Overcoming the Inventory Challenge

Recyclers are constantly taking in material, processing it and selling it. Therefore, knowing what material is available at any given time throughout the day and what it is worth can be a major challenge. Operating multiple locations and having multiple employees buying and selling material compounds the challenge. Just because a bale of material is sitting in a scrap yard does not mean it is available for sale. Someone else in the company may have already sold it.

Lee Burgamy, inventory manager for Gachman Metals & Recycling, based in Fort Worth, Texas, knows the difficulties of keeping track of inventory at a scrap yard firsthand. "Any inventory tracking in the recycling industry is a major challenge," he says, giving an example of how material bought as one classification or grade may end up being sold as something different after processing.

"You may buy an apple, but you may sell it as three or four different fruits," Burgamy remarks. "Just because you bought it in that category doesn't mean that is how it is going to be sold. It's a difficult business."

Gachman Metals uses inventory management software, which includes bar codes, to help track inventory. "We are constantly updating the system to meet our needs," Burgamy says.

Bar codes have helped Gachman Metals virtually eliminate the risk of human error in the inventory intake or selling process. If an employee scans the wrong bar code, he or she will know right away.

"Once you create that barcode tag, it goes within the software system, and we use codes to separate the different types of materials," says Burgamy. "You've got an easy way to pull a spreadsheet with all of your inventory that is processed and ready to go out the door."

Before the barcoding system, Gachman Metals was hand writing tags for material that came in and out. Burgamy says it was "a time-consuming process."

"With our growth, our inventory became such a mess," recalls Burgamy, who says he was asked to improve the process. Gachman Metals had purchased software from Shared Logic, Holland, Ohio, many years earlier. There was an inventory component to the software that the company wasn't using. Burgamy says that because the company had already invested in the software, it made sense to begin using the inventory tracking function.

Burgamy says he sees an improvement in his company's ability to track inventory. He adds that Gachman Metals continues to improve the process.

The Software Decision
Everett Duty of BuybackPro Inc., Woodland, Calif., says a good software package not only handles inventory needs from an incoming perspective but also will track what is being shipped out of a facility.

"Our approach to reporting is very universal and flexible," Duty says. "We allow customers to create not only their own report queries but also [provide] access to the report structure itself, so our customers have unlimited ability to modify our reports or create their own reports," he adds.

"When inventory is captured and posted at the time of purchase, then your work is done when the last ticket is printed," Duty says.

He says a useful software package also offers flexible payment options and has police reporting features.

Regarding return on investment, software providers contacted agreed that being more efficient means eliminating labor hours spent on recordkeeping. Software also can make a business more profitable if it allows it to turn its inventory faster. Keeping accurate inventory records also can prevent costly mistakes.

Recy Systems' software creates an inventory adjustment every time a transaction is made at the scales, says Frank Bosco, CEO of North American operations, based in

Collegeville, Pa. "With that real-time update of inventory, you know your position on any material grade and the cost of that material grade."

The software provides updated information on the value of material too. "It gives them much more accurate information immediately to know what they have on hand and what prices they should be selling at," Bosco says.

The Sky's the Limit
"What I have bought or am about to buy, plus what I have on hand, minus what I have committed to sell is my inventory position," says Perry Jacobs, executive vice president at Shared Logic. "The reporting is endless, really, as opposed to guessing. [Software offers] reports at your fingertips."

Joe Floam of Scrapware Corp., Rockville, Md., says, "The sky's the limit," when it comes to report variety.

Floam says inventory valuation is the most common type of report generated from inventory software. This report basically includes the material a scrap yard has on the ground and what the software thinks it is worth, according to Floam.

Other reports available include WIP (work in progress) and overall inventory position, which compares bulk inventory with WIP inventory and finished goods inventory with purchase contracts and sales contracts. Recyclers can then see if they are long or short on a commodity.

Emerging technology in information storage has allowed some software companies to offer packages with less hardware and fewer servers on site. In these cases, "client/server" technology is being replaced with "cloud" technology.

In Duty's opinion, cloud technology will make the entire industry more efficient within the next five years.

Jacobs says technology is moving more toward handheld data entry rather than kiosk-style entry at a work station. Screens are getting bigger to allow for touch-screen technology, he adds.

A New Mobile Alternative
Not all scrap and recycling companies have the resources to invest in the software and hardware needed to automate their inventory tracking. PopScrap.com, a San Diego-based company, says it is helping these companies keep track of inventory without requiring a huge investment or commitment from them.

Without significant upfront cost, users pay a monthly fee to access the cross-platform software that allows real-time online reporting. Users have the ability to run the software on an Android phone or tablet as well as on a Windows PC all at once. The application makes full connectivity and visibility for off-site owners and managers possible, allowing them to see what material they have available, according to PopScrap.com.

PopScrap.com President and CEO Stacy Duty says the application became available in August and is expected to attract startups and small mom-and-pop operations as well as large multi-yard corporations. Duty says he saw an opportunity to reach the smallest 90 percent of the market.

A benefit of PopScrap, he says, is the speed at which a new user can be up and running. Rather than a software installation procses that can take weeks, a PopScrap user can be ready in 30 minutes using PopScrap.com, he says.

The author is associate editor of Recycling Today and can be reached at ksmith@gie.net.