The salient aspect in management of scrap and surplus items is that it is buyer who is more well-versed and informed regarding the items than the seller. But on the other hand, though revenue received of scrap and surpluses is a sizable sum, it is quite negligible in comparison with that of the company’s regular product line. Further the varieties of surplus are so diversified in grades and kinds that it is practically difficult, though not (totally) absolutely impossible for any concern to deal with them.
As a solution to this, the services of scrap consultants come as a rescue. The scrap consultant renders the services of his preliminary survey or scrap and surplus items and their handling procedures. On the basis of his wide experience in the profession, recommends in his report for segregating, grading, handling, weighting and accounting for the company’s accumulated surplus stock. The program is implemented under direct audit and periodic survey of the consultant by the supervisor (the person in charge) of its scrap and surplus program. The negotiations from time to time with suitable parties bring a ready disposal of the company’s surplus. In return, the consultant is paid a commission on sales of scrap and surpluses.
This channel, though not invaded in its right perspective, can be a better outlet or surplus items.
Sale to Employees: Some scrap items or scrap items at times, are sold to the employees. If surplus is the result of overstocking or technical obsolescence and the materials are in new or good condition, or if they are odds and ends of scrap described by employees, this can be a satisfactory method of disposal of surplus stock. On the other hand, if the surplus are not in fully satisfactory condition, such sales, regardless of their attractive price, can be a source of resentment on the part of employees towards the employer.
Most of the concerns do not find this method favorable because of its inherent potential disadvantages. Many sophisticated firms do not sell used surplus to their employees. Especially scarp tools and equipment should not be sold to the employees, since such a concession might encourage scrapping of serviceable tools and equipment, besides the dissatisfaction is commonly witnessed among the employees emanating such sales. Further, it often entails a high cost of paper work and imposes an administrative burden on ensuring complete impartiality in the sale.
Donation of Educational Institutions: At present time, schools and colleges and even university departments actually need machine tools and other type of industrial materials for instructional use in laboratories. The disposal of surplus in this direction is rare phenomenon in the industrial realm. Though this alternative does not yield anything for the surplus or scrap items, it earns a favorable with its social responsibility. This sense, the sum that a concern has to forgo in respect of any such surplus item gifted to the educational institutions, can be very well treated s the premium to avail of higher community confidence.
On the whole, the management of surplus and scrap has its unique features particularly for the manufacturing units which require high usage of consumable items. Processing materials are so frequently likely to be confronted (affected) with the grave problem — how to yield best of the surplus items? The industries suffer swiping and swift generation of its plants and equipments, machinery and tools on account of rapidly developing technologies from time to time are also the victim of high stock of surplus and even scrap heaps. So much with this, scrap industry is characterized by a market of its uniqueness. In the true sense, scrap is usually, intended to be bought rather than sold. The practical bias to the management of surplus and scrap accumulation reveals that no market or regular demand can be crated for such surplus stocks as it is a common phenomenon with regular trade commodities. No means of advertising howsoever effective in its application can do well in this typical industry. The reason underlying rests as the demand is a delivered demand completely dependent on the sale of firm’s products and conversely for the raw materials. As a result, when the requisition knocks at the door the items must be ready on hand to be delivered. Once missed the opportunity, it is incumbent upon the manufacturing unit to maintain the large inventories till another indent is received for the items from the user dealer.