November/December 2016
Whether it’s with a device in your hands or data in the cloud, management systems offer new options for digitizing and streamlining scrapyard transactions, helping you manage accounting, compliance, security, and other operational needs.
By Katie Pyzyk
The scrap recycling industry is becoming more global, digital, and mobile, and scrap software providers say their newest products and services are ready and able to help.
Some businesses hesitate to make the leap to new programs, however, because employees don’t always fully understand the latest technology and how it operates, one software company representative says. But don’t let that intimidate you; that’s what the experts say they’re in business for. “My customers need to focus on the scrapyard and running their business. They do not need to focus on [operating] computers and tablets and phones and the peripherals,” a northern California software company president says.
“Other people understand that if you’re going to remain competitive, you have to” take advantage of the new technologies, a Louisiana software vendor says. “If you try to run any firm in the scrap industry today with the skills you had 30 years ago, you would fail. It’s that simple,” he says.
Scrapyard management systems that help recyclers run their yards more easily and efficiently can boost profitability, these vendors say. As the software advances, those efficiencies spread beyond accounting, printing scale tickets, and entering shipment information into a database. “As scrapyards learn more about what technology can do, they want it to do more,” a Florida software firm’s marketing manager says.
These capabilities include helping you comply with scrap theft regulations and run a safer operation. Choosing the most appropriate management system will require a careful assessment of your current hardware and software capabilities, how much mobility your workers require, and whether buying or leasing the software makes more financial sense for your situation.
Compliance Tops Yard Management Needs
Software vendors report seeing an influx of new customers in 2006 and 2007, when many states’ regulations for scrap transactions grew stricter due to concerns about metals theft. New rules forced some scrapyards that had maintained either paper records or home-grown modifications of business-management software to switch over to systems designed specifically for scrap business needs. Others simply found it easier to meet the regulations by doing so. Scrapyard management systems make it easier to comply not just with regulations from local North American jurisdictions, but also those in international markets. For example, one vendor notes that the software eases the process of taking, labeling, storing, and sending photos of all containers and their contents to overseas buyers, as some countries require.
Helping yard managers stay in compliance with regulations regarding scrap transactions is a huge selling point for scrapyard software. While the data the system will capture and store varies somewhat by the system and each state’s regulations, typically it includes images of the seller’s driver’s license and license plate, photos of the scrap materials, and the seller’s identifying information, such as name and address. It could include a photo or fingerprint of the seller, too. Some scrapyard systems can directly sync with government or police databases if the laws require facilities to upload transactions.
Compliance is “what’s on the top of everyone’s mind,” one Florida vendor says. Systems such as his have “greatly streamlined the process—the fact that the images are captured in real time and stored in the database.” Being forced into the technology for compliance purposes allows yards to find other benefits the software offers their overall business, he adds. Even customers who aren’t required to use electronic systems really like “the additional security the software provides you over the hand[written] tickets and more traditional ways of doing business,” another Florida-based vendor says.
The process of capturing information from a driver’s license has improved greatly thanks to barcode scanners and increasingly sensitive optical character recognition. In the past, employees could store an image of a customer’s driver’s license in the system, but they then would have to manually enter all the pertinent personal information. Now, scanning the license stores an image of the license and pulls information—such as the customer’s name and address—directly from the license to automatically populate fields in the database.
The digital fingerprint scanner has been another huge compliance innovation, according to a marketing executive for a Pennsylvania company. That device scans a customer’s fingerprint and, in a few seconds, stores it with all the other essential details of the sale. Using that technology for compliance increases scrapyard safety by “knowing who your customers are, who’s coming in and out,” storing that information “forever,” and providing it to police as necessary, she says.
Besides the added security of storing customer information, scrapyard management systems provide other safety benefits. “There’s a lot of different ways you can use the software to work more safely within your yard,” a representative for one of the Florida companies says. For example, the software can track employees’ participation in safety training programs and provide reminders when it’s time for another course. It also can manage scrapyard equipment records, such as by storing instruction manuals and tracking equipment maintenance and repairs, both scheduled and performed.
Global positioning system technology has advanced in recent years, becoming more sensitive and capable of performing more tasks than even five years ago. Many software vendors integrate GPS technology into their fleet-tracking modules, so the home base can “tell where the truck is, [the] speed limit, if [the driver’s] going too fast, [and] if he’s not on the route you expected him to take,” the Louisiana vendor says.
That GPS tracking often prompts drivers to make safer choices while allowing management to determine if it needs to make changes to boost safety, the vendor says. Facilities can use similar tools on in-house equipment to track operations and improve safety.
On Earth or in the Cloud?
One of the main trends in scrapyard management systems is cloud-based storage, which allows businesses with Internet access to eliminate in-house network servers and instead rely on another company to provide off-site servers for software and data storage.
Using a cloud-based system offers numerous advantages, the Louisiana software vendor points out. “You don’t need to worry about the server, the maintenance, the electricity, [or] the air conditioning” network servers require. “Employees can focus on their area of expertise—scrap—instead of on information technology.” Plus, there’s no need to employ an in-house IT expert.
Another advantage is the speed with which a user can set up a cloud-based system, compared with a traditional in-house server-based system. With a cloud-based system, “as long as you have Internet connections, you can be up and running and efficient the same day, whereas if you have a local [server installed], then the lead time could be weeks,” a developer for a Pennsylvania-based company says.
The fear of a security breach is one argument software manufacturers sometimes hear from customers hesitant to leap into cloud computing. Software designers say that shouldn’t be a factor. “If someone wants to steal your data, they will. It doesn’t matter if you’re localized or cloud-based,” a Michigan company vice president says. He points out that security breaches are incredibly rare, but they can happen to anyone online, from large international businesses to government agencies. “If you’re connected to the Internet somehow, and someone wants [your information], they’re going to take it,” he says. “But the likelihood of that is so slim.”
Cloud-based systems are more secure than ever, and their remote infrastructure management typically is easier for scrapyards to handle than an on-site server, says another vendor. But, he adds, it all comes down to what the scrapyard prefers. “It’s a comfort level of not having your data at your office, where you have direct control over it. … A lot of companies aren’t willing to jump,” he says.
Recyclers really should overcome their fears and make that jump, if possible, the northern California-based vendor argues. “Even though I do have people who run my software on an on-premise server, it’s never a recommendation of mine,” he says. Current cloud options are very secure compared with early iterations, he says, adding that concern over security breaches shouldn’t be a barrier. “Have you ever logged on to your computer to see your bank [statement]?” he asks. “That’s way more sensitive than what we’re talking about” with scrapyard operations.
Having an on-site server might not be as secure as many businesses believe because the entire server can be stolen, vendors point out. They report instances of setting up new cloud-based systems at scrapyards where a former employee had stolen the on-site server, along with all the business’s customer information.
There is a catch to converting to a cloud-based system, however, especially for those who want mobile access to the system: You need reliable, rapid Internet connectivity. That’s something certain scrapyards still struggle with. For many scrapyards, it’s a question of whether it’s more cost-effective to pay for high-quality Internet service and go with the cloud, or if it’s “cheaper to have a local server with [an employee] who has to maintain said server and protect said server from outside intrusions,” a Southern California sales manager says.
Developers constantly look for solutions to overcome scrapyards’ Internet connectivity issues. “Our app works in offline mode, too; if you lose [your] connection … you can keep going as if you haven’t lost Internet,” the Pennsylvania software designer says. “That was one of the biggest things we worked really hard on … to make it so there’s no downtime. We understand that a scrapyard loses money whenever there’s downtime.” He adds that with the ease of operability and continuous upgrades, “I do think that the cloud-based solution is going to become more and more prevalent and accepted in [the scrap] industry.”
With most people now accustomed to finding information in an instant on their mobile devices, “they’re going to expect their business to run the same way,” a Florida software developer says. Cloud-based systems with mobile apps provide that instant, portable information, which is one reason they have ballooned in popularity.
Some are wary of apps that mimic functions of the management software, however. They’re great for some remote operations, says the sales manager for the Southern California company, but he doesn’t necessarily recommend them for sensitive functions. “I can’t even [type in] a phone number most of the time without making at least one mistake. Big hands, small phone,” he says with a chuckle. Similarly, he thinks it’s not always best for “scale guys trying to do scaling transactions on their phone. … You’re going to get so many mistakes.” Those functions are on computers or larger devices, such as tablets, but small phone screens aren’t best for handling highly detailed, delicate information, he suggests.
Selecting a System
With the advances in information technology generally and in management systems specifically, focus on the basic choices available in several key areas, such as hardware add-ons, customization options, and price points and purchasing options.
Scrapyard management system services and equipment vary greatly from vendor to vendor. Some sell only software; others also offer hardware items such as monitors, printers, ID scanners, and ATMs. Which products to purchase depends on your scrapyard’s needs.
Most scrapyard software is designed to work with many kinds of hardware, but be sure to specify what you already own. For example, tell the vendor if you already have cameras you need to integrate into the system, how many there are, and the camera specs.
When buying accompanying hardware, keep in mind exactly where you will use the items and under what conditions. Touchscreen monitors are quite popular, according to these vendors, but those used inside a building are operating under far different circumstances than those installed outside. With certain touchscreens, “the sun will hit it, warm it up, and black it out,” the northern California company president says.
Any electronic hardware at a scrapyard needs to be durable. “I think it’s critical in our industry that we are dealing with weatherproof components,” he says. “Obviously, we’re in the scrap industry and out in the field. It’s raining, it’s muddy, and you need something that’s going to survive the clumsy hands of a scale operator.”
He recommends checking each component’s IP rating—an international standard that classifies the electrical enclosure’s protection from intrusive elements, such as dust and water. These ratings provide more comprehensive information than simply calling an item “waterproof”; they range from 00 (meaning no protection) to 69 (meaning complete protection from dust and water).
Just as there is no single type of scrap-cutting tool that’s a perfect fit for every scrapyard, there’s no one-size-fits-all scrapyard management software. “Every scrapyard runs a little bit differently. It’s important to have a system developed on a platform that is flexible, and a company that’s responsive,” a Florida company president says.
These vendors say they work with customers to create a system that best fits. Software providers can customize dozens of modules based on two major factors: how many workers will use the system and for which tasks.
Reps say the software works equally well with all scrap commodities, too. “Our software is designed to recycle pretty much whatever you want,” the Louisiana rep says. Part of the individualization is that each customer chooses what a “commodity” is and which data to track for each commodity. The information gathered from an insulated copper purchase, for example, includes some different elements than an OCC purchase.
There’s a critically important feature vendors say customers tend to forget when purchasing a scrapyard management system: It needs to be easy for workers to use. The Pennsylvania-based software designer says recently he has gained a lot of new customers switching over from competitors’ software that they say is less user-friendly. “Our user interface is very modern. We like to cut out any non-value-added steps in our process,” he says. “With some of the [competitors’] software we replace, I can see that [scrapyard workers] had to go through 10 or 12 steps just to do one thing.”
Any vendor should be willing to provide software demonstrations and user training. Most, if not all, also offer some sort of ongoing maintenance and service package for questions or problems that arise down the road.
Make sure the software works well on all the devices on which you will use it. There are different configurations not just for the various browsers and operating systems, but also for the different screen sizes on computers, tablets, and mobile phones. The software provider needs to ensure the program will run optimally on all your devices.
Because scrapyard needs vary so greatly, prices for the customized software also vary greatly. “Our system is best described as being priced by the number of users and the features that are purchased,” one rep says. “You can have small companies that [want] a lot of features, and you can have large companies that don’t use a lot of features.”
Pricing, therefore, can run anywhere from a few thousand dollars up to several million dollars, depending on customization. A medium-sized scrapyard can often expect an initial installation to start at $10,000 to $15,000, according to these software companies. Other options are available, though. The Michigan-based company charges customers $500 a month for service rather than a hefty up-front fee. That business targets “small and medium-sized yards, and we offer the same equipment they couldn’t afford because maybe they don’t have $150,000 to shell out” as an initial cost, the vice president says. “It allows everyone in the industry to have the same technology,” he adds.
In challenging financial times, a scrapyard owner might hesitate to make this investment. But software company reps say these systems can provide both long- and short-term efficiency gains. That, in turn, can provide financial gains. “In a down economy, you need to be able to track every penny,” the Southern California software sales manager says.
Some yards have continued to expand their business and have been purchasing services even during the downturn, these vendors report. But many choose the more reasonably priced options. Some have abandoned the idea of investing in a complete management system—at least for now—and instead opt for a lower-cost app that still performs key functions.
Looking Ahead
All of the vendors say they’re open to customer feedback for improving the software and adding new features. “I’m always thinking of myself as a student,” the Pennsylvania software designer says. “Scrapyards can teach me what they need, and then we adapt our software to be a solution.”
Technology changes so rapidly that it’s difficult to speculate what the next big thing will be for scrapyard management systems. One representative suggests that fleet-tracking modules may require upgrades to accommodate driverless vehicles, for example. Those might seem pretty far off for scrap recyclers, though. Most of these software reps indicate that the future instead lies in expanding the capabilities of existing technology. For instance, several vendors are working to develop online marketplaces that allow users to buy, sell, and trade directly from within the software. “It’s like an eBay for scrap,” the Michigan-based company vice president says, explaining that you would get notifications on your mobile device when other users are looking to buy or sell materials.
Also look for more tools to facilitate hedging, trading, and other activities that involve increased information-sharing among scrapyards, the Florida company president predicts. “As more integration takes place, more people are in the cloud,” he says. “If more people are willing to share information, there [are] more opportunities” in a variety of areas, including further combating scrapyard theft through compliance data-sharing.
The northern California company president envisions a further expansion of “what’s trending right now, which is integrated text-message marketing.” That technology allows a scrap business to tap into its customer database and send texts to everyone or selected groups. He says it’s a great way to send customers price sheets, promotions, or information about inclement weather closures. “E-mails have about a 20- to 30-percent open rate, but texts have about a 90- to 97-percent open rate or read rate,” he says.
These software representatives indicate they’re ready and willing to add useful features, but they can’t always anticipate what would most benefit customers in the future. “I’ve been in the scrap business my entire life, so this software came from within. And it will continue to grow from within,” the Michigan firm’s vice president says. “You’re going to see a lot of things happen that are surprises in this industry,” another representative concludes.
Katie Pyzyk is a contributing writer for Scrap.