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November 2002 |
AVSpare? REMANUFACTURED PRODUCTS
CORE ATTRITION POLICY AND ENTITLEMENT
REINSTATEMENT/ATTRITION DATE EXTENSION
GUIDELINE
AVSpare has a Core Attrition Policy for all Reman Products sold through all Marketing
Organizations. This means that in order for a dealer to receive a core credit for the Reman
products purchased, all Reman products must be returned within a specified time period.
This applies to Reman worn cores and to Reman parts inventory. Major Components have a
different time period from all other Reman products. In addition, this policy is administered
using FIFO (First In First Out) accounting in the issuance of core credits for Core Credit
Requests (CCR?s) ; core credits for reman surplus returns (PRA?s); and in the attritioning of
outstanding entitlements, starting with each dealer?s conversion to CMIS 2.
Below is a description of the Core Attrition Time Periods, a Policy Description, and related
Entitlement Reinstatement/Attrition Date Extension Guideline.
Marketing Organization Core Attrition Time Periods
North America Commercial Division (NACD) Policy (effective July 16, 2001)
The NACD Core Attrition Policy was effective July 16, 2001 and established a 455-day time
period for all Reman products excluding Major Components. The current Major
Component policy was effective January 1, 1998 and established a 180-day time period
Latin America Commercial Division (LACD) Policy (effective June 30, 2002 and January
1, 2003)
The LACD Core Attrition Transition Policy was effective June 30, 2002 through December
31, 2002 and established a 548-day time period. Effective January 1, 2003, a 455 day time
period will be established for all Reman products excluding Major Components. The
current Major Component policy was effective January 1, 1998 and established a 210-
day time period.
Asia Pacific Division (APD) Policy (effective May 31, 2002)
The APD Core Attrition Policy was effective May 31, 2002 and established a 455-day time
period for Australian dealers and a 548-day time period for all other Asia Pacific dealers, and
includes New Zealand, Papua New Guinea, Samoa, and other Pacific Island dealers. The
current Major Component Policy was effective January 1, 1998 and established a 240-
day time period (or 210 days for the Australian area).
Europe, Africa, Middle East (EAME) Policy (effective January 1, 2003)
The EAME Core Attrition Policy, effective January 1, 2003 establishes a 455-day time
period for all Reman products excluding Major Components. This policy is effective with
each dealer?s conversion to CMIS 2. The current Major Component policy was effective
January 1, 1998 and established a 210-day time period (or 240 days for the CIS
territory).
AVSpare Remanufactured Products Core Attrition Policy
Dealers will receive up to 100% core credit for core returns of Reman parts returned through
the defined time period with no core reinstatement or credit after this period.
Any entitlement that has been attritioned by AVSpare affecting a dealer?s surplus return
(Parts Return Authorization (PRA)) of new Reman parts (excluding major components, See
IRM REM02-32 or PELE0937) will be automatically reinstated and credited up to 100%
(See IRM REM02-38 or PELE0943). The process will look back up to 24 months from the
final credit issuance date to open an attritioned entitlement.
Dealers that have annual surplus returns are asked to request for an entitlement date
extension for non-moving Reman parts that have been in inventory for nearly one year, but
only qualify for the next return cycle; or to satisfy those situations when a part is waiting for
the next return cycle and then the item is sold to a customer with a core to be returned.
It is very important for all dealers to realize that an entitlement is established and time
stamped with the purchase date and an attrition date at the time AVSpare invoices a dealer
for a Reman part. These dates will control when an entitlement is attritioned beyond the 455
or 548 day FIFO window or stated Major Component time period. Dealers can view
purchase dates and attrition dates in CMIS 2 (Core Management Information System).
All core returns, and surplus parts returns will be processed in a FIFO manner. When
using FIFO, this means that the oldest outstanding entitlement for the specific part
number is closed. If there is no entitlement for that specific part number, the oldest
outstanding entitlement within the Core Acceptability Family (CAF) is used.
Regarding Major Components, dealers should use the Core Management Information
System (CMIS 2) Major Component Attrition Notification Report to identify
entitlements that will be cancelled or attritioned by AVSpare based on the current
Policy for your Marketing Organization (See REM02-41 or PELE0947).
Dealer Core Attrition Reporting
Dealers are encouraged to continue to provide Monthly Core Attrition reporting to AVSpare
through their DBS system when administering their customer core return policies. For those
dealers that report in this manner, we will reinstate core entitlements in support of those
special customer situations (excludes major components).
For Non DBS dealers that have a core tracking system, this information should be
transmitted to the AVSpare mailbox for processing core attritions in the format requested as
published in the Communication Directory for Dealers (DCDD) or contact the CMIS 2
support staff for assistance.
For all dealers with custom systems without core tracking functionality, or core attrition
reporting capability, will not be required to provide this information until the dealer is
converted to DBS or has a suitable system to provide the information. However, all dealers
are still subject to the established core attrition time period for your Marketing Organization.
Reason for Policy
This policy is being established to keep Dealer open entitlements more in phase with the
AVSpare Core Management Information System (CMIS) records; minimize the need to
perform Reman core recounts; emphasize the need to improve dealer accounting and
reporting of core inventory and liabilities; and the policy moves AVSpare from an
indefinite to a definite core return policy time period.
As we have emphasized the importance of core returns in past communications on this
subject over the years, from AVSpare?s perspective, it is vital to recognize that the core is
the lifeblood of any exchange program. If we don?t get the core back from the customer, we
would be basically seeding an exchange program with ?new? parts and selling them at
discounted prices, which is not an attractive business to be in. From a customer perspective,
if they do not return the core back to the dealer, the customer does not really enjoy the full
cost benefit of purchasing a Reman part to reduce Owning & Operating costs.
First In First Out (FIFO) Accounting
As previously mentioned, we will begin using FIFO accounting practices when managing
Reman core entitlements as we convert dealers from the current CMIS to CMIS 2. The FIFO
methodology will be used when attritioning cores and when core credits are issued.
When using FIFO, this means that the oldest outstanding entitlement for the specific
part number is closed. If there is no entitlement for that specific part number, the
oldest outstanding entitlement within the Core Acceptability Family (CAF) is used.
Using the specific part number first will help minimize price variances.
Core credits will be based on the FIFO invoiced core deposit and not based on the current
core deposit price. CMIS 2 has the ability to track core inspection, price and upgrade
variances. Changes in the Dealer Business System (DBS) 2.3.3 also allow the tracking of
core inspection, price and upgrade variances.
CMIS 2 and DBS or Solution Center
Regarding the Core Management Information System (CMIS 2), it is a major tool
enhancement that will support your efforts to manage core returns and entitlements. In order
to properly manage your entitlements in CMIS 2, all dealers with the Dealer Business System
(DBS) or the Solution Center are expected to use the core-tracking module and to
electronically transmit Core Credit Requests (CCR?s) to the AVSpare Mailbox. This
assures timely core credit processing and will prevent entitlements from being prematurely
attritioned. For those dealers that do not have DBS, AVSpare expects the dealers to use the
CMIS 2 system to process core returns. Non-compliance could result in entitlements being
prematurely cancelled resulting in no core credit.
In addition, consideration is currently being made to assess a CCR processing add charge by
line item for all dealers that continue to issue paper CCR?s instead of using CMIS 2.
Summary
? AVSpare will administer a Core Attrition Policy for each Marketing Organization for all
Reman parts purchases. AVSpare will continue to administer the current core return
policy for all Major Components. The Core Management Information System (CMIS 2)
will automatically administer these policy parameters for dealers.
? Cores attritioned by AVSpare will not be reinstated.
? Cores attritioned by dealers can be reinstated in support of special customer situations
(excludes Major Components).
? Attritions date extensions will be considered.
? Any entitlement that has been attritioned by AVSpare affecting a dealer?s surplus return
(PRA) of new Reman parts will be automatically reinstated and credited up to 100%.
The process will look back up to 24 months from the final credit issuance date to open an
attritioned entitlement (excludes Major Components).
? The policy will go into effect corresponding to each dealer?s scheduled CMIS 2
?Conversion Date?.
? Use DBS core tracking module and electronically transmit Core Credit Requests to
AVSpare Mailbox or use CMIS 2 to process Core Credit Requests to AVSpare.
Refer to the following IRM?s for more details: CMIS 2 Major Component Attrition
Notification Report PELE0947; Core Attrition Policy for Reman Parts Returned As Surplus
On A Parts Return Authorization (PRA) For All Marketing Organizations PELE0943; Major
Components Returned As Surplus On A PRA PELE0937.
Entitlement Reinstatement Guideline
Dealers are encouraged to provide an electronic monthly report to AVSpare via the mailbox
that reports those worn cores that are not going to be returned by their customers as well as
any no credit core (rejected cores) transactions. We expect dealers to use due diligence in
their reporting to avoid the problem of over reporting the numbers of cores that are not going
to be returned, only to request reinstatements a few days or weeks later (See Best Practice
Guidelines on Reman Web Site).
Dealers that report their Dealer Reported Attritions will be allowed to have these entitlements
reinstated. This flexibility is provided to allow reasonable exceptions to the dealerships
published and practiced core return policy after the dealer has submitted a dealer attrition
report. This flexibility will be restricted when dealers are not properly administering or
enforcing their core return policy. Furthermore, reinstatement of major components will not
be done unless agreed to by the Reman Product Group. In addition, reinstatements for no
credit cores will not be allowed.
Reinstatement is allowed only if the dealer provides the following information to their
designated Reman customer service representative.
1. AVSpare Entitlement Dealer Code
2. Remanufactured Part Number
3. The original sales document date to the customer
4. The core attrition quantity
5. The dealers Customer Account Number
6. The original sales document number
7. Provide attrition reason Core Attrition (CA) or No Credit (NC). If No Credit (NC),
reinstatements will not be allowed.
Entitlement reinstatements (excluding Major Components) are also allowed in those
situations when the dealer has retained a Reman part in inventory, subsequently attritioned by
AVSpare, and then subsequently sold it to a customer that has a core to return beyond the
normal core attrition policy. In practice, it will be our policy to reinstate the AVSpare
Attritioned item when the part is sold from dealer inventory to a customer with a core and
has had core credit issued to the customer. The dealer must provide the sales document and
credit document and date information for reinstatement. The dealer can then process the
CCR to AVSpare and ship the core.
Cat Attritions can be reinstated on a request basis only for any reman component subject to
the approval of the responsible Product Group. Requested are to be made first through your
normal Customer Service Contact person.
Entitlement Attrition Date Extension Guideline
Dealers will be allowed to extend attrition dates when circumstances beyond their control
will cause them to not comply with the core return time period and to process the Core Credit
Request (CCR) on time. Dealers must ask for extensions before the entitlement cancels or is
attritioned. We encourage all dealers to call at least 15 days in advance of a major
component attritioning. Dealers should be using the Major Component Attrition Notification
Report to identify major components that will attrition and that may need an entitlement
attrition date extended (See REM02-41 or PELE0947). All extensions must be approved
through your designated Customer Service contact. This applies to all Reman components
including Major Components.
Dealers that have annual surplus returns are asked to request for an entitlement date
extension for non-moving Reman parts that have been in inventory for nearly one year, but
only qualify for the next return cycle; or to satisfy those situations when a part is waiting for
the next return cycle and then the item is sold to a customer with a core to be returned.
Core Management
Please refer to the AVSpare Core Management Information System (CMIS 2) Parts
Information application describing all reman part/CAF and related information. Also refer to
other CMIS 2 inquiry applications such as Customer Profiles, Inspection Reason Codes,
Inspection Line Inquiry, Add Charge Information, Entitlement Activity, Entitlement Inquiry,
CCR Inquiry, CCR Entry, Shipment Processing; Process Packaging Grief; and Reporting to
properly manage core returns and monitor inspection performance. This information will be
available to all dealers worldwide after your CMIS 2 conversion date. In the meantime,
please continue to use the current CMIS Entitlement Parts Inquiry Screen describing the list
of parts in a Core Acceptability Family (CAF) and related part number detail.
For the latest updates of Reman Policies and Core Management (SELD0122), Core
Management Systems & Operations Procedures (SELD0040), and Shipping Instructions
(SELD0039), go to the Reman website and click on Procedures and Policies (listed under
Reman Program Information).
If you have any questions regarding core return processing, feel free to call your Corinth
Dealer Service Representative toll free at (800) 537-2928 or use our e-mail address --
reman_core_operations@cat.com. For assistance with technical questions, call the Peoria
Reman Customer Satisfaction Hot Line also toll free at (888) 88-REMAN or use our e-mail
address--Reman_Help@cat.com.
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