Recycling Profit Analysis

The Recycling Profit Analysis offers plant managers the ability to gauge the profitability of Supplier accounts at the purchase level by mapping inbound grades to final products on an account and location basis. The Recycling Profit Analysis (below) provides the inbound costs of material and expenses rolled up by account location and grade, with the added ability to derive an estimated profitability through the allocation of final sales products to inbound grades for each account location (or for “any” account location).

The Recycling Profit Analysis, in addition to providing the inbound costs of material and expenses by account location and grade, offers details such as Cost, Sales, Profit, and Margin. The following is a list of the available information in the Recycling Profit Analysis.

For each Account Location by Grade:

The Unit Type differentiates between Grades received by Unit Type (i.e., Bales, Loose, Gaylords, etc.);
The Weight given is the total weight received in LBS by the Warehouse in question or for the Plant as a whole;
The number of Loads is the total number of loads containing the Grade receiving in the reporting period;
The Purchase price is the total price paid for the Grade received, while the Purchase/ST is the average price paid per ton;
Freight is the total Freight cost paid for the loads received and the Freight/ST is the average cost paid per ton;
Any Processing charges shown are the charges that have been added to the Allocation Business Rules (discussed further below);
The Inquiry includes columns for Adjustments and Adjustments/ST in order to capture additional credits or debits impacting the true cost of the Grade;
Displayed later are the Cost and Cost/ST, which include the Freight, Processing, and Adjustments displayed earlier in the Inquiry;
Once Allocation Rules have been setup (see below), the Sales and Sales/ST will reflect the Sales Price and average Sales Price per ton based on the mapped final products;
Based on the Purchase and Sale, the Profit and Profit/ST are derived from the allocation rules for each Grade;
The Margin displays the Gross Profit Margin for each Grade, based on the mapped transformation and business rules; and
Finally, the Pricing Model displays the model used to derive the information for each Grade.

The analysis tool looks at the profitability of supplier accounts by using a cascading series of user-definable business rules that can define how inbound commodities are transformed, if at all. There are different levels of rules that can be applied to a specific type of received recycling grade. When run, the inquiry will specify for each account/location/grade line which allocation model is used to derive the estimated profitability.

Account/Location/Grade: The Account and Location specific allocation will be used if a receiving grade matches a specific account and location.
Account/Grade: The specific supplier “account” pricing model will be applied if there is no account and location specific model to use and an account model is found for the grade being received.
Default: The “Default” model will be applied if there is no account specific model for the grade being received.
Average Price – Grade: This is where the analysis derives an average sales price by matching the outbound grades (if any). This will be used if no other allocation models apply.
Average Price – All: (This is the universal default) If no other pricing model can be used, the system will determine sales price and profitability using the total weighted average price for all commodities sold in a given period.

Setup

Prior to using the inquiry, clients must first setup allocation rules by mapping a percentage of final products to inbound grades on an account and location basis (or account and “any” location basis). Setup can be completed by selecting Allocation Models from the Tools menu.

The Allocation Models screen will display one row for each inbound grade received from either a specific account and/or location or for all accounts, by using the (Default) setting. The following is a detailed description of how the rules are applied:

If an account does not have any rules specifically setup, then the (Default) account settings will be applied for any receiving grade when that grade is not already sold as an outbound grade in the reporting period.
If an account has a rule setup for a receiving grade with the Location set to (Any), then the rule will be applied to any material received from any location (shipping point) related to that account.
If an account has a rule setup for a specific location and grade, then the allocation will ONLY be applied to material of that grade received from that location. Note: If location specific rules are used, a separate rule must be setup for every location and receiving grade.

Allocations Models can be entered by clicking the New Allocation icon provided to access the Recycling Profit Allocation detail.

The setup form can accommodate up to 12 allocations for each received grade. Please note that the match up for allocations is currently not unit type specific.

Additional Settings

The Recycling Profit Analysis Inquiry has an option under Settings to prevent unsold commodities received in a period from being priced with the total average price for the warehouse. When this occurs, the Pricing Model in the inquiry will now appear as (None).

Located within the Tools menu, the Processing Rules (below) allow processing charges to be added either for a specific account and/or location or for all accounts, by using the (Default) setting.

As discussed briefly above, the Processing Rules entered here will be displayed in the Processing column of the Recycling Profit Analysis Inquiry.

Processing Rules can be added by clicking the New Rule icon provided to access the New Processing Rule form. Charges can be defined by Warehouse and Unit Type and are entered as a per weight charge.

If you have additional questions, please contact the Support Team via email to support@cietrade.net.