I don't think its all that simple to run a Moss or VB operation.
It also doesn't look like a industry sector that is making dough
hand over fist, but then I don't have any inside P&L info (or any
affiliation).
They offer thousands of items and the retail price or gross margin
of any one repro part would have these components in it -
Original annual sales volume projections
Design/engineering spec writing
Sourcing and RFQ strategies re offshore or onshore, new or
established supplier base
Upfront tooling cost
Tooling amortization
Minimum volume production runs and volume variable quoted unit
cost
Production scrap levels and inspection/disposal procedures
Inventory levels, payable/receivable control, all related to
interest cost of money
Exchange rates, hedging policies, and letters of credit, if
offshore
Allocation and control of costs between cost of goods vs SG&A
Gross margin and profit strategies re price/quality, market
share/growth, ROI/EPS and risk factors
Internal and external flack levels
System, management and employee incompetence
Customer service levels and warranty policy
Unpredictable liability and insurance (killed the US GA aircraft
industry)
Price relativity to other catalogue items
Competitive forces, possibly on a country by country basis.
Typically not enough staff to effectively manage all of the above
in any detail
I don't want to get too esoteric about the burdens of running a
business, but if it were all that simple then we all be doing it,
or at least there should be a lot less belly aching about our
existing competitive supplier base.
The decision to source out of Taiwan, mainland China is not
usually so straightforward. One has to be quite careful and
selective. They are not always value effective. The unit prices
may look good, but the hidden costs of long distance business and
culture differences can be enormous. BTDT. Whether in the end the
offshore gross margins are obscene or not, and if they are whether
that is used to reduce the margins elsewhere - only Moss and VB
know - or do they?
Actually I am quite amazed at the service level that our really
very small volume LBC industry sector has access to, although I
agree that seemingly unexplainable pricing and quality
discrepancies do abound. In context, go try and find a door knob
in Russia.
And in any industry sector there will be both intentional and
unintentional ripp offs. (The car related products on infomercials
must be the epitome of the endless supply of ultimate customer
stupidity).
Mike L.
60A,67E,59Bug
----- Original Message -----
From <type79 at ix.netcom.com>
Cc: <british-cars@autox.team.net>; <spridgets@autox.team.net>
Sent: June 28, 2000 10:33 AM
Subject: Repro Parts WAS Bad Parts
> Listers,
>
> Someone who chooses to sit out this public thread, contacted me
off-list with an
> interesting comment on this subject.
>
> The lister questioned the profit margin on parts sourced from
Asian suppliers and
> theorized that it is far greater than the profit margin from
European suppliers. If
> this is true, he commented, why don't the retailers selling
these parts pass on the
> savings, or to put it another way, apply the same markup to
these parts rather than,
> for example, selling the $5.00 part for $20.00?
>
> Am I on a soap box? Yes. I have been fooling with lbc's for more
than 20 years and
> hop-scotching through the repro parts jungle for that entire
time, hearing the same
> reasons/excuses year after year.
>
> Jay Fishbein
> Wallingford, CT
>
>
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