September/October 1997
Whether it’s going the extra mile—or working the extra hour—scrap processors sometimes must move mountains to provide great customer service to their suppliers and consumers.
By Robert L. Reid
Robert L. Reid is managing editor of Scrap.
What does processing scrap have in common with selling sweaters?
Everything—when it comes to customer service, says Leslie Fine, professor of marketing at Ohio State University (Columbus).
As she explains, “When you can call up L.L. Bean and say, ‘I’m this tall, I weigh this much, I want a sweater,’ and the person on the other end of the line can figure out your size, what sweater you want, and put it in FedEx so you can have it the next day, then people have very high expectations in all their business dealings.”
Thus, scrap recyclers must understand that the service they provide their suppliers and consumers is being judged not only against other scrap companies, but also against the best service provided by companies in other industries and other parts of the country. Moreover, scrap customers may even expect services from you that they’ve only read about, but never received from any other supplier. Businesses today are “bombarded with stories of really good service and really bad service,” via business publications, trade meetings, even the Internet, Fine says. And all this information keeps pushing customer expectations higher and higher.
So how can you make sure your processing firm not only meets but exceeds these growing customer demands? This review of customer service in the scrap industry provides some answers.
Moving Mountains of Scrap
Compared with other businesses, scrap processing operations are somewhat unique in that they serve two sets of customers: their suppliers and their consumers. “We’ve got to cater to both sides of the aisle—both the people who supply us with our raw materials and the people to whom we supply a secondary material, our consumers,” explains ReMA President Jim Fisher of Fisher Steel and Supply Co. (Muskegon, Mich.).
The supply side of scrap customers is further divided into two groups—retail and industrial. Retail usually involves individuals bringing scrap “over-the-scale” to the processor, while industrial refers to customers who generate scrap that the processor then collects.
Each of these scrap recycling customers—retail supplier, industrial supplier, and consumer—has different service expectations that the processor must meet.
For the retail supplier, the adage “time is money” rings especially true. Getting a truck in and out of the scrap plant quickly is a key part of customer service to them. As Jeff Mallin, president of Mallin Brothers Co. Inc. (Kansas City, Mo.), notes, truckers “make a living driving on the road, not sitting here waiting for us to unload them.” To ensure quick turnaround, employees at his wire chopping firm definitely go the extra mile—or extra hour. “We’ll work late, we come in early, we don’t go on breaks, we work through lunch,” Mallin says.
Mallin Brothers has even moved mountains for its customers—mountains of scrap, that is. About five years ago, the firm’s inventory made it difficult for incoming trucks to pull up to the dock. “There wasn’t as much space to maneuver as there is now,” Mallin explains. “They’d have to pull up and back up, pull up and back up.” To rectify the problem, the company moved its scrap piles and opened the traffic flow. “Now the trucks have plenty of room to pull up,” he notes. “They can back straight in to the dock on a one-time shot.”
Columbus Scrap Corp. (Columbus, Ohio), a ferrous and nonferrous processor, also rearranged its operation to better serve its suppliers, not only moving its scrap piles, but also adding two more traffic entrances—bringing the total to four—to help move suppliers in and out more quickly, explains Cheryl Garrett, general manager. Other processors even operate two scales, with one serving retail suppliers and the other handling commercial truck traffic, which expedites deliveries—and minimizes problems—for both types of customers.
If trucks must wait, be sure you have someplace where the drivers can relax or check in with their home office, recyclers suggest. A drivers’ lounge where they can sit down and get something to drink is nice, but your own offices will also suffice.
And when drivers absolutely can’t wait, you need to accommodate them. In such instances, for example, Columbus Scrap pays to have trucks weighed at the scale of a local concrete company.
Aside from time issues, building relationships is key to bringing retail customers back time after time, Fisher notes. He stresses the importance of making sure your employees are friendly, courteous, and professional during each stage of a scrap delivery.
But even the broadest smile won’t overcome your customers’ anger if they feel they’ve been treated unfairly. So accurate weighing and grading of scrap is absolutely essential. “Too often in the past, our industry has had an image of not giving a person the proper weight for what’s come in,” Fisher says. “That’s why it’s critical that customers get paid for what they have, not only from the weight standpoint but from a commodity standpoint—that the scrap is graded correctly and that they’re getting the value of what they know that commodity to be.”
Safety is another absolute when serving retail customers. As Fisher notes, “You’ve got to make sure customers are taken into safe areas and returned safely—it’s no different than with your own employees.”
Even basic housekeeping can be viewed as a service—and safety—issue to retail suppliers. After all, Garrett notes, “If drivers get flat tires on more than one occasion, they’re not going to come back.” So it’s important to not only keep traffic routes clear of scrap fragments, but also keep walking surfaces free of oil or other materials that could cause slips, trips, or other personal injuries to your suppliers.
Finally, don’t overlook the maxim of the real estate industry—location, location, location—which comes down to providing conveniently situated locations that make it easy for your suppliers to drop off material. E-Z Recycling Co. (Portland, Ore.), a paper processor, has learned this lesson well. Though the firm has more than a half-dozen competitors seeking the same material in its area, it remains the largest in terms of volume, thanks, in part, to its strategically placed facilities in and around the Portland area, says Ray Petermeyer, vice president. The idea was to make it convenient for commercial haulers to deliver their loads at a nearby E-Z Recycling site, rather than haul the material to another part of the city where they might get more money—but only after driving farther and spending more time on the road, Petermeyer explains.
Show Up, Pick Up, Clean Up
When it comes to serving industrial suppliers, three issues seem to set the standard. “Pick the scrap up in a timely fashion, leave the area clean, and if you have any problem, report it to the customer immediately—see that there’s good communication between the generator of the scrap and your company,” notes Fisher.
Mallin Brothers is one processor that’s taken the timeliness philosophy to heart, with its trucks often arriving “20 to 30 minutes early for fear of being late,” Mallin says. And when the firm contracts with trucking companies to pick up scrap, it looks for “good solid companies that have been around for a while and that show a good track record of reliable service.”
Picking up scrap on time can also mean collecting it at odd hours. To service suppliers who run shifts around the clock, Columbus Scrap always has at least one standby driver on call 24-hours-day, reachable via beeper, cell phone, and home answering machine, Garrett notes. And there’s always a backup driver ready in case the standby driver can’t make it.
Cleanliness is also an important customer service issue, with many facets. One is having neat and courteous drivers. Another is leaving the supplier’s scrap-loading area tidy. Columbus Scrap’s drivers, for instance, will shovel up excess scrap that the customer didn’t manage to get into the container, even though the supplier created the mess, Garrett says. And the firm’s drivers will even take a collection container to a local truck wash and wash it out to help keep the customer’s site cleaner. Cleanliness also means keeping your trucks freshly painted, washed, and regularly maintained so they are more aesthetically pleasing and don’t break down at the supplier’s site. In the event a truck does develop a problem, such as an oil leak, be sure your drivers have the necessary cleaning material on hand.
Of course, it’s not just your trucks that can leak oil—the scrap itself might contain or be coated with fluids that could contaminate the supplier’s site as the scrap is being removed. To prevent such problems, Schupan & Sons Inc. (Kalamazoo, Mich., and Elkhart, Ind.), a processor of ferrous and nonferrous scrap, provides its industrial suppliers with nonleaking containers, says Dana Schupan-Wardlaw, marketing manager. The firm is equally environmentally conscientious when it brings the scrap back to its operations, unloading material into a self-contained area that drains fluids into a holding tank—protecting both Schupan and its suppliers from environmental liability problems.
Some processors also exhibit customer service by showing industrial scrap generators how to maximize the profit potential of their material. Schupan-Wardlaw, for instance, analyzes scrap flow for potential customers and continuously monitors scrap issues for existing customers, striving to make scrap handling easier and more profitable for them “because once it’s easier for them, the product they send us is better.”
In addition, Schupan produces a quarterly publication, The Metalist, that provides approximately 800 consumers with information on scrap markets and other concerns. Schupan also assists customers with commodities it doesn’t recycle, such as when it helped one customer establish recovery systems for rubber, plastics, OCC, and other commodities, then helped it find recyclers that handled the material.
These types of cooperative activities are related to the larger trend toward scrap management arrangements between industrial scrap generators and processors. In these arrangements, scrap generators hire a processor to manage most or all aspects of their internal scrap operations, giving them responsibility for the material from generation through processing to selling, and more. (For a look at Ford Motor Co.’s scrap management system, see “Service Through Scrap Management” at right.)
Meeting Consumers’ Standards
Great customer service on the supplier end can help get scrap into your facility, but it’s equally important to provide top-notch service to consumers to move the material out.
For consumers, consistency is a key concern on several fronts. Chaparral Steel Co., a Midlothian, Texas-based minimill, prefers doing business with scrap processors who “consistently sell at market prices,” says Dick Jaffre, vice president of raw materials and transportation.
Product consistency, or quality, is stressed by Barry Cohen, vice president of Allied Metal Co., a Chicago-based secondary aluminum and zinc smelter. “If the scrap normally runs 5 percent contaminants, we’d like to see those same 5 percent all the time,” he explains. “If it runs 10 percent, that’s fine—as long as we understand what we’re buying.”
Likewise, John Correnti, president and CEO of minimill steel producer Nucor Corp. (Charlotte, N.C.), emphasizes that “we want grades to be what we bought—if we buy No. 1, we expect No. 1. We don’t like mixed nuts.”
Mallin Brothers, for one, uses a team-based approach to ensure that it ships the right product to the right consumer. “We don’t depend on any one person to have the final say,” Mallin explains. “Everything that goes out of here is double- or triple-checked by different individuals, so the whole team is responsible.”
Scrap consistency and quality touches much more than shipping the proper grade of material, of course. It also means shipping scrap that’s predominantly free of dirt, oil, moisture, and other contaminant materials, including radioactive sources and naturally occurring radioactive materials, or NORM.
Timeliness of delivery is also vital to consumers, who must have the necessary amount of raw materials on hand to meet their production needs. The time issue becomes even more important if the consumer operates on a just-in-time delivery basis with its raw materials. As Correnti sums up, “When we place an order, we want to get the steel on time. We can’t melt paper.”
That doesn’t mean that many consumers don’t want paperwork on scrap deliveries. Although transactions were once handled informally, with just a phone call, nowadays the trend is toward computerization and documentation. This trend is illustrated by Johnny Gold, vice president for the eastern regional office of the Newark Group’s recycled fibers division (Salem, Mass.), which buys recovered paper for the company’s 15 paper mills. As he explains, “We send our scrap suppliers a confirmation that the transaction will take place. We want our vendors to sign-off on that transaction and agree to pricing, the commodity being shipped, and the time period.” The scrap company then receives a release number for its shipment—like a reservation for the transaction. So, if the processor “wants to bring in an order on Friday, we enter it into the computer, and the information goes to one of our mills saying that XYZ Co. will show up with this load under this release number. If they don’t show up with the number, they don’t go in—it’s the only way we can confirm it.”
Cohen echoes the need for proper documentation. “That means the shipment should have a purchase order number so that my receiving people can reference it to a document to know what they’re supposed to be getting,” he notes. “It should have a bill of lading to tell us exactly what’s on the truck. And a packing list would be nice to show us how the truck is packed.”
Packing that truck should follow the scrap equivalent of the Golden Rule: Processors “should load the truck as they would like to see a truck come into them,” Cohen says. “In other words, I should be able to go in with a forklift or loader and get everything off. But if everything’s mixed up and it takes me several hours to unload a truck, when it should take me half an hour, that paints a pretty poor picture of the scrap processor.”
As when dealing with industrial suppliers, it’s beneficial to understand your consumers’ operations, including how they make their product, how scrap fits into their process, how scrap quality can affect their product and process, and more. This understanding can enable you to better meet the consumer’s needs. Toward this end, Fisher Steel and Supply goes so far as to take its operations employees to visit its consumers’ sites. “We take the team that actually produces our product into the facility so that they can see and know exactly who their customer is,” Fisher says. “It’s the best training method possible to let them see exactly what’s needed.”
And last but certainly not least, frequent and close communication with consumers is essential to serving them properly. Only in that way can you receive the necessary feedback on their satisfaction with the scrap you’re shipping them and the service you’re providing.
Making the Customer Service Grade
Of course, there are limits to how far your firm should go in the name of customer service, such as when it comes to handling material that could pose an environmental or safety risk. “We tell all our customers upfront that we’re not a landfill,” Garrett says. “We tell them we’re a scrap processing plant and it has to be ‘clean’ scrap. If it means losing a customer, that’s when it doesn’t matter. We won’t do anything to cause problems with the environment.”
Such situations don’t automatically have to lead to loss of customers—if you know how to handle them diplomatically, says Fine. “What you have to say is: ‘Let me explain why our business can’t engage in that kind of activity—we could possibly put you or our employees in danger if we tried to handle that material.’”
Then offer the customer an alternative, Fine says, such as noting how they can handle the material themselves or providing the names of other firms that can help them. That way, she notes, “when the customer has a reasonable request, they’re more likely to come back to you.”
Overall, consumers seem to give scrap companies good marks for their customer service. Correnti puts it in terms of a letter grade, asserting, “I give the industry a B+ on the whole,” though he notes that Nucor buys “from some A++ firms, as well as some C+. There are even a few Ds and Fs—but we only buy from them once.”
Cohen echoes that last point for Allied Metal. “You have 90 percent of your problems from 10 percent of your suppliers—so just eliminate that 10 percent.”
In the end, customer service must be viewed as the sum total of materials, personnel, support, and intangibles that your firm brings to its scrap suppliers and consumers. It can make the difference between being an A++ or a C+ processor. It can be the edge between your firm and closely matched competitors. It can, in this era of ever-increasing customer expectations, be the deciding factor in your firm’s long-term success. So take a lesson from L.L. Bean and give your customers—both suppliers and consumers—the type of service that will keep them from buying, or selling, anywhere else.
Service Through Scrap Management
Scrap management is the term for arrangements in which a scrap generator turns over its entire scrap operation to an outside processing firm.
Ford Motor Co. (Dearborn, Mich.) moved to this system for its ferrous and nonferrous scrap in October 1995, appointing seven scrap managers to handle regional territories. Each scrap manager received a one-year contract—a significant change from the previous monthly bid contracts that had involved more than 100 processors, notes Chris Hamm, Ford’s purchasing specialist for raw materials.
Under these renewable contracts, Ford expects the scrap managers to increase the value of its scrap 5 percent a year by means such as reducing costs and finding new markets for the material.
To make this system work, the scrap managers meet with Ford employees at the generating plants on a daily basis and gather at Ford’s Dearborn headquarters once every few months, Hamm says.
Scrap managers help Ford sell scrap outright, reuse the material, swap scrap for other usable products, and find homes for recyclables within the automaker’s Tier I suppliers. Such efforts allow Ford to identify its scrap as units of value and thus “hedge our bet on how we handle car prices and buy raw materials,” Hamm notes. This means that scrap managers essentially advise the plants they service on what raw materials to purchase. In turn, Ford keeps a close eye on the latest scrap technology and even conducts tests with other scrap firms to ensure the competitiveness of its scrap managers.
Under the old system of monthly contracts, scrap companies were reluctant to invest in new technology to meet Ford’s needs because they knew they could lose the contract next month, Hamm notes. But under year-long contracts, he says, Ford’s message is “you’re going to be our scrap manager for a while, so be innovative, take some risks on new types of technology.” •