Optimizing Your Business with Converter Statistics
<h1>Optimizing Your Business with Converter Statistics</h1>
Catalytic converters are the most complex non-ferrous item in the recycling industry. For those who are new to toll-refining and assaying, knowing how to interpret your returns and results can be confusing. While many companies only rely on the average price per unit, this statistic can be highly misleading.
Let’s explore how having the right information can help you review and interpret your invoices with ease, especially if you’re selling to a toll refiner. With a clear understanding of the data, businesses can optimize their operations. There are two sets of data to consider: the information to track before processing a load and the data to evaluate and analyze after receiving assay results.
Tracking Pre-Processing Data
It’s important to know what kind of data your converter lot holds before it even goes through the toll-refining process. That means converter count, booking accuracy, extras, and partial percentages.
Maintaining an inventory of your material requires counting the different types of converters that you have. It’s important to separate your count by material type (OEM, Aftermarkets, DPF, foil, beads, etc.) to ensure accurate inventory management. This way, you can easily track your converter results once your assay results come in.
With a comprehensive inventory system, you can verify the accuracy of gross and net weights on your final invoice. Your processor conducts a physical converter count for each load, enabling you to cross-verify with your own count. An organized tracking and inventory system also helps prevent errors. Without a proper count before shipping, you can’t ensure the accuracy of the grading report provided by your processor, or keep track of the different material types in each shipment.
To keep track of your inventory, it’s crucial to keep an accurate daily running count of your converters. This valuable data helps you monitor the material flow in and out of your facility.
Does Your Processor Have a Counting System?
Once you establish a count, it’s important to work with a processor that also counts each unit upon arrival. As we’ve mentioned before, your processor will give you a detailed grading report once they’ve counted your material. This grading report is essential to compare with your own converter count. This is called booking accuracy, and it’s essential to building a transparent relationship with your processor.
Booking accuracy refers to the discrepancy between the number of converters you have before the material leaves your facility and the number received by your processor. A reflective booking accuracy helps you hedge your metals accurately and monitor theft. For example, a recycler within a 2% accuracy range is considered to count their material accurately, while a booking accuracy over 5% indicates a problem.
Extras are any unit types that don’t meet the minimum material count to be qualified for assay. These are paid on a per unit basis, since there isn’t enough material for proper assessment. On average, 10-20% of each load received by recyclers is made up of extras. Monitoring extras helps ensure accurate hedging of your material, especially when hedging in advance.
When converters are recycled, each unit has a different level of fullness. That means the biscuit inside the converter is either completely gone, partially intact, or completely full. So when your converters arrive at your processor’s facility, they have to take into account that not all your units will be full. In the industry, a partial percentage refers to the percentage of converters that aren’t completely full.
Data shows that in a typical load, 4-5% of converters will have biscuits that are either completely gone or partially intact. If your lots are under 5%, that’s a good indicator that your material is being dismantled correctly and units are being managed with care. On the other hand, if your partial percentage is over 5%, this could be the result of improper dismantling, like pulling or tearing converters from the vehicle carcass. If that’s the case, you should consider using different dismantling methods and tools to make sure the converter doesn’t lose ceramic.
Watch Out for Converter Fullness Red Flags
Scrap metal recyclers with yards should exercise caution when collecting material in order to avoid purchasing broken or half-full converters. Verify the material's condition before purchase to ensure that you’re paying the right price. Other deceptive practices to be aware of include re-stamping converter shells with high-value serial numbers and creating counterfeit OEM units by filling empty converters with aftermarket material or producing brand-new converter shells/heat shields.
Tracking Data Post-Processing
Once you receive your assay results, you’ll have access to the data points described below. These metrics help you analyze your results and make strategic decisions for your business.
Parts Per Million (PPMs)
Determining the precious metal content of your material is an important part of the assay process. There are lots of factors that affect the precious metal content in a given converter load, including vehicle mileage, converter wear and tear, emission laws, and the region for which the converter was manufactured.It's also important to note that precious metal results from a scrap metal yard will vary more because the material is purchased from multiple sources, unlike auto recyclers, who pull converters from vehicles. Other factors that affect precious metal content in recycled converters include the converters’ age, as older converters contain more platinum relative to palladium, a trend which has since reversed, and fluctuations in the precious metal content based on market price and technological developments.
This is where the parts per million reading comes in. This is one of the most important metrics on an invoice when selling your material by assay because it provides clear readings of the precious metal content within a converter load. An accurate reading of the parts per million is crucial to getting an accurate price for your load.
Weight Per Converter
If you know and keep track of the weight of your units, you can monitor and even predict your earnings. An average converter contains about 2 lbs of honeycomb inside the shell, so if weight per converter is higher than 2.3 lbs, this indicates that the converters are more likely to be older, heavier converters with lower PPM. If the weight per can is under 1.8 lbs, that indicates a composition of late model units with very high PPM.
Monitoring your weight per converter is critical, but it requires a complete grading report from your processor that includes full and partial units. A good grading report provides valuable insights. For example, if you had a low weight per converter (below 1.8 lbs) but your grading report shows 40%+ of pre-units, the weight makes sense and there is no cause for alarm.
Ounces are generated from your material’s processed weight and PPMs. Tracking this metric helps identify patterns. For instance, if a hedge is made up front, an estimate of 80% of total ounces, you can compare it with the results of your assay.
Monitoring this statistic allows you to assess whether your ounces are being hedged accurately, detect consistent over-hedging, and figure out if you need to adjust the hedge percentage over time. Without a hedging history, one strategy for your next lot is to aim for 60-80% of the national average price.
Benefits of Analyzing Data
Building up a thorough assay history enables you to verify each of the above data points against a running average of your past lots. This empowers you to track your converter statistics, identify irregularities, and confidently correct them, knowing that you’re basing your decision on reliable data.
With this comprehensive data, you can analyze the most profitable aspects of your business and identify areas of loss. You can evaluate material trends, determine which buyers offer more profitable units, and compare the profitability of multiple locations.
At PMR, we assist our suppliers in effectively tracking all their data and information, empowering them to understand their businesses with confidence. This is the only way for recyclers to optimize and grow their businesses.
So if you think the results of one of your converter loads is off, ask your buyer and processor to further explain your numbers. If they can’t give you an explanation that’s backed up by data, it might be time to find a buyer and processor who can. Your business deserves a partner that provides you with answers, not more questions.
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