Increase Your Profitability with Proper Core Management

Founder & Chairman of the Board of Karmak , Inc. | Richard Schien | 10/14/2017

For many businesses, cores aren’t an asset to a business . They are a “necessary evil” that costs you money. This doesn’t have to be the case. Rather than seeing cores as a resource sink in your business, you can add them to your asset list, and use cores to increase the profitability in your business. Through the proper handling, tracking and accounting practices for cores, they can help your business rather than hurt it.

The core tracking process

One aspect of the successful handling of cores is the tracking process. If your cores are not tracked from beginning to end, neither is the money associated with them. The best way to do this is to be sure cores are checked at every stage.

Check them in

Although some systems do this automatically, cores are often not posted into inventory as cores when they are received from the supplier. And yet, every repair/exchange item has an accompanying core. For every rep air/exchange item in stock there is a core, and a core value. This core value is an increase to inventory and should be posted into physical inventory and to an appropriate inventory account in general ledger.

Many businesses do not want to deal with both a repair/exchange cost and a core cost. However, in the process, they lose track of the core cost.

Check them out

This is the most important step. Each time an “old” or dirty core is received from a customer, it is important to update the proper inventory records for that dirty core.

Most businesses have no idea how many dirty cores they are supposed to have in stock. They can only count the dirty cores they see. Therefore, they do not know how many cores were lost, how many cores were not returned, or how many cores were sold at cost.

Many core tracking problems can be eliminated by implementing a policy of Three Line Repair/Exchange Transactions.