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Another Return? Who's at Fault Here?


5/1/2005
By Gary Goms

Returns are part of running a parts distribution business. But shouldn't technicians be somewhat responsible for the product they return? As it turns out, the answers depends on the situation.
 

Let's consider a hypothetical, but also very modern, parts return scenario: A technician retrieves a diagnostic trouble code (DTC) from a 1994 Ford Ranger that indicates the distributor pickup coil is transmitting an erratic signal to the powertrain control module (PCM). For the technician, the diagnostic logic is clear because an erratic distributor pickup might cause the surging complaint. Since it's late in the day and his jobber doesn't have the part in stock, the technician orders the part for the next day's delivery.

In the meantime, the technician discovers an oxygen sensor heater circuit shorting into the PCM is creating false trouble codes in the PCM's diagnostic memory. Only after replacing the oxygen sensor, he discovers that the customer's surging complaint is really being caused by clogged fuel injectors. The next morning, the pickup coil arrives just as the technician is finished with flushing the fuel injectors.

RETURN DILEMMAS
To continue with our story, the now-unneeded distributor pickup coil will be returned to the jobber for a restock. Let's say its wholesale cost to the repair shop is about $35. If the repair shop keeps the part, it will eventually be discarded because it's a very slow-moving number. If the jobber keeps the part in stock, it'll eventually be returned to his distributor warehouse or manufacturer as obsolete stock. Is the technician to blame in this scenario? Whose responsibility is it to control returns, anyway?

Let's begin by saying that the pickup coil's box appears shelf-worn because several previous technicians have made the same assumptions, and like a ping-pong ball, the part keeps bouncing from the store to the shop and back again. Clearly, the technician based his ordering decision on the best information he had at that particular moment and, if the diagnosis had begun that morning, he may not have ordered the part in the first place.

On the other hand, if his late-afternoon diagnosis had been correct and he had spent another hour confirming the diagnosis, then he would have worked past the ordering deadline and would be waiting another twenty-four hours for the part to be delivered.

PARTS OVERHEAD
At the jobber level, the pickup coil is just another part added to the return pile. The jobber returns parts on a monthly basis, so he has about $25 of his operating capital invested in a returned part for the remainder of that month. If the jobber has a liberal return policy (and many do), he may tie up thousands of dollars in operating capital trying to accommodate his customers. If the pickup coil is returned to the warehouse to gather dust until it is liquidated or discarded, then the coil becomes another grain in that huge pile of sand we call parts distribution operating overhead.

INVENTORY TRENDS
Clearly, the wait time on parts will increase unless jobbers respond by increasing the breadth and depth of their current inventories. The longer the wait times, the more often a technician or service writer will cover himself by ordering a replacement for a suspect part or by over-ordering parts for brake and other services.Parts proliferation is indirectly creating more returns because jobbers must often choose between investing their money in slow-moving parts, like distributor pickup coils, or in faster moving parts, like spark plugs and filters. The subsequent lag time between order and delivery on slow-moving parts increases the probability that the part will no longer be needed because either the original need has disappeared or the part has been sourced elsewhere. Adding depth and breadth to an inventory is more difficult because the estimate of import and domestic models being sold in the United States has jumped from about 600 in the early '90s to as many as 1,800 different models in 2004.Proliferation comes in many forms. Until recently, trucks were manufactured only in full-sized and economy models. Today, we're seeing a multitude of mid-sized trucks, which add considerably to a jobber's truck parts inventory. Similarly, we're seeing, among others, a proliferation of Korean vehicles and the new hybrid vehicle lines built by Ford, Honda and Toyota.Gaining the capital to increase breadth and depth can only be accomplished by increasing overall parts sales. In addition, stocking patterns should be based upon the demographics of local vehicle population. Jobbers in affluent populations, for instance, must adjust stocking patterns differently than jobbers in less affluent ones. Consequently, the "window of return" increases in direct proportion to the increase in lead-time for ordering.WARRANTY RETURNS
The other side of our opening scenario is that the technician receives same-day delivery of the distributor pickup, installs it and finds that it doesn't remedy the customer's surging complaint. For the purpose of discussion, let's say that the tech drives the vehicle and returns with a diagnostic code indicating that the distributor pickup is causing the problem.

With some justification, the average technician might assume that the new pickup is defective and demand a warranty replacement. On the other hand, a better-trained technician might question the diagnostic procedure and proceed by calling a technical hotline, checking related technical service bulletins or testing the engines other electronic components.

Of course, this is an instance when internal technical resources can be so valuable to the modern jobber. Through his own technical resources or outside resources, the jobber might discover for himself that, indeed, a shorted oxygen sensor heater circuit might cause an ignition-related diagnostic trouble code to be stored in the Ranger's PCM.

At this point, the jobber is justified in not warranting the distributor pickup coil because he has information indicating otherwise. To avoid a warranty confrontation with the technician, the jobber may forward the information to the technician and offer to deliver a new oxygen sensor in place of the pickup coil.

RETURN POLICIES
Clearly, a jobber's return policies are becoming greatly influenced by modern technology. At the one end, we're all too familiar with the DIY or untrained service technician getting the initial vehicle identification wrong or diagnosing by parts replacement. However, at the professional level, more jobbers should be tracking returns as a percentage of sales from individual shops.

In most cases, a jobber will find that the more experienced and technically qualified technicians a shop has, the less likely it will generate of warranty and unneeded part returns. An ASE-certified technician, for example, has obviously spent a great deal of time learning his trade. In addition, an ASE-certified tech has usually completed several years of auto mechanics trade school and has spent additional time studying to pass the ASE test series. The ASE-certified technician will also be more likely to consult a technical database before making a diagnostic decision and is more likely to continue his technical education than is the non-certified technician.

As to the value of experienced technicians, they are more likely to recognize and understand pattern failures in vehicles. Because of this, an experienced technician is less likely to "shotgun" a brake parts order because he knows, for example, that a particular vehicle driven to a specific mileage under specific conditions will need a specific type and number of brake parts.

Furthermore, an experienced technician knows when a diagnosis just doesn't "feel right." In our opening example, although the evidence indicated a defective distributor pickup, the technician pursued the diagnosis until he found the root cause of the complaint. The result was a returned part instead of a warranty claim.

Last, the more technical information the technician has at his disposal, the fewer times he'll return warranty or unneeded parts. If the jobber takes a proactive approach and distributes copies of all technical product service bulletins to all the technicians in his dealer base, the less he'll face warranty returns on various product lines like alternators, starters and engine electronics parts. By working hand-in-hand with the technicians in his dealer base, any jobber can reduce both warranty and unneeded parts returns.

Although product-training clinics seem to be going out of favor, they can and should be a jobber's first line of defense against excessive returns. Education, after all, is an extension of goodwill in the parts distribution industry. All of us, down to the smallest one-man repair shop, should take advantage of that opportunity when and wherever we might.















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