Return question

[Jaybee]

While I'm guessing this is a good problem to have, I have too much return reserve. I am a Honda dealer and we have very good return reserve. We can convert some of it into cash, if we meet certain guidlines. I am getting ready to start turning my return reserve into cash. I will be using it, at first, to self-scrap, and then just roll it into profit. I am not sitting on aIot of non-returnable stuff. I still want to use part of my return reserve to stay in guidlines. I am at present sending back anything that is 9 months no-sale, and 6 months no-receipt. Do these sound like good numbers to use?

Thanks in advance for your help,

John

[Mike Nicholes]

Ever thought of buying (cents on the dollar) of someone else's inventory, in good condition of course, and returning it at full value for the return YOU EARNED?

[Jaybee]

Yes, that I am thinking is the next step. I have been told I can use the money from this for some field scrap. I have a number of open packages, bad labels etc. I have just been moving them into a scrap source and putting them at DP status for now. I want to get those off the books first.

Thanks,

John

[FixedManager]

John, I like what you are doing. The only thing I would add is maximum use of OAR's as well if you are not on top of them within the 28 day parameters. You'd be surprised what will be accepted even though it may be coded as not OAR'able. Also keep your obsolescence value at one percent or less. This is where the best run Honda parts departments are.

Ever thought of buying (cents on the dollar) of someone else's inventory, in good condition of course, and returning it at full value for the return YOU EARNED?

DON'T WASTE YOUR TIME DOING THIS. Honda will give you the same cash value without the effort, expense, and liability exposure. However, along the same lines hook up with ADP and other parts matching programs to buy inventory you normally sell at a substantial discount.

Keep up the great work!

[mdishong]

[quote="FixedManager"]John, I like what you are doing. The only thing I would add is maximum use of OAR's as well if you are not on top of them within the 28 day parameters. You'd be surprised what will be accepted even though it may be coded as not OAR'able.

Can you go in detail on this? Do you try to input a return request on all special ordered parts that are still in your inventory after 20 days? Or, do you look for a certain return codes? Do you run a report doing this for you out of your DMS? Thanks for the input. Nice to see a Honda tread...

[FixedManager]

The details are quite simple; I input them all, call the customer with their last notice, and read the answer back the next morning. My target for this is 21 - 24 days from date of order.

Furthermore I do this for all manufacturers, especially the ones that "protect" inventory. 35% is considerably less than 100%.

[PMDN]

Can you go in detail on this? Do you try to input a return request on all special ordered parts that are still in your inventory after 20 days? Or, do you look for a certain return codes? Do you run a report doing this for you out of your DMS?

Consult the Parts System Guide. You file an OAR using reference code E for Error or J for Controlled Part. Only good for SRA codes: A, D, F, N, R, S, Y, and *. I have a 6910 report in Reynolds that I print each Friday and file OARs for all special orders from 20-27 days old.

You will find that SRA code D is the most common for OAR returns. The vast majority of parts though will have SRA code E which is only good for a buyback. Always do your controlled parts which will have an SRA code of E or *. Just choose OAR reference code J for those.

Any wholesale or retail returns should also be checked for eligibility.

[PMDN]

Another thing to keep in mind, the return paperwork will not be sent to you for about two weeks. Even then, you have another two weeks before you have to return them. So in reality you can keep the parts for 60ish days before they will actually be returned.

[FixedManager]

All good points PMDN and all factors in why I choose to submit them all. The reality is that if they aren't sold in ten days they probably won't sell; at least not without much work.

I have run those reports for returnability and found them to not be 100% compatible with all items Honda will accept for return. There are many codes that aren't accounted for by the price tapes. Through trial and error I realized that the few extra minutes spent submitting all items was well worth it.

[partking]

Quite a few years ago when I was a Honda PM, we had a similar situation - way more allowance than I had a use for. And at the time, there was no cash allowance; it was use it or lose it. With Honda's permission, I bought obsolesence from other (badly upside down) dealers at 50% back of DN and made some good money on the returns. I'd submit the request and send the return docs to the other dealer. He would do all the packing and shipping and when the credit arrived, I'd cut a check for half the credit. If the stuff was not in returnable condition, not my problem.

If it's still OK with AHM (and I'd check first) it's a good way to make some quick gross profit little effort and no risk.