Few would deny that OEM parts are the gold standard for repairs, but other options are worth considering in many situations. Using recycled, remanufactured, reconditioned or aftermarket parts can save customers 25 percent to 50 percent over the cost of new parts.

Suppliers of these kinds of parts also compensate by providing warranties that are often longer, more comprehensive and more flexible than those offered with OEM parts, says Chris Rand, president of Richmond, Va.-based C&K Auto Parts.

Parts 101: Terminology Tutorial

New – The part is brand new and built by the original equipment manufacturer (OEM).

Remanufactured – The part is disassembled completely, the original main structure is used, brought back to OEM specifications and cleaned, then new internal parts are put in.

Rebuilt – All obvious wearable parts are replaced but complete disassembly is not performed.

Like Kind and Quality – This is a used part of similar type and condition to the part being replaced.

For example, warranties can be tailored to the needs and business models of individual service contract administrators. Among administrators, some take a risk management approach and opt not to buy extra coverage while others prefer to take the cost of the part into account and extend coverage of the part to the life of the warranty.

“Some administrators want a bare bones price (part only) and others want an end-of-contract warranty,” explains Hugh Pettigrew, owner of Big “D” Auto Parts, based in Dallas. “We can create a warranty and an appropriate price based on what the warranty company asks for.”

Most parts suppliers offer a minimum warranty of 12 months/12,000 miles parts and labor with many large parts carrying a 36-month/100,000-mile warranty.

Availability can also be better, particularly for parts that are back-ordered, obsolete, cannot be located or that may be limited in certain geographic areas. Used and remanufactured parts suppliers often have a broad network of remanufacturers, used suppliers and salvage yards from which to find the needed part.

Small parts can often be shipped overnight, while larger parts can take three to five days. “It’s incumbent upon us to know what we’re doing regarding shipping and we choose the best delivery method for every individual order,” Rand says. “If we don’t live up to our promise, we accept additional costs for delays.”

In addition to accepting responsibility at the beginning of the order, companies like Big “D” Auto Parts, C&K Auto Parts and Chicago-based LKQ Corp. stand behind their parts after delivery.

“When we have a claim, we immediately contact the repair facility and find a way to correct the problem as expeditiously as possible,” Pettigrew says. “Anybody can sell a part, but the difference lies in how they respond to a problem. We act quickly and pay directly to the shop.”

The benefits of a national supplier include the ability to handle claims in other parts of the country from where the original repair was made. In addition, recycled, remanufactured and reconditioned parts are more environmentally friendly than new original equipment parts.

“Buying these parts is a simple way for businesses to make their operations ‘green’ because these parts are taken from recycled automobiles, which saves energy and materials compared to producing new parts,” says Laurie Garcia, vice president of OEM Services & Marketing at LKQ Corp.

Complete Assemblies, National Reach Limit Costs

Suppliers of used and remanufactured parts are often able to deliver more complete assemblies, relieving the repair center technician from having to put together every piece of a part.

For example, engines, transmissions, air conditioner compressors and cylinder heads can come completely assembled or nearly complete from external parts suppliers.

The cost savings offered by these suppliers is useful in the negotiation process between administrators, repair facilities and contract holders. Because MSRP can vary, a quote from a parts supplier can help an administrator verify that the dealer’s price is legitimate.

Of course, from a customer service standpoint, the selection of a part provider cannot solely be based on price. Some contract holders want nothing less than a new part from the OEM and it is important to give them that option.

Parts suppliers are typically used in situations where there is a significant price difference. Service contract administrators can present the lower-cost option, giving contract holders the power to choose their preference and the ability to pay the difference if they so choose.

“Recycled and remanufactured parts provide original equipment quality at a savings compared to new original equipment,” Garcia says. “Our recycled product is late-model, low-mileage with a standardized inspection and testing process backed by our nationwide warranty.”

She adds that remanufactured products start by being completely disassembled and reassembled to OEM specifications.

Technology Advances Improve Efficiency

Going outside the most obvious supply chain for a part admittedly adds an extra step to the process. Parts suppliers acknowledge the additional effort required and are seeking ways to make their systems as easy for administrators to use as possible.

Administrators typically contact suppliers via e-mail, instant message or phone to check on price and availability. The push in the last year has been toward greater automation and some suppliers are now integrated with administrators’ systems, which allows for prices to be displayed automatically.

“Information technology is the fastest growing part of our business,” Rand says.

Because non-OEM parts suppliers are smaller companies, they are often able to deal with problematic parts more quickly and with greater flexibility. Design flaws can be addressed beyond the OEM and remanufactured parts can actually be superior if a known defect can be avoided.

What to Look for in a Supplier

Some perceptions remain among warranty providers and service contract holders that used, remanufactured or rebuilt parts are untested, dirty or worn out.

In reality, reputable suppliers deliver clean, tested, well-packaged parts that are under warranty. All parts are drained of oil and other fluids before being shipped.

“We develop dealer customers by sending good parts,” Pettigrew says. “We’re very conscious of the presentation of the parts we send out because we believe technicians are more likely to do a better installation when the part looks nice and is clean.”

Rand agrees: “We know what warranty companies expect and bad parts and labor will eat you alive.”

Administrators are looking for the best pricing option, quality and parts availability. Customer service and flexibility with warranty terms can also set suppliers apart.

“There is very little patience in our industry for bad customer service,” Rand says. Because it is easier for administrators to handle problems than to deny claims, suppliers must honor claims they disagree with at times.

Suppliers that can see the big picture and are sensitive to the relationships between warranty providers and contract holders can be a great asset to administrators.

Michael Santos, claims manager with Warranty Solutions – part of Wells Fargo Dealer Services – in Denver, works mainly with four or five suppliers and says service has been excellent. C&K Auto Parts is one of the parts suppliers.

He says the training C&K provides about its online tools is of great value.

“Dealers know the suppliers we use and they know they are reputable,” Santos says. “The biggest reason to use good suppliers is the peace of mind it gives you.”