When it comes to inventory management, Adam Weitsman, owner of Upstate Shredding–Ben Weitsman, headquartered in Owego, N.Y., has a simple philosophy. “We never speculate on scrap,” he says. “We bring our inventories down to the ground each month.”
Another reason Upstate Shredding takes inventory down to the ground each month is because it helps the company discover internal theft more easily, he says. “When you have a small pile, it’s easier to know something is missing,” Weitsman adds.
However, with eight yards currently in operation and an additional four yards scheduled to open in the near future, a considerable volume of material still needs to be accounted for during the course of a month.
Realizing the company could achieve a number of efficiencies and reduce internal theft by better tracking its scrap metals inventory, Upstate Shredding is in the process of installing software specially designed for scrap yards from Woodland, Calif.-based BuyBackPro, Weitsman says.
Additionally, the new software will help Upstate Shredding comply with state regulations pertaining to scrap purchasing that often involve photographing the seller and the incoming material as well as recording the seller’s license plate and ID information.
“We want to be proactive instead of reactive,” Weitsman says.
However, he admits he was “slow to the gate” when it comes to using software to help streamline operations. “It was my fault,” Weitsman says. “I feared change. I am not as computer literate as I should be.”
Counting the Benefits
Weistman says that by introducing software the company is seeking to lessen human error and improve operational efficiencies. “We were not doing as many inventory counts as we should and not managing the yards as well as we should,” he says of Upstate Shredding’s manual approach to inventory management.
Kevin Deet, IT manager for Upstate Shredding–Ben Weitsman, says the software has been installed at four of the company’s locations as of mid-January.
Before joining Upstate Shredding, Deet worked for another scrap yard where software was integral to the company’s operation. He says he saw two major benefits as a result: the simplified aggregation of uniform information as well as an endless variety of reporting capabilities. “Data was far more reliable and easy to get at for the business decisions that needed to be made,” Deet says. “You’re working on near-real-time data rather than hunches.”
He says software’s inventory tracking capabilities also can help to reduce a common error when inventory management is done manually: selling the same pile of scrap to three different customers. It can also help prevent the problem of material not being added to inventory because an employee failed to record the data.
“The fact of the matter is that when we bring in people who are expert at grading metal, they might not have a clerk skill set that lends itself to entering information into Excel or creating an inventory on a legal pad,” Deet adds.
While Upstate Shredding’s employees who are buying and grading scrap might not have the skills required of a clerk, Deet says the software learning curve is easily managed. The software’s interface is simple for a front-end user to learn. “No computer experience is required to buy the scrap and to regrade it,” Deet adds. However, the program offers a “powerful” SQL (structured query language) database for the office staff that enables the data to be queried in a variety of ways, he says.
Among the reports Upstate Shredding’s office staff can create is a Metals Position report, which details the metals the company has in inventory across all of its yards that are running the software. This information can then be compared to the book of sales for individual yards or for the company as a whole, so Upstate knows whether it needs to purchase more scrap to fulfill its orders.
Tracking Upgraded Material
Software also can help a scrap yard keep better track of material as it’s upgraded, giving an operation better insight into costs, Deet says. Without such a tool, he says, “It is near impossible to take the amount of processing and upgrading that we do into account to come up with close estimates as to average scrap cost.”
Rather than use a work-in-progress category for metals undergoing upgrading, in the case of nonferrous metals, Upstate is waiting until it has a finished Gaylord container full of prepared scrap. That full container will be weighed, and the weight and description of the finished metal will be entered into the company’s inventory, Deet says. The purchased product and the final, upgraded product will have separate ticket numbers in the company’s system, he adds. Therefore, pounds that flow through the yard may change item codes and ticket numbers as they undergo processing. For instance, if Upstate buys 1,000 pounds of dirty yellow brass and upgrades 800 pounds to yellow brass, with the remaining 200 pounds being iron, the company’s inventory can be adjusted easily with a couple of key strokes.
A secondary benefit to knowing its metals position is being alerted to cases of potential internal theft. This issue was among the concerns that led Upstate Shredding–Ben Weitsman to buy software for its scrap processing operations, Weitsman says.
Deet adds that the company anticipates the software will make a considerable difference in this area. “What we have is going to heavily prevent the falsification of tickets,” he says. “It doesn’t mean it can’t happen, but it makes it less of a risk; it gives us an audit trail.”
Of course, there are potential benefits in terms of complying with legislation designed to limit materials theft, as well. Deet says the company recently received a subpoena for tickets for scrap metals it purchased from four individuals. An employee spent a couple of hours daily for a number of days searching through Upstate Shredding’s tickets looking for purchases from these individuals and photocopying those tickets. Once the software is fully operational, however, Deet says Upstate will be able to produce this type of information within minutes.
“We can have that information and convert it into a PDF file inside of three minutes,” he says. In such cases, Upstate will be able to query the ticket history file using the name of the individuals in question. This will pull a ticket report that lists the dates, times and locations where the transactions occurred and also will include pictures of the sellers’ vehicles, drivers’ licenses and the materials.
Deet says the software will help to “create many efficiencies when trying to get at data and audit trails.” He adds, “From a customer and vendor standpoint, it will enable us to give easy and accurate service. It will add to our professionalism and enhance our response time to customers, vendors and law enforcement.”
The author is managing editor of Recycling Today and can be reached at email@example.com.