We recently did an analysis for a WD customer that was buying air disc brake calipers directly from several OEM brake manufacturers (Bendix, Meritor, and WABCO) and realized they were losing a lot of money and opportunity because of the extra cost of the OEM branded caliper, the cost of financing the inventory of the higher cost, the cost of financing the core costs (both the calipers in inventory and returned cores), the losses of a couple of cores, and the cost of shipping the cores back to the OEM brand. They wanted to figure out a way to quantify the cost savings and cut their costs and inventory while still providing their customers with superior calipers. So, we ran an analysis on the annual quantity of each type of caliper they were using against DuraBrake’s No-Core Alto caliper program, based on:
- Their current OEM brand caliper cost
- The DuraBrake caliper cost
- Their average inventory
- The average cost of holding that caliper inventory based on 10% (the cost on their line of credit)
- Their core cost
- The number of cores they lost/couldn’t return
- The average cost of holding that core inventory (new and used) until they had enough to return them to that OEM brake manufacturer
- The average cost to ship the core back to OEM brake manufacturer
This customer sold 107 air disc brake calipers last year and by switching to DuraBrake calipers, they believed they would have saved approximately $76,000 last year in their caliper program, representing a savings of 65% from their OEM caliper program. They realized that the entire amount wouldn’t all be profit since they would have to provide their customer some discount from what they sell the OEM branded caliper for, but they also realized that they could increase their profit per caliper because of the lower cost and increase their volumes by being more competitive. The analysis also helped them realize how much cost went into the financing of cores, shipping of cores, and tracking of cores, all costs not chargeable to the customer.
Want us to do a similar analysis for you? Let us know. Why deal with cores when you don’t need to?
