A scrap metal recycler does not buy a catalogue product. They buy a truckload of mixed metals, a skip of factory offcuts or a private seller’s haul, then weigh, inspect, sort, store and resell a standardised product to a steel mill, a foundry or an export trader. The margin cannot be read from the purchase price or the sale price taken in isolation: it is built on sorting, on exact weight and on the moment the price is fixed relative to the market.
A standard ERP, designed to buy items and resell them, distorts this model. This guide is for owners and finance directors of recyclers, scrap yards and secondary raw material traders (SMEs and mid-market companies). It describes what the ERP must actually handle, where the trade-offs lie, and how to compare four families of solutions. It complements our guide on collecting and complying with regulated waste: here we deal with materials trading and margin, not with the waste producer’s obligations.
An unusual business model: buying heterogeneous flows, sorting, and reselling at market prices
Transformation, not simple trading
In conventional trading, the item bought is the item sold. At a recycler, what comes in is not what goes out. A mixed inbound lot yields, after sorting and shearing, several outbound grades (heavy melting steel, cast iron, copper, brass, aluminium, stainless) plus a non-recoverable residue to dispose of. The ERP must therefore model a disassembly bill of materials: one input, several outputs, with a yield that varies from lot to lot.
This logic is close to what extractive industries face, as they also turn a heterogeneous flow into saleable products (see our analysis of ERP constraints in the extractive industry). The common point: the cost of an outbound grade is not computed by addition but by allocating an input cost.
The flow to reproduce in the ERP
Truck in Gross weighing Quality check Sorting / processing Stock by grade Sale
(supplier, -> (weighbridge) -> (visual, radioactivity, -> (shearing, -> (yard, bay, -> (contract,
private seller) + tare moisture, impurities) shredding, sorting) container) exit weighing, invoice)
| |
Rejection / downgrade Residues (disposal, register)Each arrow is an event the ERP must record, with a weight, a date, an operator and a link to the previous document. If any link lives in an Excel file or in a standalone weighing program, traceability breaks and the margin can no longer be verified.
Specifics to set out in the requirements from day one
- Multiple units: tonne, kilo, piece, container, with controlled conversions.
- Formula-driven pricing: purchase price indexed to a benchmark minus a discount, sale price indexed to a benchmark plus a premium.
- Lots and sub-lots: a lot can be merged, split or reclassified.
- Yield and losses: the gap between weight bought and weight sold must be explained (moisture, impurities, evaporation, weighing error).
- Several supplier types: industrial customers under contract, collectors, occasional suppliers, private individuals.
Weighing, tickets and weighbridges: ERP integration, goods-in quality control, grading
The weighbridge is the source of truth
In this trade, weight is revenue. The weighbridge produces the company’s most sensitive data, and it must enter the ERP without re-keying. Integration usually rests on three building blocks: the weighing indicator, weighing software that manages tickets, and an interface to the ERP (file, API or shared database).
What to demand in a weighbridge and ERP integration project:
- Automated double weighing: gross weight on entry, tare on exit, net weight calculated with no manual step.
- Numbered, tamper-proof weighing tickets, with a log of every correction.
- Degraded mode: if the network drops, weighing continues locally and resynchronises afterwards without duplicates.
- Link to the vehicle registration and the haulier, useful for checks and for invoicing transport.
- Legal metrology compliance: weighing instruments used for commercial transactions are subject to legal metrology rules. Check with your local verification body which requirements apply to your installation before sizing the interface.
Goods-in quality control and grades
On receipt, the lot is inspected: visual check, impurities, prohibited materials, radioactivity, moisture. The result determines the grade, and therefore the price. The ERP must allow you to:
- record the inspection on a tablet, with photos attached to the ticket;
- automatically apply a deduction according to the defect found;
- downgrade a lot from one grade to another without breaking the traceability chain;
- block a non-compliant lot (rejection, return to supplier, specific treatment).
The European framework is a useful reference. Regulation (EU) No 333/2011 sets end-of-waste criteria for iron, steel and aluminium scrap. In particular, it requires the producer to issue a statement of conformity for each consignment (Article 5), to apply a documented quality management system covering acceptance control, process control and radioactivity monitoring (Article 6), and to accompany each consignment with a radioactivity certificate (Annexes I and II). If your business produces scrap meeting these criteria, the ERP becomes your evidence tool: it must output the statement and keep the quality-system records. Check the version currently in force and national implementation rules, as the framework may change.
Anomalies the system must detect
- Gap between the inbound ticket weight and the weight received into stock.
- Ticket with no associated quality check.
- Grade changed after invoicing.
- Outbound weighing higher than the available stock of the grade.
Stock valuation and margins with volatile prices (LME, indices); hedging and contracts
The “margin at sale” trap
A recycler buys at one price, holds stock for a few days or weeks, then sells at a different price because the market has moved. If the ERP does not separate processing margin (sorting, logistics) from position margin (price movement), the owner believes they are earning money through their trade when they are in fact speculating, or the other way round.
To separate the two, the ERP must:
- value each lot at entry cost (weighted average cost or lot identification, depending on accounting policy);
- compare the stock value daily with market value from an imported quotation (the London Metal Exchange for non-ferrous metals, sector indices for ferrous);
- calculate the unrealised margin by grade;
- apply write-down rules when prices fall (see our guide on obsolete stock and year-end write-downs).
Contracts, price formulas and hedging
Sales contracts often include a price formula, with a pricing period (monthly average, price on the day of collection) and premiums or discounts. The ERP must handle these formulas and set the final price at the right time, sometimes after delivery. In the meantime the invoice is provisional, which complicates accounting and VAT.
When the company hedges its position (for example a forward sale on an organised market), the hedge must be linked to the lots or contracts it protects. For an SME, a general-purpose ERP is not always enough: if position-taking becomes significant, look at the scope of a dedicated tool, as explained in our article on commodity trading, positions and hedging. For most scrap dealers the need is more modest: a reliable dashboard of net position by grade, updated daily.
Management indicators
| Indicator | What it reveals |
|---|---|
| Margin by grade and by lot | Real profitability of sorting |
| Material yield (kg out / kg in) | Quality of purchasing and process |
| Net position by grade | Exposure to price movements |
| Stock age | Write-down risk |
| Inbound / outbound weight gap | Losses or weighing errors |
Compliance: waste registers, consignment notes, metal purchases from private sellers and payments
This chapter summarises French obligations to be checked against the texts in force; many EU countries have comparable rules, so check your own national framework. It does not replace advice from a lawyer or your trade federation.
Chronological register and waste traceability
Operators who collect, trade or treat waste must keep a chronological register of inputs and outputs. The French Ministry for Ecological Transition describes the framework for traceability of waste, excavated soil and sediments (in French), and declarations to the national registers now go through the Trackdéchets platform. For the detailed content of registers and consignment notes, see our guide on Trackdéchets, BSDD and compliance. The ERP must produce the register from weighing tickets without re-keying, and keep the data for the required period.
Metal purchases from private sellers: police register and payment method
Over-the-counter purchasing of metals from private individuals is a major control point in France:
- Police register: Article 321-7 of the Criminal Code requires a register for retail purchases of goods, with criminal penalties for failure to comply.
- Payment: Article L. 112-6 of the Monetary and Financial Code prohibits cash payment for retail purchases of ferrous and non-ferrous metals, and requires a crossed cheque, a bank transfer or another authorised method.
Consult the texts in force on Légifrance and your federation’s guidance (FEDEREC publishes a guide to retail purchasing). For the ERP, this translates into concrete functions:
- Supplier record with verified identity, supporting document and, where relevant, proof of ownership.
- Payment block while the record is incomplete.
- Traced payment: the payment module refuses cash for this purchase category.
- Exportable register on request from the authorities.
- Personal data management: retention period and access rights, since you are processing identity documents.
This last requirement ties in with our guide on GDPR compliance for ERP.
Cross-border shipments
If you export, waste shipments fall under the EU Waste Shipment Regulation, which distinguishes in particular between waste lists and notification procedures. Each export container must therefore carry the right classification (waste, or product that has reached end-of-waste status). The ERP must keep that classification, because it determines the documents to be produced.
Logistics: transport, bulk and export containers
Bulk transport and collections
Scrap flows are heavy, bulky and low in value per kilo. Transport cost therefore weighs heavily on margin. The ERP must manage:
- collection scheduling at industrial sites (skips, roll-on containers, trucks);
- subcontracted hauliers and their per-tonne or per-trip costs;
- the own fleet, if you have one, with its real costs (see our guide on ERP and fleet management: TCO and CO2).
Containers and export
For sea export, tracking is by container or by bulk lot: container number, net weight, grade, buyer contract, customs documents and certificates. The usual trap is a departure weight that differs from the arrival weight: the buyer invoices a weight claim you had not provisioned. The system must attach discrepancies to the contract, so you can renegotiate or adjust afterwards.
Four solutions compared: vertical recycling vendors, Odoo, Business Central, Sage X3
The comparison below is qualitative. Exact capabilities depend on version, modules and integrator: ask for a demonstration on your own flow, from weighing to invoice.
| Criterion | Vertical recycling vendors | Odoo | Microsoft Dynamics 365 Business Central | Sage X3 |
|---|---|---|---|---|
| Disassembly and grades | Native, built for the trade | Possible via manufacturing and configuration | Possible via BOMs and extensions | Possible, strong in industry |
| Weighbridge integration | Often native or proven | Development or connector | Partner extension or development | Development or connector |
| Price formulas and benchmarks | Frequently built in | To be developed | To be developed or extension | Advanced configuration possible |
| Registers, private-seller purchases | Often covered | To be developed | To be developed or extension | To be developed |
| Accounting, consolidation | Variable, sometimes limited | Adequate for SMEs | Strong | Strong, multi-site |
| Cost and project risk | Dependence on a small vendor | Flexible, quality varies by integrator | Broad ecosystem | More structuring project |
Recommendations
- Single site, pure scrap dealer: favour a vertical vendor, provided you check its longevity, its accounting coverage and references from customers of comparable size.
- Growing SME with trading and processing: Odoo or Business Central, with an integrator who has already delivered a weighbridge. Budget for developing price formulas and registers.
- Multi-site mid-market company with export and consolidation: Sage X3 or Business Central, possibly combined with a specialist weighing tool. Our comparison of Business Central, Sage X3 and Odoo for B2B distributors offers transferable selection criteria.
In every case, insist on a test using three real scenarios: a purchase from a private seller, a mixed lot sorted into five grades, and an export sale at a deferred price.
Common project mistakes
- Treating weighing as a peripheral. If the weighbridge interface is not tested in real conditions (network outage, badly positioned truck, corrected ticket), the ERP loses the yard’s trust in the first week.
- Modelling one item per product sold. Without lots and disassembly, you cannot calculate a cost per grade.
- Ignoring position margin. The company then steers its results blind when prices move.
- Postponing compliance to phase 2. Registers, payment of private sellers and statements of conformity must be in the initial scope, because they condition the right to operate.
- Underestimating data migration. Suppliers, private sellers, grades, open contracts: the clean-up takes longer than planned.
- Training yard operators too late. Weighbridge and sorting users work standing up, wearing gloves and in the rain: their screens must be simple, touch-friendly and rugged.
- Choosing on a generic demo. A catalogue demo proves nothing about a disassembly flow or a deferred price.
Going further
The central issue in this trade remains stock valuation: read our guide on obsolete stock and year-end write-downs to set up your provisioning rules. If you are preparing a project and want to define the scope for weighing, grades, price formulas and registers, contact us: we help you build requirements and a selection grid suited to your business.
