Processor was getting rejections at consuming mill for oil content that exceeded their specification. Actual out of pocket expense to processor exceeded $150,000 annually in extra freight, labor and packaging supplies.
Different solutions were considered that included selling to other customers at lower prices, or setting up sorting and handling procedures to reduce the oil content that was well inside the mill tolerance. Based on the volume of material handled, it was determined that an oil separation system was the most cost effective solution. As an added bonus, the scrap metal then retrieved a premium value, and became preferred at some mills. This was especially valuable when orders were tight and delivery appointments were scarce. We sourced the equipment necessary and negotiated prices for the purchase and setting up of the system. The payback for the system was less than one year. As an added benefit, new business was available that utilized the same equipment.
Dealer was suspicious there was metal missing from inventory but had a difficult time figuring out who was involved and how much was missing, but thought it was substantial enough to look for outside help.
It was impossible to determine how much may have been stolen, but there were obvious security issues. The dealer had poor records of purchases and sales. He felt there were no adequate computer programs to use that kept the records personal. The employees that worked there were not trained on inventory procedures, but they knew how to sort the metals. By interviewing each employee, we are able to determine where problems existed. The dealer was right, however, it was not one individual but a group of employees that conspired to steal, and did so on a regular basis in a variety of ways. The ways metal was being stolen were both simple and ingenious. Solutions included getting rid of the problem employees, setting up new security procedures, and installing a computerized inventory system that satisfied his needs. Nonferrous warehousing procedures were also improved. His problem was solved with the payback almost immediately. As a bonus, we were able to increase his efficiency on sorting and processing so that he was able to process more metal with less labor cost.
Large manufacturer was having difficult time getting both adequate service and competitive prices for his scrap metal from the local dealer.
After surveying the entire scrap handling process many items in need of correction or improvement were observed. The local dealer felt he had a captive audience, and thus could treat the manufacturer as he saw fit. The manufacturer wanted to establish pricing based on published prices in trade publications. This had both positive and negative implications. On the positive side, the purchasing department could relax because the price it was receiving would be competitive. On the negative side, the dealer may be stuck in a formula where he lost money if the market conditions changed, or if he didnt also sell based on the same formula. Procedures for handling the scrap were excellent at this facility. However, shipping and loading procedures were sloppy. It was true that the local dealer could service the manufacturer at a moments notice. However, why was the dealer always servicing the manufacturer on weekends or evenings? Originally, the manufacturer said they preferred it at that time, because it didnt interrupt their normal operations. It took a while to realize that shipping procedures during those hours were inadequate. There was no paperwork trail, just a memo that a truck may have made a pickup. No accusations were made, but after eliminating the off-hour pickups, the percentage of scrap that the manufacturer was paid for increased substantially. The scrap was then sold through a broker/processor for maximum return.