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Features - Software Focus

Scrap yards are turning to technology to help them comply with materials theft regulations and deter scrap theft.

Kristin Smith June 10, 2011

Accounting software utilized by the recycling industry can certainly record a transaction and commodity and customer information efficiently. But there is an added benefit to recording the IDs of customers and tracking the material that is coming into a scrap yard. Obtaining this information can also keep customers honest and deter those who may try to make money by selling stolen material to a scrap yard.

Peddlers who sell scrap metal to earn a little extra cash can be a substantial part a scrap yard’s livelihood. With metals prices high, theft is a concern for both scrap yards who strive to do an honest business and law enforcement officials who are trying prevent crime.

In 2009, Michigan passed Public Act 429, also known as the Nonferrous Regulatory Act. Shelly Padnos, the executive vice president of Holland, Mich.-based Louis Padnos Iron & Metal Co., was instrumental in helping define the details of the act, according to the company’s, director of administrative services, Tim Beers. Public Act 429 requires that scrap yards in the state obtain a government-issued photo ID as well as a thumb print of the person selling material, he says. Scrap yards are also required to tag and hold any materials for seven days that meet certain criteria. Scrap yards also cannot pay a seller more than $50 in cash for nonferrous material.

Weighing the Options
Regulations regarding what information a scrap yard needs to obtain from its customers vary from state to state. And just as the laws differ, so does the size of the scrap yard. This means the ability to tailor accounting software is a must as needs and requirements for software vary widely. A basic software package can start at $20,000 and go up in price from there, according to Perry Jacobs, executive vice president, Shared Logic, Holland, Ohio.

Jacobs says the industry and the law have driven the development of the software Shared Logic provides.

“I am a computer programmer,” says Jacobs. “Everything in the software is there because a regulation or customer told us to put it there.”

Tim Beers, director of administrative services, Louis Padnos Iron & Metal Co., Holland, Mich., says, “When there is an opportunity to make the software more user friendly, Shared Logic does a good job of listening to what our needs are.”

Andrew Slesnick, head of sales, Slesnick Steel & Recycling Co., Canton, Ohio, has had the same experience with St. Petersburg, Fla.-based Transact. “They can build a program to do what your specific needs are.”

In Florida, for example, a scrap yard must record an employer name and address and a home phone number. Some states require pictures of the material or a picture of the customer next to the material.

The data captured from the software can be sent to state or local law enforcement sites such as LeadsOnline, an online investigation system used by law enforcement to recover stolen property.
 

Louis Padnos also requires that its customers selling scrap at one of its 15 locations in Michigan sign a statement that they are the owner or are authorized to sell that material. In order to capture information about its customers, Padnos locations use accounting software provided by Shared Logic, Holland, Ohio.
 

SETTING A PRECEDENT
Beers points out that, required or not, many of the precautions against buying stolen material have more to do with setting a precedent on how the company conducts business than it does complying with the law.

“We have always tried to be a good corporate citizen. Many things we have in place because we are leaders in our industry,” says Beers. “We are not part of the problem, we are part of the solution to help eliminate or reduce theft.”

According to Beers, the first line of defense starts with the employees at the scale buying the materials. They are trained on what materials carry the highest risk of being stolen. Some potential scenarios include a personal vehicle carrying new copper tubing or new industrial material. He admits, however, that there is no telltale sign that material is stolen.

“If someone comes in with production scrap, we don’t buy it unless there is a letter or certification indicating it was a valid sale,” says Beers. “In many cases we have to turn customers away.”

Another indication that material is stolen could be if a customer requests payment in their name instead of the business they are representing. The software from Shared Logic can track which companies allow their employees to receive personal payments for material.

Beers points out that among the biggest victims of scrap theft are the scrap yards themselves. “We are often the victims of theft, as most of our operations are outside,” he says. He admits that the company has probably bought the same material more than once.

In addition to the profits lost to theft, Beers points out that installing video and security systems can be expensive. Louis Padnos has spent more than $100,000 on its system. Beers says that just knowing scrap yards are involved in developing this legislation and making the investment should show that the recycling industry is committed to reduce theft.
 

NOWHERE TO HIDE
Slesnick Steel & Recycling Co., Canton, Ohio, has been using Scrap Dragon from St. Petersburg, Fla.-based Transact for nearly six years. Andrew Slesnick, head of sales, says that just having the software discourages stolen material from arriving because customers know everyone who drives onto the scale is identified. “I do believe that people who try to steal know we have this system and ask for IDs.”

Having software that saves customer information and in turn helps Slesnick comply with laws and stop stolen material from arriving goes along with how the company does business. “Purchasing stolen material is walking over dollars to pick up pennies,” says Andrew. “It is an ongoing issue so the more we can protect by putting a system in place like this, the better. We take the stance that we do not purchase stolen material.”

If the police get a report of stolen material, they will notify Slesnick of the theft. Andrew admits that sometimes finding that material can be like trying to find a needle in a haystack.

An important feature of the software, in addition to deterring theft, is its ease of use. “From a production standpoint, it does speed up productivity by getting customers in and out. It really works on all aspects of the business,” says Andrew.

The software is designed for use on a touch screen monitor and does not require a mouse or keyboard. Several  Slesnick Steel employees have been trained to use the program.
 

KEEPING EMPLOYEES HONEST
Another benefit of software is that is keeps track of inventory and can be “a good anti-theft device within the company as well,” says Andrew Slesnick.

Part of the Solution
One of the ways the scrap industry is working together to prevent materials theft is through the ScrapTheftAlert.com website. ScrapTheftAlert.com is a tool for law enforcement that allows people to alert the scrap industry of significant thefts of materials in the United States and Canada. Upon validation and review, alerts are broadcast by e-mail to all subscribed users within a 100 mile radius of where the incident occurred. The service is provided by the Institute of Scrap Recycling Industries Inc and the Canadian Association of Recycling Industries.

Premier Metal Services, Cleveland, uses software from ScrapWare, Rockville, Md., for its international metals trading business. Owner Michael Eisner says that while he doesn’t have a physical yard where he needs to keep track of inventory, the software is helpful in keeping track of day-to-day operations while he is abroad.

“I can log in from anywhere in the world and see what is going on in real time,” he says.

Van Gundy’s AMPCO Inc., Grand Junction, Colo., has invested in software and surveillance cameras to deter theft. Van Gundy’s uses software developed specifically for it by San Antonio, Texas-based PIC Business Systems.

“I put in a legitimate system. I want to purchase legitimate scrap,” says company president Randy Van Gundy. “I think it has made a big difference.”

Van Gundy supports stricter laws even at the cost of installing the equipment and software to comply with them. “I am glad they are being changed to combat scrap theft. If they don’t have a place to sell it, why would they steal it?”
 

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