Core Credits, Tracking, RMA Processing

By Jim Snyder

Mentioning the tracking and accounting of cores brings a groan from many PEI members. The more volume you do, the worse it gets. Trying to keep up manually with the complexities of cores and the corresponding RMAs to suppliers is close to impossible. There are just too many possibilities for omissions and mistakes. Even many automated accounting systems don't do a good job of addressing this critical part of your business. So what is the solution?

Start with inventory. In an inventory item record, you need the ability to identify whether a core is associated with the item. If so, another inventory item needs to be set up with either a prefix or suffix code attached to it. Here is an example:

When this item is sold through parts sales or service, a question should be displayed that asks if there is a core credit associated with the sale, or is it warranty-related, or is no core involved. If there is a core credit, in the item examples above, both the selling price and cost could automatically be adjusted by the amounts associated with the core item. This is not applicable if it is warranty-related or if no core was involved in this sale.

You should also have an option to override the core item being returned. In the above example, if an OEM Pump Cntl Node was used, the normal assumption would be that an OEM Pump Cntl Node core is associated with it. However, it is possible that a Gilbarco core is actually being returned. Allowances must be made for this situation.

From a billing and accounting perspective, everything looks good. Your personnel have not had to remember that there may be a core associated with this item, nor did they have to manually adjust the part sale billing for the core. Two items that often are missed are now taken care of.

However, was the core ever returned to the warehouse? Or do cores have a habit of just disappearing? A core audit report can show, by customer and invoice, those items that have not been returned. Items are removed from this report when they are received back into your warehouse through a core return entry procedure in inventory. The creation of a warehouse location dedicated to cores is desirable.

So far, so good. But what about returning the core item to the manufacturer/supplier for repair or warranty replacement? Through a routine in inventory called RMA OUT, the core is selected for return to the manufacturer/supplier with an associated RMA number. An RMA OUT audit report shows all items returned to the manufacturer/supplier. Without this type of report, it becomes very difficult to know and track what items have been returned or if they have been sent back.

When the item is received back from the manufacturer/supplier, a routine in inventory called RMA IN would be used to receive the item back into stock. This routine creates a purchase order to record the amount charged for the repair (usually not required for warranty returns). This is done primarily for verification that the amount on the invoice (when received) matches the amount on the purchase order. The routine will also remove the item from the RMA OUT Audit Report.

When receiving items back from the manufacturer/supplier, what happens if an item returned differs from the item originally sent? Perhaps the original item has been replaced by a new replacement item or a substitute item. Allowances must be made to accommodate this type of scenario in the receiving process.

The examples provided above indicate how difficult and tedious core tracking can be. Trying to keep up with the complexities of cores and the corresponding RMAs to suppliers is a challenge. Automation is a step in the right direction.

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The PEI Journal • First Quarter 2009 • Volume 3, No. 1 • Contents are Copyright © Data Key Communications, Inc.
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