Computer Considerations

Making the Most of Office Automation

Whether you’re thinking about buying your first computer or are considering a conversion from an outdated one, the advice of vendors and experiences of users detailed here can help you in your search.

What do you need to consider if computerization of your operation is to reach its potential? The answer lies in an interrelated combination of details, including what you want the computer to handle; who gets involved in purchase and implementation decisions; how you choose software and hardware; and the ways in which implementation is accomplished.

Exploring that question assumes that you need a computer. But is that necessarily so?

Ask a system vendor or successful user and the response will likely be affirmative. Mike Leigh thinks computers can help any scrap management professionals "ready to join the 1990s, to [go beyond] the way their fathers did business." Leigh, the president of two Orlando, Florida, businesses--Junk Brothers, Inc., a scrap processing facility, and Scrap Systems, Inc., which sells computer systems--notes that "in the old days everyone used barrels as containers but now they use gaylords on pallets because they're easier to use. Computers are something like that--another piece of machinery to make things easier."

Who Gets Involved?

Before you start trying to find the right computer system for your firm, you need to determine what staff members should be involved in the decision. Like every other part of the search and implementation process, this step requires consideration of what you want to accomplish with a computer. If you're only looking for automation of scale-house operations, your operations manager may be able to handle the task alone. However, says John Underwood, president of Systems Alternatives, Inc., a Toledo-based system vendor, if integrated automation of all your company's departments is your goal, the head of the accounting department probably will need to be included since most fully integrated systems are based around accounting functions.

Of course, he notes, if the system really is to be integrated, the company controller should be part of a decision-making team that also includes the operations manager and, if applicable, a commodity trader. On top of that, "owners need to be involved in a decision as serious as this," notes Larry Smith, vice president of the Shared Logic Group, a system vendor headquartered in Maumee, Ohio. "The system will not be as effective as it could be if top management isn't behind it," he says.

Phillip Klein, president of Adept Solutions, Inc., a Chicago-based software provider, recommends that if you choose a team approach, "you should have one person on the team who's designated as the system administrator" to streamline efforts. Again, that person is "usually someone with accounting responsibility because [even the scrap operations segment of a system] is basically an accounting system--you use the computer to make disbursements for purchases or to prepare invoices for sales."

If no one in the decision-making process at your company has computer experience or if you just want some outside expertise, consider hiring a consultant, temporary analyst, or accounting firm to help you, suggests Deborah Greenberg, controller for Durbin Paper Stock Co., Inc., Miami. Keep someone from your fin-n involved, however, she warns, "so you find something that's meanings to your company."

Where's the Software?

Where does the search start? First, says Ken Matthews, controller for Chatham Iron & Metal Co., Savannah, Georgia, "focus on software; then look at hardware," to avoid limiting yourself. There are three primary sources of software for the scrap industry: custom-written programs, package systems designed for the industry, and nonscrap-specific packages. Hiring a programmer to design a custom program may seem like the most thorough way to obtain software, but it has disadvantages. For one thing, notes Leigh, a programmer probably won't have more than a few days to learn how the scrap industry in general and your operation in particular work, and that limited knowledge will likely show in the final product. "This industry is unique and very few outsiders understand how it works," he says. Adds Smith: "Even the most talented program writers need industry expertise."

Another drawback to custom programs is the amount of time it takes to have a system written. According to Greenberg, who had been a computer programmer before joining Durbin Paper Stock, it could take a programmer several years to complete a system for a scrap company.

The cost of custom programs also removes them from consideration at many operations. Chatham Iron & Metal Co. is one of them--and it has on-staff computer programmers. According to Matthews, to computerize the company's scrap operations (its steel distribution business has been computer automated for 20 years) with an industry-specific package would cost approximately $50,000--enough to pay the salary of one of the company's programmers and part of the pay of one of its supervisors for one year. "But that's not adequate time for development" of a custom program, he says. "Buying a package essentially allows you to share the cost with other companies."

Are Packages the Answer?

Buying package software, says Klein, also removes many of the possible purchasing unknowns from the beginning. "You know what you're going to get, you know what it's going to cost you, and you know when you're going to get it," he explains What can you get from package software? The list of possibilities for scrap-specific software is long, but includes scale house management, customer business history, brokerage shipment control, commodity inventory control, container tracking, and sales contract management, as well as accounting and payroll operations.

Package software not specialized for scrap management will often handle many of the same things that programs written especially for the industry can master, but will probably require customizing to do so. Before Durbin Paper Stock purchased its current computer system--which runs a scrap-specialized software package--Greenberg considered a nonscrap package, but rejected it because the level of modification it would have required made it "too expensive." Another potential problem with modification of nonscrap packages is that modification may not create the final product you're looking for. The Luntz Corporation, Canton, Ohio, began automation of its operations in 1980 with a modified steel-distribution package. According to Greg Luntz, treasurer and vice president of administration, after four years the company decided the system just wasn't satisfactory and replaced the software with a package designed specifically for the scrap industry.

Even if you purchase scrap-specialized package software you may want it to be customized for your particular needs. The key, says Klein, is to start with software centered around a data base (which is easiest to modify) and be sure the modification isn't so extensive that it approaches a rewritten program. Look at possible modification of a program as you would a house, he advises. "The foundation should be good and stay in place while you remodel rooms or build an addition."

When a customer requests a program addition that Systems Alternatives doesn't possess, Underwood tries to find an applicable program already on the market by a specialist before he offers his firm's custom programming services. Why? It usually costs the customer less than custom programming and offers more specialized expertise.

Will Your Hardware Handle Growth?

The software you choose will determine to some extent what computer hardware you need. However, when examining hardware--and software--you also must consider potential growth of your company and of your company's use of its computer. The size of your system should reflect the foreseeable size of your business--not in terms of volume, says Smith, but in terms of number of transactions the system will handle. The problem is, notes Klein, "many people don't realize what a computer can offer them until they get it. Therefore, they underestimate how much they'll be able to use it."

Luckily, you'll probably be able to add printers, terminals, and disk space if you underestimate your hardware needs, but additions can only go as far as your original hardware allows. And unless cost isn't a factor, your original purchase shouldn't exceed your growth expectations.

Networked personal computers often will support only eight terminals, and even minicomputer systems (the next largest system) have limits on memory, terminals, and printers. Durbin Paper Stock, for example, replaced its previous minicomputer system last January because, says Greenberg, "we simply outgrew it--we were always running out of space." The company's new system (a larger minicomputer) has plenty of disk space and can be upgraded to handle more terminals, she says. If your company has more than one site, you have another hardware decision to make: whether to link those facilities together through the computer. It's important for some operations, like Chatham Iron & Metal, which Matthews says networks the computers at its six locations so that all can see processed data simultaneously and immediately. Other firms choose to operate separate computer systems at each site. This is what's done at Luntz Corporation, which then manually enters data produced by personal computers at its several out-of-town locations into the company's minicomputer system at its main office. Similarly, the scale house computers at its other facilities are not linked to the minicomputer, says Luntz. The scale houses maintain different hours of operation than the administrative office where the minicomputer is located, so if all were networked, all segments of the computer system would have to be kept on all the time. This is undesirable, he says, because it would increase the ability of outsiders to tamper with the computer system via telephone

Who Gets the Sale?

Computer vendors should be able to help you sort through many of the variables you'll encounter in your software and hardware search. But, warns Matthews, don't let them decide how you should feel about your computer system. "Sellers want you to have a 'warm, fuzzy feeling,'" he says, "but buyers should go beyond to see the hard realities of what the system will and will not do. They' re making decisions that will change people's lives." When Chatham Iron & metal installed its newest steel distribution system in early 1989, he says, "it was a trauma--and we had had a computer system for 20 years. It can be that much more of a trauma for those who are installing their first computers to replace manual procedures that had been used for many years."

Experiencing trauma doesn't mean you can't be levelheaded in your computer search, however. One way to help ensure that you make an appropriate decision is to test all the computer systems you're seriously considering. It's a step that can be as simple as the one-day software test that Luntz performed at the vendor's office to see if the program made sense. Or it can be as intense as the "conference room pilot test" included in Chatham Iron & Metal's search. According to Matthews, the test brought together computer users from different departments who were "locked m the conference room for three-and-one-half days to build files and produce reports with the software." It required a big investment in time, but, says Matthews, it was necessary as a way "to know whether we could live with the packages."

In addition to testing software and hardware you should scrutinize the vendors that offer those items. While the major criterion to apply is what products they will obtain for you, Matthews emphasizes the importance of a potential vendor's stability and future viability. "There have been [scrap] businesses that were destroyed by bad software," he says, something fueled by purchase from a vendor with uncertain qualifications. Therefore, he says, in his most recent computer search, software companies were gauged on their ability to remain in business in the future and their likelihood of responding to Chatham Iron & Metal's problems. Matthews eventually chose Arthur Andersen & Company, an accounting firm headquartered in Chicago, because the firm, he says, "is our auditor, so we knew if things [on the computer] got tough, they would stay with us."

Hardware support is essential, too, according to Greenberg, who says Durbin Paper Stock had problems getting help from hardware vendors in the past. Therefore, she rejected the equipment suggestion from her software vendor because the recommended manufacturer didn't have a nearby dealership and "we were worried about service.

Is Purchasing the End?

Once you've chosen the right system for your operation and feel comfortable with the vendors involved, you still have to deal with implementation of the system, which could take anywhere from two weeks to more than a year. A sizeable portion of the implementation process will be spent on training. If the system users already have some computer experience and you are installing a program designed to automate only one facet of your business, training could be as simple and quick as running a two-hour-long tutorial and telephoning follow-up questions in to the vendor, according to Leigh. However, if you're putting in a large integrated system that will include users with no prior experience, Underwood suggests you expect training to take up at least four to six weeks over the course of a year.

The size of the system you'll be installing also will determine who needs training, according to Smith. It's helpful for one person--usually the controller--at your organization to become familiar with all the programs on your system, regardless of size. It's a vital strategy, he says, if you are installing a minicomputer or larger system. In addition, for those systems, his company suggests that at least two people be trained on each program module.

Most vendors will provide you with some training, but who will teach the system to new employees or those in need of additional lessons? Some computer companies offer "repetitive training" in your office or theirs. The latter, says Underwood, can result m much greater productivity than onsite training because regular office distractions are missing. It's also less expensive for the customer, he says. But perhaps an even more economical way to provide training to your system's users is to do what Chatham Iron & Metal has done: tram someone from your own firm to be your in-house trainer.

Another important part of system implementation is loading the system with pertinent information about your company, such as your chart of accounts, commodity inventory, and supplier and consumer lists. Prepare as much of this information as possible in advance, suggests Luntz, so that when the system is installed you're ready to load it. If you don't have anyone on staff who can be pulled away from day-to-day operations to concentrate on data entry, consider hiring a temporary operator to input your initial data, as Durbin Paper Stock did.

After your vital data have been entered, you still have to get all segments of your system up and running. Out of necessity, Chatham Iron & Metal accomplished this for its steel distribution system in one weekend, but most systems in the scrap industry likely will follow a schedule closer to Durbin Paper Stock's. There, explains, Greenberg, the general ledger, accounts payable, and accounts receivable have been up since those accounting data were entered. Because the company chose to give its primary attention to ensuring that those functions were operating without problems before setting up other functions, the brokerage and scale operations programs were not yet up at press time, one year after system purchase. Since those operations were not computerized previously (but accounting was), and they can function in a manual mode much better than can other operations, Greenberg says, it hasn't been as vital to get their programs up, though she's anxious to get the whole system running.

One factor that has taken time in Durbin Paper Stock's implementation is the fact that it continued to run its old accounting computer system with its new system for three months, just in case the new system contained hidden problems. Matthews discourages such parallel operations because of the burden it puts on the system users. "People are busy enough without having to do two jobs at one time," he says. But if you’re to follow Matthews's advice, you'll probably want to put extra time into thoroughly testing potential systems prior to purchase.

What Results Can You Expect?

After all the work you've put into choosing and implementing your computer system, you'll be anxious to see results. Don't expect results comparable to those you'd see with the purchase of a new crane or shredder, warns Smith. It can take more time to see the positive effects of computers than heavy machinery, he says.

Leigh, whose scrap processing operation has been computerized for five years, can Pinpoint specific benefits he's seen from computerization. In a nine-hour day, he says, his one cashier can write up 300 scale tickets, and at the end of the day can balance the cash drawer m five minutes. In addition, he notes, the computer eliminates decimal placement errors--mistakes that, in the past, would allow the cashier to pay $46.00 for a purchase worth only $4.60.

The Luntz Corporation, which also has had its computer system in place for five years, discloses even more tangible results. "We've been able to take on 30 to 40 percent more volume without adding employees because of the computer," says Luntz. On top of that, he says, the computer enables the company to get key information such as purchasing and sales histories 90 percent quicker than it takes to get the same information manually.

Klein thinks a computer offers even bigger benefits. In a recent survey he conducted on computers in the scrap industry, he encountered one large user that refused to respond. "That company no longer thinks of the computer as an internal tool. It's an effective portion of the services it offers to customers--a part of its marketing operations," Klein explains. "That's the way a computer should be. It should help you get a competitive edge."

[SIDEBAR]

Special Software for Smelters

If you operate a secondary smelter, how do you determine the most cost-effective purchases for your furnace? Chances are, your plant superintendent uses his knowledge of scrap chemistry, cost, and availability to decide the best recipe of ingredients. That determination probably figures cost-effective purchases, but, says Mark W. Kachel, owner of MWK Software, Plymouth, Minnesota, it's unlikely it calculates the most cost-effective purchases, which might provide an extra few cents of savings per pound.

According to Kachel, the way to see those savings is through a least cost charge calculation, which is based on a linear mathematical technique that dates back to World War II. It's a technique that can be done manually, but it is accomplished quicker and more thoroughly on a computer, he says.

The variables the software uses are the same that your plant superintendent probably uses--chemistry, cost, and availability of scrap ingredients--but the computer, Kachel explains, can keep precise track of these factors for all of the scrap items you might ever buy for your furnace mix, and provide you with a preferred scrap buying list that will save you money. How much can you save? According to Kachel, secondary aluminum and copper smelters can expect to save m excess of 2 cents per pound, iron foundries can save 0.3 cents to 0.5 cents per pound, and steel foundries can save 1 cent per pound for low-alloy steel and 5 cents or more per pound for high-alloy steel.

According to Kachel, installation of his software is "quite simple" and the program is "reasonably easy to use." Entering the initial data for all of the materials you might purchase takes three to four hours, he says, but once they're entered, they need only be updated as price and availability change. In addition, enhanced versions of the program are sent to users at least once a year.

Making the Most of Office Automation

Whether you’re thinking about buying your first computer or are considering a conversion from an outdated one, the advice of vendors and experiences of users detailed here can help you in your search.

What do you need to consider if computerization of your operation is to reach its potential? The answer lies in an interrelated combination of details, including what you want the computer to handle; who gets involved in purchase and implementation decisions; how you choose software and hardware; and the ways in which implementation is accomplished.

Exploring that question assumes that you need a computer. But is that necessarily so?

Ask a system vendor or successful user and the response will likely be affirmative. Mike Leigh thinks computers can help any scrap management professionals "ready to join the 1990s, to [go beyond] the way their fathers did business." Leigh, the president of two Orlando, Florida, businesses--Junk Brothers, Inc., a scrap processing facility, and Scrap Systems, Inc., which sells computer systems--notes that "in the old days everyone used barrels as containers but now they use gaylords on pallets because they're easier to use. Computers are something like that--another piece of machinery to make things easier."

Who Gets Involved?

Before you start trying to find the right computer system for your firm, you need to determine what staff members should be involved in the decision. Like every other part of the search and implementation process, this step requires consideration of what you want to accomplish with a computer. If you're only looking for automation of scale-house operations, your operations manager may be able to handle the task alone. However, says John Underwood, president of Systems Alternatives, Inc., a Toledo-based system vendor, if integrated automation of all your company's departments is your goal, the head of the accounting department probably will need to be included since most fully integrated systems are based around accounting functions.

Of course, he notes, if the system really is to be integrated, the company controller should be part of a decision-making team that also includes the operations manager and, if applicable, a commodity trader. On top of that, "owners need to be involved in a decision as serious as this," notes Larry Smith, vice president of the Shared Logic Group, a system vendor headquartered in Maumee, Ohio. "The system will not be as effective as it could be if top management isn't behind it," he says.

Phillip Klein, president of Adept Solutions, Inc., a Chicago-based software provider, recommends that if you choose a team approach, "you should have one person on the team who's designated as the system administrator" to streamline efforts. Again, that person is "usually someone with accounting responsibility because [even the scrap operations segment of a system] is basically an accounting system--you use the computer to make disbursements for purchases or to prepare invoices for sales."

If no one in the decision-making process at your company has computer experience or if you just want some outside expertise, consider hiring a consultant, temporary analyst, or accounting firm to help you, suggests Deborah Greenberg, controller for Durbin Paper Stock Co., Inc., Miami. Keep someone from your fin-n involved, however, she warns, "so you find something that's meanings to your company."

Where's the Software?

Where does the search start? First, says Ken Matthews, controller for Chatham Iron & Metal Co., Savannah, Georgia, "focus on software; then look at hardware," to avoid limiting yourself. There are three primary sources of software for the scrap industry: custom-written programs, package systems designed for the industry, and nonscrap-specific packages. Hiring a programmer to design a custom program may seem like the most thorough way to obtain software, but it has disadvantages. For one thing, notes Leigh, a programmer probably won't have more than a few days to learn how the scrap industry in general and your operation in particular work, and that limited knowledge will likely show in the final product. "This industry is unique and very few outsiders understand how it works," he says. Adds Smith: "Even the most talented program writers need industry expertise."

Another drawback to custom programs is the amount of time it takes to have a system written. According to Greenberg, who had been a computer programmer before joining Durbin Paper Stock, it could take a programmer several years to complete a system for a scrap company.

The cost of custom programs also removes them from consideration at many operations. Chatham Iron & Metal Co. is one of them--and it has on-staff computer programmers. According to Matthews, to computerize the company's scrap operations (its steel distribution business has been computer automated for 20 years) with an industry-specific package would cost approximately $50,000--enough to pay the salary of one of the company's programmers and part of the pay of one of its supervisors for one year. "But that's not adequate time for development" of a custom program, he says. "Buying a package essentially allows you to share the cost with other companies."

Are Packages the Answer?

Buying package software, says Klein, also removes many of the possible purchasing unknowns from the beginning. "You know what you're going to get, you know what it's going to cost you, and you know when you're going to get it," he explains What can you get from package software? The list of possibilities for scrap-specific software is long, but includes scale house management, customer business history, brokerage shipment control, commodity inventory control, container tracking, and sales contract management, as well as accounting and payroll operations.

Package software not specialized for scrap management will often handle many of the same things that programs written especially for the industry can master, but will probably require customizing to do so. Before Durbin Paper Stock purchased its current computer system--which runs a scrap-specialized software package--Greenberg considered a nonscrap package, but rejected it because the level of modification it would have required made it "too expensive." Another potential problem with modification of nonscrap packages is that modification may not create the final product you're looking for. The Luntz Corporation, Canton, Ohio, began automation of its operations in 1980 with a modified steel-distribution package. According to Greg Luntz, treasurer and vice president of administration, after four years the company decided the system just wasn't satisfactory and replaced the software with a package designed specifically for the scrap industry.

Even if you purchase scrap-specialized package software you may want it to be customized for your particular needs. The key, says Klein, is to start with software centered around a data base (which is easiest to modify) and be sure the modification isn't so extensive that it approaches a rewritten program. Look at possible modification of a program as you would a house, he advises. "The foundation should be good and stay in place while you remodel rooms or build an addition."

When a customer requests a program addition that Systems Alternatives doesn't possess, Underwood tries to find an applicable program already on the market by a specialist before he offers his firm's custom programming services. Why? It usually costs the customer less than custom programming and offers more specialized expertise.

Will Your Hardware Handle Growth?

The software you choose will determine to some extent what computer hardware you need. However, when examining hardware--and software--you also must consider potential growth of your company and of your company's use of its computer. The size of your system should reflect the foreseeable size of your business--not in terms of volume, says Smith, but in terms of number of transactions the system will handle. The problem is, notes Klein, "many people don't realize what a computer can offer them until they get it. Therefore, they underestimate how much they'll be able to use it."

Luckily, you'll probably be able to add printers, terminals, and disk space if you underestimate your hardware needs, but additions can only go as far as your original hardware allows. And unless cost isn't a factor, your original purchase shouldn't exceed your growth expectations.

Networked personal computers often will support only eight terminals, and even minicomputer systems (the next largest system) have limits on memory, terminals, and printers. Durbin Paper Stock, for example, replaced its previous minicomputer system last January because, says Greenberg, "we simply outgrew it--we were always running out of space." The company's new system (a larger minicomputer) has plenty of disk space and can be upgraded to handle more terminals, she says. If your company has more than one site, you have another hardware decision to make: whether to link those facilities together through the computer. It's important for some operations, like Chatham Iron & Metal, which Matthews says networks the computers at its six locations so that all can see processed data simultaneously and immediately. Other firms choose to operate separate computer systems at each site. This is what's done at Luntz Corporation, which then manually enters data produced by personal computers at its several out-of-town locations into the company's minicomputer system at its main office. Similarly, the scale house computers at its other facilities are not linked to the minicomputer, says Luntz. The scale houses maintain different hours of operation than the administrative office where the minicomputer is located, so if all were networked, all segments of the computer system would have to be kept on all the time. This is undesirable, he says, because it would increase the ability of outsiders to tamper with the computer system via telephone

Who Gets the Sale?

Computer vendors should be able to help you sort through many of the variables you'll encounter in your software and hardware search. But, warns Matthews, don't let them decide how you should feel about your computer system. "Sellers want you to have a 'warm, fuzzy feeling,'" he says, "but buyers should go beyond to see the hard realities of what the system will and will not do. They' re making decisions that will change people's lives." When Chatham Iron & metal installed its newest steel distribution system in early 1989, he says, "it was a trauma--and we had had a computer system for 20 years. It can be that much more of a trauma for those who are installing their first computers to replace manual procedures that had been used for many years."

Experiencing trauma doesn't mean you can't be levelheaded in your computer search, however. One way to help ensure that you make an appropriate decision is to test all the computer systems you're seriously considering. It's a step that can be as simple as the one-day software test that Luntz performed at the vendor's office to see if the program made sense. Or it can be as intense as the "conference room pilot test" included in Chatham Iron & Metal's search. According to Matthews, the test brought together computer users from different departments who were "locked m the conference room for three-and-one-half days to build files and produce reports with the software." It required a big investment in time, but, says Matthews, it was necessary as a way "to know whether we could live with the packages."

In addition to testing software and hardware you should scrutinize the vendors that offer those items. While the major criterion to apply is what products they will obtain for you, Matthews emphasizes the importance of a potential vendor's stability and future viability. "There have been [scrap] businesses that were destroyed by bad software," he says, something fueled by purchase from a vendor with uncertain qualifications. Therefore, he says, in his most recent computer search, software companies were gauged on their ability to remain in business in the future and their likelihood of responding to Chatham Iron & Metal's problems. Matthews eventually chose Arthur Andersen & Company, an accounting firm headquartered in Chicago, because the firm, he says, "is our auditor, so we knew if things [on the computer] got tough, they would stay with us."

Hardware support is essential, too, according to Greenberg, who says Durbin Paper Stock had problems getting help from hardware vendors in the past. Therefore, she rejected the equipment suggestion from her software vendor because the recommended manufacturer didn't have a nearby dealership and "we were worried about service.

Is Purchasing the End?

Once you've chosen the right system for your operation and feel comfortable with the vendors involved, you still have to deal with implementation of the system, which could take anywhere from two weeks to more than a year. A sizeable portion of the implementation process will be spent on training. If the system users already have some computer experience and you are installing a program designed to automate only one facet of your business, training could be as simple and quick as running a two-hour-long tutorial and telephoning follow-up questions in to the vendor, according to Leigh. However, if you're putting in a large integrated system that will include users with no prior experience, Underwood suggests you expect training to take up at least four to six weeks over the course of a year.

The size of the system you'll be installing also will determine who needs training, according to Smith. It's helpful for one person--usually the controller--at your organization to become familiar with all the programs on your system, regardless of size. It's a vital strategy, he says, if you are installing a minicomputer or larger system. In addition, for those systems, his company suggests that at least two people be trained on each program module.

Most vendors will provide you with some training, but who will teach the system to new employees or those in need of additional lessons? Some computer companies offer "repetitive training" in your office or theirs. The latter, says Underwood, can result m much greater productivity than onsite training because regular office distractions are missing. It's also less expensive for the customer, he says. But perhaps an even more economical way to provide training to your system's users is to do what Chatham Iron & Metal has done: tram someone from your own firm to be your in-house trainer.

Another important part of system implementation is loading the system with pertinent information about your company, such as your chart of accounts, commodity inventory, and supplier and consumer lists. Prepare as much of this information as possible in advance, suggests Luntz, so that when the system is installed you're ready to load it. If you don't have anyone on staff who can be pulled away from day-to-day operations to concentrate on data entry, consider hiring a temporary operator to input your initial data, as Durbin Paper Stock did.

After your vital data have been entered, you still have to get all segments of your system up and running. Out of necessity, Chatham Iron & Metal accomplished this for its steel distribution system in one weekend, but most systems in the scrap industry likely will follow a schedule closer to Durbin Paper Stock's. There, explains, Greenberg, the general ledger, accounts payable, and accounts receivable have been up since those accounting data were entered. Because the company chose to give its primary attention to ensuring that those functions were operating without problems before setting up other functions, the brokerage and scale operations programs were not yet up at press time, one year after system purchase. Since those operations were not computerized previously (but accounting was), and they can function in a manual mode much better than can other operations, Greenberg says, it hasn't been as vital to get their programs up, though she's anxious to get the whole system running.

One factor that has taken time in Durbin Paper Stock's implementation is the fact that it continued to run its old accounting computer system with its new system for three months, just in case the new system contained hidden problems. Matthews discourages such parallel operations because of the burden it puts on the system users. "People are busy enough without having to do two jobs at one time," he says. But if you’re to follow Matthews's advice, you'll probably want to put extra time into thoroughly testing potential systems prior to purchase.

What Results Can You Expect?

After all the work you've put into choosing and implementing your computer system, you'll be anxious to see results. Don't expect results comparable to those you'd see with the purchase of a new crane or shredder, warns Smith. It can take more time to see the positive effects of computers than heavy machinery, he says.

Leigh, whose scrap processing operation has been computerized for five years, can Pinpoint specific benefits he's seen from computerization. In a nine-hour day, he says, his one cashier can write up 300 scale tickets, and at the end of the day can balance the cash drawer m five minutes. In addition, he notes, the computer eliminates decimal placement errors--mistakes that, in the past, would allow the cashier to pay $46.00 for a purchase worth only $4.60.

The Luntz Corporation, which also has had its computer system in place for five years, discloses even more tangible results. "We've been able to take on 30 to 40 percent more volume without adding employees because of the computer," says Luntz. On top of that, he says, the computer enables the company to get key information such as purchasing and sales histories 90 percent quicker than it takes to get the same information manually.

Klein thinks a computer offers even bigger benefits. In a recent survey he conducted on computers in the scrap industry, he encountered one large user that refused to respond. "That company no longer thinks of the computer as an internal tool. It's an effective portion of the services it offers to customers--a part of its marketing operations," Klein explains. "That's the way a computer should be. It should help you get a competitive edge."

[SIDEBAR]

Special Software for Smelters

If you operate a secondary smelter, how do you determine the most cost-effective purchases for your furnace? Chances are, your plant superintendent uses his knowledge of scrap chemistry, cost, and availability to decide the best recipe of ingredients. That determination probably figures cost-effective purchases, but, says Mark W. Kachel, owner of MWK Software, Plymouth, Minnesota, it's unlikely it calculates the most cost-effective purchases, which might provide an extra few cents of savings per pound.

According to Kachel, the way to see those savings is through a least cost charge calculation, which is based on a linear mathematical technique that dates back to World War II. It's a technique that can be done manually, but it is accomplished quicker and more thoroughly on a computer, he says.

The variables the software uses are the same that your plant superintendent probably uses--chemistry, cost, and availability of scrap ingredients--but the computer, Kachel explains, can keep precise track of these factors for all of the scrap items you might ever buy for your furnace mix, and provide you with a preferred scrap buying list that will save you money. How much can you save? According to Kachel, secondary aluminum and copper smelters can expect to save m excess of 2 cents per pound, iron foundries can save 0.3 cents to 0.5 cents per pound, and steel foundries can save 1 cent per pound for low-alloy steel and 5 cents or more per pound for high-alloy steel.

According to Kachel, installation of his software is "quite simple" and the program is "reasonably easy to use." Entering the initial data for all of the materials you might purchase takes three to four hours, he says, but once they're entered, they need only be updated as price and availability change. In addition, enhanced versions of the program are sent to users at least once a year.