Curiously, Purchasers, though trained to buy, are often required to sell - in particular to sell scrap. Here are some ideas that can help busy Purchasers succeed in their dual duties.

Curiously, Purchasers, though trained to buy, are often required to sell - in particular to sell scrap. Here are some ideas that can help busy Purchasers succeed in their dual duties. First, some background...

Steel scrap markets have been moving up steadily for the past 2 years. The value of a no. 1 dealer bundle (a common grade of industrial scrap) has literally doubled since the end of 2001. (See graph below.)

It is just possible that your scrap dealer did not point this out to you and pass on the appropriate increase! An easy way to check this out is to ask your Accounts Receivable department for the payment history. If it does not show scrap dealers passing on your fair share of this windfall, it's time to get on the phone.

The value of office waste paper shows a similar trend over the last two years; and the price of old corrugated containers (OCC #11), while volatile over this period, still shows upwards movement.

The plain truth is that Purchasers are generally too busy with higher priorities (like purchasing!) to pay much attention to the scrap market. So what's a Purchaser to do?

The best defense against opportunistic scrap dealers is to negotiate deals that tie scrap payments to a published index, and insist each invoice shows a photocopy of the relevant data.

It is prudent to check the dealers' relevant data now & again against an independent source of pricing information (another trade journal or a website, like Propurchaser).

Finally, make sure you are being paid for all your scrap. Indexed pricing only works if the weights are correct! Beware the dealer who promises you more than market prices: he simply can't achieve this, at least not without cheating.

Here are two ways to check:

• Pre-weigh your scrap at your premises and check your numbers against the figures the dealer uses to calculate payment. If weighing each load is difficult, do it randomly, making sure the dealer does not know which loads are checked.
• Pre-weigh your scrap at a public weigh scale. If weighing in-house is not practical, use a public facility. Make sure you choose the public scale (and change it occasionally). Randomly ask the driver to get weighed on his way back to his yard. Have the stamped, signed weigh ticket sent directly to you. Of course, the dealer will know this particular load has been weighed, so catching irregularities means looking for longer term trends: i.e. checking if pre-weighed loads are generally heavier than those that do not go to a public scale.

Article in courtesy of ProPurchaser.com