Selling metal scrap can feel like trying to have a conversation with somebody who speaks a different language. 

While you and the buyer both understand the basics, i.e. that your scrap is valuable, navigating the details of transactions that aren't part of your core business — type of material, volume, quality, and, most importantly, price — can be tricky.

So, working with somebody who can bridge the knowledge gap, match you with the right buyer, and help you get the best price for your metal scrap possible, makes all the difference. 

The problem is that, in many cases, there's a mismatch between your interests and those of your interpreter (read: your local scrap dealer). 

Throw in operational challenges — especially if you have multiple production sites — and it becomes even more unlikely that you'll squeeze out as much value as you possibly could from your metal scrap-selling efforts. 

So how do you address these issues and get more bang for your buck?

The scrap metal black box

The operational challenges of metal scrap management turn the process into a black box: un-transparent, inefficient, and fraught. 

"Many metal scrap sellers we talk to may have a rough idea of their overall scrap volumes and contracts before they start working with us," says Metaloop's Head of Growth Patrick Gallit. "But they don't have detailed data or control over the specifics of what is happening at each location. 

"This means the central management team doesn't have a clear, comprehensive view of their scrap management operations, which leads to missed revenue opportunities."

Poor visibility impacts revenue by creating inefficiencies and waste. 

Say you have two production sites where you use aluminum printing plates. If you had access to real-time production data, you could aggregate the volumes from both sites and, so, gain enough negotiating leverage to deal with one larger buyer. 

But, without that information to hand, you're forced to sell the material from the two production sites separately, to smaller buyers who'll likely want to pay lower prices.

Similarly, not having a centralized source of real-time data may mean storage and delivery practices differ significantly between sites, resulting in duplication — of both logistical processes like deliveries, and admin — and, crucially, inconsistent material qualities.

Misaligned incentives

While operational inefficiencies and poor data integrity have a significant impact on scrap metal revenue, the dynamic between sellers and dealers adds further opacity to the black box. 

The lack of widely accepted industry standards means logistics, pricing methodologies, and other contractual elements can vary between dealers, making apples-to-apples comparisons challenging. 

More to the point, your dealer is often one in a chain of up to seven or eight middlemen. Every one of those middlemen will take a cut, which ultimately comes out of your revenue.  

"Scrap metal is a volume business," says Patrick Gallit. "To maximize profit, you need to unlock economies of scale, and the prices your dealer offers you take this into account."

The upshot is that while, as your interpreter, your dealer's interests should broadly align with yours, the way the industry works means this is often not the case. According to our own research, 60% of SMEs end up losing revenue when they work with the same metal scrap dealer for five years or more.

Escaping the metal scrap black box, with Metaloop

Metaloop's all-in-one solution addresses the black box issue through standardization, centralization, and optimization. 

Standardization

"One of the key issues we encounter, especially when a business has grown through acquisitions, is that metal scrap operations look vastly different from one production site to another," explains Patrick Gallit. 

"They could be recording their output using purpose-built, but old software on one site, and an Excel spreadsheet on the other. Which means it's impossible to aggregate the data without significant manual effort."

There might also be inconsistencies in naming conventions and terminology. For example, copper scrap could be called "turnings" on one site and "shavings" or "chips" on another, giving the impression they're different types of scrap when, in fact, they're the same type of material and could be aggregated.

But the differences could be even more fundamental. 

"One of our clients," continues Patrick Gallit, "recorded scrap output in Italian on one site, and in German on another."  

As part of the onboarding process, Metaloop aggregates the data from all the different production sites, and converts them into a standard format. Our extensive product database recognizes different naming conventions and categorizations for the same materials, removing ambiguity and increasing transparency.

Centralization

Bringing together and standardizing data from disparate sources makes it possible to create a golden source of truth: a trusted repository of data you can use to track production volumes, grades, storage, and deliveries, as well as long-term trends. 

For one of our clients, a renowned automotive supplier specializing in the production of sealing systems and components, centralizing their scrap metal operations meant their purchasing department was able to find better ways to market their material, as well as save time and slash admin.  

Equally, another client — a Belgian packaging manufacturer — was able to pinpoint bottlenecks and other issues, and find ways to improve their processes to make them more efficient.

"The Metaloop portal gives clients a holistic view," says Patrick Gallit. "and that means they're better-equipped to make well-informed decisions, because they have full transparency and control over their internal scrap metal management processes."

Optimization

A key benefit of Metaloop's all-in-one solution is that it enables you to dramatically shorten your supply chain by connecting you directly with end-buyers: large smelters and foundries. 

This is possible because of our network of local partners, which enables us to aggregate and deliver large quantities of metal scrap and, so, guarantee a reliable supply.

From a seller's perspective, this ultimately means more revenue. For one of our clients, a medium-sized company that produces offset plates, Metaloop's all-in-one solution unlocked an extra €48,000 a year in revenue, an 8% increase over what they were getting from their long-time local scrap dealer.

Don't get boxed in

The scrap metal recycling industry will be worth $421 billion globally by the end of 2024 and is expected to reach around $569 billion by 2032. Which is to say, moving forward, it's going to keep growing and become more valuable.

As a manufacturer, this is an unmissable opportunity. A chance to build an additional revenue stream, diversify, and become more sustainable. But you won't be able to reap the rewards if your scrap metal management processes are a black box. 

"At the end of the day, greater transparency is a win-win for everyone," concludes Patrick Gallit. 

"Sellers earn more revenue. Buyers benefit from better traceability of raw materials, which means less risk. And society as a whole is better off because, the more scrap we reuse, the more sustainable our economy and the healthier our planet."

Want to learn more about how Metaloop can help you boost transparency, efficiency, and revenue through standardization, centralization, and optimization?

Book a free, no-obligation chat with our specialist, Patrick.