|
Core Charges |
.. Geoff, Jan 3/07 |
|---|
Selling to customers
For part numbers that can have core
charges, there are 3 part numbers and 3 prices in Deere's system. For
example:
|
Part number |
Description |
Selling price |
Distributor cost |
|
RE47135 |
Injection pump |
$1,952.73 |
$1,528.66 |
|
RE47135X |
Exch |
$1,694.09 |
$1,284.66 |
|
RE47135C |
Ret Cr |
$258.64 |
$244.00 |
Note that the part number suffixes ("X" and "C") are Frontier's. Deere, confusingly, uses the bare part number for the new part, the core, and the exchange price.
Usually, we sell a customer RE47135 injection pump at full list price. When he returns the core, we credit back a RE47135C. When we return the core to Deere, Deere credits us for an RE47135 core.
When we sell a new injection pump, we have no idea if the customer will return the core in the future. So it makes sense to sell the item as a new part, because that is what we purchased from Deere, and that is what we are selling the customer. If he decides to return the core to us, that would be a separate transaction.
Purchasing from Deere
Unfortunately, Deere's invoices are
misleading. Instead of showing $1,528.66 for the new RE47135 injection pump,
their invoice shows:
|
RE47135 |
fuel injection |
1284.66 |
|
core price |
244.00 |
If we simply compensate for Deere's confusing invoices, the rest of the process becomes straightforward. So when you see a core charge in addition to a part from Deere, add the core charge + the part charge together. This gives you the cost on the new part.
The key point is that there should never be a core charge on a new part, either from the manufacturer to us, or from us to a customer.
The entire process
Here's how to make it work:
- we order
a new injection pump as an RE47135
- Deere's invoice shows it as (exchange
cost) + (core charge).
- we add the 2 lines together to get the cost for the
new injection pump
- we sell it to the customer as a new injection pump. We
should make him aware of the option of returning the core with an information
line on the invoice.
end of transaction #1
if the customer returns the injection pump core:
- we credit
customer for RE47135C
- we now show 1 core in stock
- we return the core
to Deere. Deere credits us.
- we now show 0 RE47135C cores in stock
end of transaction #2
If you are unclear on this, please ask Geoff for directions, and we will update this document.