Many companies look on scrap as a problem to dispose of when in fact it could be viewed as a source of incremental profit and an opportunity to achieve some measure of natural hedging against metal price volatility. Ferrous and non ferrous scrap is obviously a product of any manufacturing process that as a business one seeks to minimize. Any material that is not being transformed into a saleable finished product represents a cost that the business unit has to incur. However unlike virtually all other direct material inputs to a business, scrap has the ability to create a separate revenue stream and as such it deserves its own strategy. (more…)

I once heard the CEO of a large electronics distribution firm give a public talk on some of the very detailed specifics of his company’s supply chain transformation. He even went so far as to publish his company’s strategy and tactics in his book Free, Perfect, and Now. On the one hand, I was sort of shocked. Why would the CEO of a middle market company publish in essence his company’s recipe or success for all to see including his competitors? And so my hand shot up, “Mr. Rodin [Rob Rodin, former CEO of Marshall Industries, now Avnet], let me ask and answer my own question … why would you essentially publish your entire strategy? Is it because you feel that implementing such a strategy is a lot harder than writing about it?” I seem to recall his smile and a head nod.

What is the relevance of this story? Actually, Rob’s thinking had a profound impact on our decision to “let loose” a tool in our consultant’s belt. MetalSaver, as we have named it, though only 10 questions in length, offers several cost savings strategies for companies sourcing metals related categories. It’s a work in progress, but we believe you’ll find some value in spending a few minutes thinking about your own sourcing strategies.

Tomorrow, we will continue our regular blog posts covering various metals markets. Stuart takes the pen in a two-part series on scrap management strategies.

And as always, if you have any suggestions, ideas or feedback on MetalSaver or topics you’d like to see covered on the blog, please feel free to post a comment.

–Lisa Reisman

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