GPI 135 – Convince your customers to buy cheaper parts using up your scrap or ‘off spec’.

Create a program to use up your remaining scrap or leftover items from production.  Offer to sell parts at a reduced price in order to use up remaining material you have from normal operations versus selling it to scrap dealers for next to nothing.  Offer to some selected customers to make more of their products at a discount if they will order from what you have in stock using scrap material while it lasts.

Provide weekly scrap lists to a selected customer.  Tell him if he selects what he wants to use and he gives you a list of products to make for him, you will make the products for him at a temporary discount just to use up your remaining scrap.  Tell him he can get as many as the remaining scrap amount allows.

Possible “Cheaper Parts” Program using in-house scrap material on hand:

1. Material available:  Give the customer the list of material we have on hand this week.  It is probably leftover material from his last order.  Tell him to review it and tell you in order of importance what parts the firm can make for him at a discounted price (he gets a break on the material cost just for working with you).
2. Products priority list:  Give your customer an updated list of the products that you can make, given material specifications.  The firm will produce the listing until it runs out of material.  When the company does run out, it will go to the next leftover material that needs to be used and will make the next parts specified on the list.  We will make those parts until that leftover material runs out.
3. Advantage to customer:  Reduced price on parts he normally orders and may need.
4. Advantage to your firm:  Use for scrap that would normally lose 75-90% of its value thrown away because of its small size.  Additional sales using material charged off the books on the previous sale (jobs absorb all material cost normally).
5. Limited material and time frame:  Clarify that your special reduced offer is limited to scrap material available only.  Tell the client that the offer is limited to the scrap on hand and once used, causes the special to close.