Converter Inventory Control and How to Level Up

Converter Inventory Control and How to Level Up

Published by Recycling Today

One of the bigger challenges with understanding returns from catalytic converters is knowing what you have before anyone else evaluates your material. Most automotive and scrap recyclers do not have an in-house expert who is able to quantify the material. This article offers solutions to take charge of your cats and gain insights that ultimately will make your business more profitable and the core more secure.

The Need For Specificity

To start, we all need to agree that tick marks on a sheet of paper, while seemingly accurate, do not provide real averages or anything close to inventory control. Using an average number of units per box is another miscalculation. These are not boxes of copper wire or starters that have a consistent weight or size. When it comes to converters, too many variables must be considered, and you cannot rely on simplistic calculations.

In my experience visiting scrap yards, most have dismantlers removing converters and placing them in a central bin that eventually gets moved to a secure location by a manager. It is at this point that the units are counted into a gaylord box or holding container. Respectfully, how many yard owners/managers can honestly say they know what type of material is going into the box? After years of yard tours, my answer is very few.

Here is where the problems start. One tick mark, one converter, right? However, there are several different types of converters, and some are two units that look like one.

A number of questions should be answered prior to the material leaving your facility:

1. Is the converter an original equipment manufacturer (OEM) gasoline/diesel/foil

2. Is it aftermarket?

3. Is the unit an OEM ceramic/foil combo (meaning it’s two units)?

4. Is this a branch with multiple converters?

5. What are the percentages of each type of material?

6. Are your material percentages different from the yard history?

For those of us in the converter business, it is easy to tell the difference between the material types. Many on the front lines don’t want their employees to know the difference or to make any judgment calls when it comes to counting and securing the material. So, how can a yard reasonably and securely take stock? More importantly, why is converter inventory knowledge so important?

Understanding this core is important because in today’s market the converter is factored in when purchasing the car for its parts or recycling value. From my interactions with recyclers, they tend to build in pricing from core buyers or what they think/have been told the can average is. Problem being, if the reporting from the vendor is a feel-good high average number, then the pricing going into the car purchase can be exaggerated or undervalued. In either case, it can mean a financial loss or a missed opportunity to purchase the vehicle.

Inventory Evaluation

If a yard is to have any chance of understanding what it has, the choice of vendor is critically important. Is your vendor willing or able to act more as a consultant, assisting you with material identification/separation prior to handling your cats? If the answer is no, then you need to ask yourself how transparent your vendor is.

To evaluate your converter inventory, you must:

1. Identify and separate OEM converters from aftermarkets;

2. Identify and separate ceramic converters from foil units;

3. Identify and separate diesel converters;

4. Identify the fullness of all units; and

5. Identify combination and branch units.

With proper material separation and counts, you have a place to start. As you are tracking month to month, you can start observing patterns in your material type averages. Working with a toll refiner will give you even more information because they offer weights of material and precious metal loadings that can be applied to current metal markets. Only with historic averages and proper counts can a yard know where it is with a projected inventory value. If you always have wondered what happened with cats this month but don’t have proper inventory control and history, it is easy to place the blame on your buyer.

I can almost hear the reactions from busy yard owners reading how material should be inventoried and tracked: “We just don’t have the time or resources to manage this type of in-depth tracking!”

Admittedly, it seems like a large task, which is why PMR has designed a platform, Supplier Services Platform (SSP) to assist with these steps. If your employees can operate a smartphone, they can track all the information required to take control of inventory.

Our SSP offers a way for recyclers to visually track every converter that comes into inventory and assign a value for managers and owners to view, with the ability to keep these values hidden from frontline workers. We also provide extensive catalogs on the values of converters by serial number and can give instant evaluations with our photo grading tool.

If you are tired of never being sure what happened with converters this month, we have a solution that involves a knowledge-based approach that allows you to take control of your converter inventory and start making better purchasing and selling decisions.

For more evaluation knowledge, visit PMR’s Resource Center.

Published: January 4, 2022
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