to a new sale and branch out trying new auctions.” What opportunities or challenges

Steve Lucas, Buying Manager, Standard Auto

are faced in the buying areas? The opportunities to pursue for Gold’s team at Standard Auto include covering more

auctions and improving buying with more trained buyers to cover the auctions they would like to attend. Buying takes up a lot of time per auction. Yet the idea of buying more of the “cars that god made for me,” as Jim Counts has often told Gold, is his goal. As for a challenge, Gold admits that focusing on traditional local auctions only and trying to bid on all cars at that auction sometimes does not allow them to hone in on more auctions for the variety of cars we need on a grander scale. Bidding less cars per auction may allow us the time required to capture the cars we really need to fill the holes in our inventory and to increase fill rates, he notes. Watson-Rons agrees with Morrow that having more data and reports at their disposal will improve the buying process. For buyers, this allows for more time spent on evaluating more vehicles at more auctions. Clickers cover a variety of administrative functions as well as inventory functions (clerical) above and beyond the physical clicking of auctions on a daily basis – dispatch, paying for vehicles, filing, producing paperwork for inventory personnel/tows/production, assigning stock numbers, entering MVR’s, saving and cropping pictures, uploading vehicle images to web- site. Tweaking the “clicker” processess is on Gold and Watson-Rons list of ways to improve buying. The advice from auto recyclers illustrates that buying salvage is an evolving strategy that needs ongoing fine tuning. The buyer who is on auto pilot may get cars, but they may not be the cars the company needs. Michelle Keadle-Taylor is afreelance writer based in Pennsylvania.