Cracking the Core Code

Episode 378: In this episode of The Heavy Duty Parts Report, host Jamie Irvine speaks with Brent Dinger of SRC Reman about the challenges and opportunities associated with remanufactured parts and core management. 

They discuss how inaccurate cross-references, limited industry-standard data, damaged or unidentified cores, rising freight costs, and inconsistent ERP systems create difficulties for distributors, repair shops, and remanufacturers. Brent emphasizes the importance of accurate core identification, proper handling of cores as valuable assets, and stronger validation processes by remanufacturers to prevent costly mistakes. 

Brent explains why remanufacturing remains a growing and valuable part of the heavy-duty industry, offering cost-effective, high-quality products that can sometimes outperform original equipment due to engineering improvements based on real-world failure analysis.

Links

·         SRCReman.com

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Transcript

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Jamie Irvine

Welcome to The Heavy Duty Parts Report. My name is Jamie Irvine, and in this episode, we're going to talk about a problem that a lot of companies have when it comes to parts, and that is how to handle cores. And to help me with that, my guest today is Brent Dinger, Business Development Manager at SRC Reman. Brent, welcome to The Heavy Duty Parts Report.

Brent Dinger

Yeah, no, I appreciate you having me, Jamie. It's always good to talk about things.

Jamie Irvine

Well, you and I have been circling this interview for some time, trying to put it together and we're finally able to do it. That's great. I'm glad to see you and glad to talk to you. So this is going to maybe seem like a strange place to start since we're going to talk about cores today, but let's start off with an overview of why in the aftermarket there is a challenge when it comes to getting accurate cross references. I think that's an important place to start. Those who maybe don't understand where we're going to go, we'll see the connection to cores later. But what's your thoughts on that?

Brent Dinger

Yeah, I think really, you know, it's just a lack of that structured ACES and PIES data and the heavy-duty side, right? So I mean, if any of you have worked in into the passenger vehicle side and the heavy-duty side, like the passenger vehicle side, it is very cut and dry. It's very, very structured ACES and PIES where you have a vehicle manufacturer that came out with their engine, they put it in their vehicle and they released that data to know that this was this year to this year. Heavy-duty is just very different, right? You have an OEM that makes an engine platform and they sell it to whatever OEM truck wants to buy it and put it in. So all of these part numbers start to get added. There's not a good database that publishes that information out. So it gets very convoluted and it gets very difficult. And it's really just over the last, I mean, I've been doing this for 17 years now and throughout those 17 years, I've just seen that it's really just a big free for all on cross references that get posted online. So it's really just that lack of structured ACES and PIES data.

Jamie Irvine

For those who don't understand what ACES and PIES is, the way that I kind of understand it is ACES is year make model information and PIES is like all the attributes of the part. You know, it's this big and it weighs this much and it has this many ports and those ports are three eights and it just gives you all that I've got that right, correct? And so you can imagine when you now add a remanufactured line or component to it, where now we're taking parts and we're remanufacturing them and there's a core attached, if you don't have accurate cross-references, that creates a whole other host of problems, right? So how does remanufactured products with a core charge complicate things?

Brent Dinger

I think where it really kind of starts to complicate things, mainly on the customer side, right, is one of the biggest things I've been told over the years, I hear it continuously, is I just don't have a good way to handle cores, right? Like whether it's systematically, maybe the customer just their way their ERP system works and stuff, they don't have a good way to handle that core. And then it's also a lot of people that just, they don't want to physically handle the core, right? They don't want to have to have a guy that's back there lugging these things around, packages them in boxes and that aspect of it. And then I think another big thing too right now that's kind of complicating things for remanufacturers is just the rise of freight charges, right? Just like everything else, freight charges are going up, not only are you sending, you're having freight charges on your finished good product that's going out, but now you've also got a freight charge that the customer or you as a company has to cover to get that core coming back. But I think rising freight charges is kind of complicating things a little bit right now too.

Jamie Irvine

Okay, yeah. And so let's go back to the identification component. If you can't even identify the part when it's new, then you have this core that you have to send back and you have this growing freight bill, which is eroding margin on both sides of the equation there for the customer and the manufacturer. And then you end up sending the wrong core because you weren't able to identify it correctly. Like that's where things kind of fall apart pretty quickly.

Brent Dinger

It does very quickly. And especially because you know, your core coming off of an engine that's been ran, it's been in heat, all these bad conditions and stuff. A lot of times you get it back and you can't even see a part number on there. That part number tag is gone. So then you've got to go through numerous other steps trying to identify what this is. A lot of times that is tearing it down and evaluating piece by piece and figuring out exactly what component each thing is to get you back to what that original finished good part number is. We try a lot of things visually right? We try and be able to identify core just by looking at it and say, I know what this is. And we can do that on a lot of things, but there's a lot of components, turbochargers specifically, that a lot of them look identical. You can't tear them apart, you can't tell them apart unless you tear it down and physically inspect each component. So without that data tag, attached to the turbo with a visible part number. It gets very complicated.

Jamie Irvine

Yeah, and then there's super cessions, right, where you have a series of part numbers that have been released on the same part. There's been updates done. So you go and buy a compatible part, but it's been superseded to another part number. You're sending back the original core off of the original maybe truck that the OEM had put on originally. There's differences there. Then there's all the flood of offshore products in the marketplace. So then you as a manufacturer have to make a decision, like, is this rebuildable? Is it made of the same quality as the OEM one? You know, oh, it just, it gets complicated. And you talked a little bit ago about the customer's ERPs, and that is a major issue. Repair shops with their shop management software, it's all over the map. The parts ERPs, a lot of them, the legacy ones have that figured out to a degree. But I've seen companies where their core assets on the balance sheet and on, is way out of whack compared to what they actually have. There's all of these factors that really complicate things. So when we get back from our break, we're going to talk about kind of what SRC does as a company to try to help its customers manage this and some of the best practices.

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What can we do to make core identification more accurate and to get that part of the job right?

Brent Dinger

Yeah, I think a lot of that comes down to us as remanufacturers, right? I think that we need to be more willing to do really develop better validation processes, right? I know I mean, I've been guilty of it in past roles. I think we get caught up so much on the I don't want to miss a cell, right? So I know that I have this component and it has these cross references, but I know that if I have this part number, I can make it work to make one of this part number. So I add that as a cross reference to this so my customer sees it in my cross and I don't miss that cell, but then that really starts to I mean, that gets published online and then people go to look at cross-references and they see that and it really just starts this spiral of inaccurate cross-references. So I think just we as remanufacturers need to do a better job of just validating the correct cores, making sure we have the correct part and making sure that we are taking the exact correct cross-references and publishing that and not inaccurate crosses that we know are inaccurate.

Jamie Irvine

Yeah, because if you're a distributor, I mean, you're at the mercy of whatever is published, and so you're looking to the OEMs, you're looking to the remanufacturers, you're looking to the tier 2 parts manufacturers and tier 3 to make sure that whatever data they're publishing in their websites and their cross-references is accurate. It's not really your fault as a customer if there's inaccurate crosses or if that data is quality is not high. On the other side of it, I think the customer, the distributor, and their customer, they've got some issues when it comes to mishandling or misidentifying cores themselves. So what can they do to make sure that they're living up to their end of the bargain and making this whole reman thing work?

Brent Dinger

Yeah, I mean, I think from a customer standpoint, you know, if you're misidentifying core, right, like you have this core in there and you can't identify it, but you're just taking it and you're sending it back to the remanufacturer, there's a big risk there on your end because everything that goes out has a core charge. And some components such as turbochargers, you may have $1,000 to $1,500 core charge. And if that comes back and it's the incorrect part, you're not going to get that refund. You're not going to get that credit for your core. It's very important that the customer is able to identify that they are sending the correct core back. And it's really up to us as a company to make that easy for them. So as a customer, you want to really check if that data tag is there and make sure that that part number matches the part that you sold to the customer and that your customer has returned the right part. If there isn't a data tag, we're here to help the customer. Just give us a call. We'll help you identify what it is to make sure you're sending back the correct thing. I know there's a lot of talk going on right now in the industry about different ways to integrate AI, to be able to help customers and stuff. So we're on a right path to make it even easier for the customer. But I think it's just really, I mean, as a customer to do your due diligence and work with your supplier to make sure you're sending the right part so you can get your credit.

Jamie Irvine

Is there any best practices that you would recommend for handling cores at the distributor level?

Brent Dinger

So every core is an asset, right? And even for you as a customer, you may look at this thing and you're like, I've got this dirty core. It looks terrible. Yeah, I'm getting my credit back. It's no big deal. But you got to remember that core is rebuildable. And that is potentially another item for you to sell in the future. I think as far as handling core, one of the biggest things that I see happen is, again, people think, man, I've just got this dirty core setting here. It doesn't mean anything. And they just throw it in a tote and then other stuff gets piled on top of it. And what was once a rebuildable core has now got damaged parts on it because other stuff's been thrown on top of it that's heavy and is damaging it and it comes back and now it's not rebuildable. So I think one of the best practices to me, I think as a customer, if I was in that position, is just thinking about that as a finished good product, right? I'm going to handle that thing as like it's a brand-new turbo right off the shelf so that by the time it gets back to the remanufacturer, they've got a good product that they can still remanufacture.

Jamie Irvine

I always have said that when I go into a parts room, I don't see parts. I see stacks of cash. And when I go to a core area or to a junk steel bin and I see a core in there, it's like you just took a bundle of cash, put a rubber band on it, you got a nice fat roll of cash and you tossed it in the steel bin. And so if you start thinking about it that way, and if you can teach your people who work for you to think about it that way, to value these as assets, I think that's the first step in being able to then start thinking about, well, how do we handle this in a more effective way to make sure that we get our money back? How does a remanufacturer like SRC help? You kind of talked about an investment in technology. You've talked about helping with parts identification. What other things does SRC do to help its customers to make sure that they're getting their money back on their cores, you're getting the cores so you can rebuild them, and the whole thing works.

Brent Dinger

So one thing that really stands out for SRC that is it's really been amazing because I've been in, like I said, I've been in the remanufacturing industry for 17 years now and worked for a couple companies, but this is the first company I've been a part of. We have an SRC logistics division and they have developed their own core software. And it is available for customers to purchase and it integrates into your system. There's two different versions of that product. The more popular one for the ads market side would be that standalone version. And it can do everything. It can do everything to scheduling the pickup for you for your core. It's a very great software. So we offer that. That's a big resource that we have to really try and make things simple for our customer because I am all about, I always say, easy button, right? Everything I look at doing, I'm trying to figure out like from a customer standpoint, how I can make that as easy as possible for our customers. I don't want it to be complicated for them. I want it to be very simple. So, but that's one big way that we as SRC really try and help our customers. We have that logistic side that can help handle the core.

Jamie Irvine

Yeah, and it's those kinds of investments, right? It's education. It's teaching the parts people at our distributor locations and the warehouse people about the product, about how to handle the cores, like all of that investment. And I know a company like SRC would be heavily involved in all of that. I think when it comes to cores, there's a lot of people that I talk to that really are of the opinion that reman is kind of going away. It's not going to be really part of the future. There's too much technology coming on new vehicles. What would you say to someone who thinks that way about reman? Is reman on the decline or what's happening there?

Brent Dinger

No, I don't, I honestly, I think we're still, I mean, we're still on the incline, honestly, because if you think about it, you know, remanufactured product is, especially from, you know, your good quality companies, a remanufactured product, it gives that customer a cheaper option, basically. I hate using the word cheaper, right? But it's a more affordable option.

Jamie Irvine

A more cost-effective option.

Brent Dinger

A more cost-effective option that is just as good a quality and a lot of times better than the original product put out. So with the way the economy is right now, I know owner operators are always looking for ways to keep stuff running and save money. Fleets, these guys that are doing fleet repairs and stuff, they're being driven to figure out a way to keep costs down and keep these fleets running. So remanufactured product, it gives you that solution. You get a good quality remanufactured product at a more affordable cost than a brand new one. I mean, sometimes in some cases on certain parts, I mean, sometimes half the price of what that brand new one is.

Jamie Irvine

Brent, you mentioned that a remanufactured product could actually be of higher quality or better performance than an original equipment part. How is that possible?

Brent Dinger

There's this big thing in the industry. A lot of people don't completely understand what remanufacturing is, right? You'll hear rebuild, you'll hear refurbished, you'll hear remanufactured, right? There's a big difference between the three. We don't just take a part and clean it up, put some new seals in it, put it back together and resell it. This thing is being completely remanufactured. So it is getting torn down to the component level. Every single component gets remachined to that factory specification. If it is a part that is completely scrapped out, we might have to tear down another core to get another part. Sometimes they get replaced with a brand-new part. So some remanufactured product might have some brand-new components in it. It's not just taking this thing, cleaning it up a little bit. Yep, it's still in good shape. We put some new seals in and send it out. It's getting completely remanufactured. So when you get that product back, visually, it doesn't necessarily look brand new because you might have some pitting on the housing just from wear and stuff. But functionally, it's a brand-new turbo. We as remanufacturers, we get to see all of these turbos coming in. When we go through this remanufacturing process, we reverse engineer, we go through sometimes a hundred turbos when we're developing a product or whatever that product is, we'll go through say a hundred of them and we see what those failure points were, right? Your original manufacturers usually aren't getting to see that kind of data. We get to take this core that's came off of an engine, we can see that this thing has been this failure on 70% of them. So we get to see that data and then we're able to take that and our engineers can improve the product. We can say this was a failure point. We can make this part better. And then we eliminate what caused that to fail in the first place. And when you can do things like that, I've always talked to people about turbocharger specifically, that's been most of my career. And I've always talked to people about failures and trying to get them to understand a turbocharger doesn't just fail, right, something on the engine has always caused that failure. So when we're able to see all of these cores coming in, we do these analysis on them, we see that, you know, this turbo was, it's designed to run the life of that engine, but we see that, you know what, it was doing fine, but this on the engine just kind of caused this to fail. But if we made this better, it would still last a lot longer. Even with that on the engine, causing this problem, it would still last a lot longer. So we're able to do things like that and a lot of times fix failures that original manufacturers made.

Jamie Irvine

Absolutely. So Brent, been great talking to you. If you want people to remember just one thing from today's conversation, what's that one thing?

Brent Dinger

Yeah, I think the one thing that I really want people to take away from this is don't be scared of reman, right? We have this perception, I hear it all the time. I had a bad experience with a remanufactured product. I don't want it. Don't be scared of reman. There are companies out there that make great remanufactured products. And the other thing is just don't let core turn you away from buying reman. There are companies out there like SRC that will make it easy for you. We're always looking for solutions and we want to help you make that process easy to get that back. So don't let core turn you away from buying Reman.

Jamie Irvine

You've been listening to The Heavy Duty Parts Report. I'm your host, Jamie Irvine, and we've been speaking with Brent Dinger, Business Development Manager at SRC Reman. To learn more about SRC, visit srcreman.com. Links are in the show notes. Brent, thanks so much for being on The Heavy Duty Parts Report.

Brent Dinger

Yeah, thanks for having me, Jamie.

Jamie Irvine

And thank you for listening or watching this episode right to the very end. If you haven't already, head over to heavydutypartsreport.com where you can follow the show wherever you get your podcasts. As always, I want to conclude this episode by encouraging you to be heavy duty.