In advance of the launch of the AMCS Platform for Metal Recycling at ISRI convention in Las Vegas on the 21st of March, we are taking time to interview our colleague Mark Valdes- Dapena who along with Mitch Lortie (Senior Product Manager) have been at the forefront of AMCS efforts to create this next generation solution for metal recycling.
Mark is a scrap industry veteran of over 25 years and he and the team have worked closely with a group of key AMCS metal recycling clients to realize this new solution.
Scrap is bought and not sold so you need to understand your inventory and costs to manage your margins – automation is essential for this.
Metal recycling will change fundamentally due to a new feedstock mix, increased focus on quality , new circular economy models, tighter regulations, and sustainability requirements.
New opportunities demand a next generation solution to offer increased automation, agility, and data insights. The solutions designed in the last century are no longer fit for purpose.
Tell me a little about your background in the scrap metal industry.
I joined Systems Alternative International (SAI) in 1996. I worked initially as a sales engineer, demonstrating the CRES solution to customers and prospects. I really enjoy the theatre of a software presentation as well as engagement with customers in the scrap metal industry. Many of my AMCS colleagues around the world have over 20 years of scrap industry experience as we have 300 metal recycling customers worldwide.
How has the scrap metal industry evolved in your experience over the past 25 years?
Around the time I joined SAI, the scrap metal industry began significant consolidation. Through a series of acquisitions, what were hundreds of small family-owned scrap operations grew into multi-million/billion-dollar enterprises.
Originally it was a kind of cottage industry that then turned into a much more industrial operation, with more and more focus on software solutions to manage what had become operations that spanned very large geographies with hundreds of employees.
In parallel, with this the volumes and variety of scrap metal has grown exponentially. The mechanical processing and sorting technology have also progressed over this time. Scrap automation has moved from paper and spreadsheets to much higher levels of automation but there is potential for greater digitalization. Sustainability and the circular economy are now driving big changes across our industry.
It is an exciting time in the North American scrap market with trends such as the onshoring of much of the recycling and closer ties between recyclers, steel mills and manufacturers of automobiles and white household goods.
What are the automation challenges specific to the scrap recycling industry?
There is an adage in the scrap industry that goes 'scrap is bought and not sold' which explains that scrap recyclers are price takers for their finished product from smelters and steel mills, so to manage their spread, their focus must be on managing costs of purchasing, collection, and all their processing costs.
It is imperative to understand all your cost build up, so you don’t pay too much for an incorrectly classified intake and that you are maximizing your operational efficiency across all your logistics and operations.
Scrap recycling is an inventory-based business, so the best companies understand all the dimensions of their inventory as it is critical to driving profitability. This is particularly challenging as the grades and classifications of scrap may be counted in the hundreds in most yards.
The transformation process means that you are often buying apples but selling them as oranges which adds to the complication of keeping track of re-graded material across the multiple yards and locations. A scrap recycling business needs to always understand the status of its inventory – cost, classification, location, and availability for sale. This requires robust automation designed specifically for the scrap industry.
What are the main forces driving change in the scrap recycling industry and how do this impact automation?
There are multiple forces shaping the industry and calling out for greater automation.
While demand continues to grow for scrap at 8% per annum, regulations and higher purity specifications require higher quality output and this calls for a greater focus on automating the management of material quality across your operations.
Costs such as gas and labour have skyrocketed over the past year so automation and transport optimization can help counter this.
A new generation of both electrical vehicles and household appliances means that the range of materials (e.g., ferrous, non-ferrous and polymers) recovered are more varied than before, so this is both a challenge and an opportunity.
Sustainability is centre stage as growing regulation and customer sentiment means that our sector can play a leading role in protecting our planet against climate change and preserving our finite natural resources such as ores and precious metals,
The transition to a circular economy will fundamentally change the end-of-life treatment of automobiles and white household goods. I could imagine that these goods could be owned by manufacturers, and we will use them as a service so these items may no longer be simply shredded but instead dismantled, re-manufactured and prepared for re-use.
These changes call for companies to be agile and to be digital to be able to innovate and compete.
Despite all these changes, I think that some of the fundamentals remain in that you need to master your inventory and your costs to protect your margins and the answer is automation
You have been at the forefront of designing the new generation AMCS Platform. Can you tell us about this process?
Over the past two and a half years, Mitch and I have held several workshops with our legacy software clients. We’ve shared with them current capabilities of our existing recycling software solution the AMCS Platform, as well as designs for enhancements to meet the specific needs of metal recyclers. We have also held several focus group meetings with smaller groups focusing on requirements like designing a new generation real-time inventory management system. It has been a fantastic collaboration of our team, with decades of years’ experience in software design, with our largest scrap recycling customers.
How important is inventory management and valuation to the successful operation of a scrap operator?
Managing inventory, especially in a multiple facility operation, is so challenging. Hauling costs can represent a significant portion of one’s inventory value. It is not uncommon for a scrap operator to simply ‘spread’ transport costs across inventory values, as opposed to calculating and assessing those costs to the appropriate inventories.
A must in scrap metal is upgrading wherever and whenever possible. Capturing this movement as it happens of often not practical. It is necessary to have an inventory system that provides the flexibility to capture inventory movement in the field in real-time when it is practical and to be able to update inventory levels via a cycle count or stock take as needed.
Are there areas in scrap recycling automation that are ripe for automation?
Projections or demand planning is an area where automation could be brought to bear. At a multiple facility operation, to have visibility into the availability and status of material to fulfil sales obligations is an area that is most often managed off-line. Aggregating and presenting necessary data, and providing actionable information is at hand. Several of our paper recycling clients have automated demand planning already with the AMCS Platform and they are reaping the dividends.
The emergence of the circular economy means that scrap recyclers need to be able to share data and increase collaborate with supply chain partners such as automotive companies and manufacturers of large household goods such as fridges and conditioning units. Advanced analytics and portals will make this collaboration possible.
What is different about the AMCS Platform for Metal Recycling?
The scope of the AMCS Platform automation is truly unique as it ranges from dispatch, through to scale and yard operations through to finance and sales. This end-to-end solution will provide unmatched automation, control, and visibility across all your operations.
Many scrap software solutions start and end at the receiving scale. Clearly, the receiving scale is of the utmost importance, however, so much happens upstream and downstream of the receipt of scrap and this is where we have maximized the automation of all the key tasks of grading, production, inventory management, sales, finance and outbound logistics.
Also, the AMCS Platform technology is unique in that it is based on the latest SaaS Cloud technologies meaning that it offers security, scalability, and continuous availability.
The modern browser-based user interface means that users can readily learn how to use it so the return on your investment is relatively short.
There is also an exciting product roadmap with two more main releases planned for 2022, each packed with scrap specific functionality and business value.
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