It is almost impossible for a manufacturer to avoid having scrap. Many manufacturing companies view scrap, excess raw material that was not needed during the manufacturing process, as an inevitable part of running their business.
Discarded material has a negative impact on manufacturers in several ways, especially if the scrap rate is high:
- It costs money to purchase the raw materials that become a finished product. The raw material left behind is money left behind.
- Manufacturers expend a lot of additional resources to deal with scrap: Labor costs, storage costs, transportation costs, lost time.
There are ways to reduce scrap in manufacturing. One way to minimize scrap is to optimize your manufacturing process. Lean can help with that. Check out MAMTC’s Lean solutions here.
To recoup some of the losses associated with scrap, a manufacturer can recycle or sell their scrap. A scrap management program can help a manufacturer receive the maximum benefit from their scrap.
Here are a few secrets for creating a valuable scrap management program that turns your waste stream into a revenue stream, from MAMTC’s Alliance Partner, Mast Scrap Management Advisors.
- Designate someone (or a team) in your manufacturing organization that is responsible for your scrap program. The best thing you can do with scrap is to minimize the amount of scrap that is produced in your manufacturing process. The next best thing you can do is make sure that you have a process in place to obtain the most value out of the necessary scrap created.
- Be sure to audit your scrap handler.
- Do you know what they do with your scrap? You are responsible for your scrap’s impact on the environment even after a scrap handler has removed your scrap from your facility.
- Are they paying you fair value for your scrap? Ask any scrap handler and they can provide the “base” number. There are unscrupulous scrap handlers who will take advantage of manufacturers if you are not aware or paying attention.
- Is your supplier on an annual contract with you? If your scrap handler visits you frequently throughout the year, an annual contract gives you leverage. At the end of each year, you can put your contract to bid, taking the best offer.
- Are they good at one material and not another? For example, some scrap handlers might be good at cooper but bad at steel. You may not be receiving the best revenue from your steel scraps. It is ok to have more than one supplier for different materials.
- Segregate different materials into different containers. Different materials have different values. And metals can have different values for different alloys. Ensure that you are getting the correct value from your scraps by making it easy for the scrap handler to tell how much of each material is available.
- Be sure to work with a scrap management consultant who has relationships in international locations where you have factories. Mast Scrap Advisors, for example, works with partners in the United States and Mexico. The factories in Mexico can have the same scrap management program as in the US, ensuring consistency for the organization.
- Have an experienced, transparent third party, who is familiar with the scrap supplier process, set up your scrap management program. The advisor should have a relationship with you, the client, and not the scrap handlers. You want to be sure that your best interest is being represented.
- Promote your recycling efforts. As long as you have an active scrap management program, you might as well take advantage of the benefits that come with the perception of an environmentally concerned manufacturer.
Mast Scrap Advisors has many other secrets that can help you develop a scrap management program allowing you to recoup material expenses, increase operational efficiency and employee productivity, and mitigate risk associated with scrap management.
MAST founder, Elizabeth Muñoz-Lebaron, likes to say that she has molten metal running through her veins. Born in the U.S. and raised in Mexico, Elizabeth was introduced to the family business, a scrap metal yard, at an early age. Elizabeth began buying and selling scrap on her own and held key positions with several recycling companies. One of her top priorities is to help clients to embrace the revenue potential of their by-products and design recycling programs that achieve higher value.
Contact MAMTC if you are interested in exploring a scrap management program that will help you realize a benefit for your manufacturing company.
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