Demystifying Technology in Scrap with Evan J. Schwartz

In this episode of Born Scrappy I sit down with Evan J. Schwartz, Chief Innovation Officer at AMCS Group, to demystify technology and understand its practical application in the scrap metal industry.

Evan has spent 35+ years across resource-intensive industries and now sits at the forefront of innovation at AMCS, operating across 80 countries. His job? Spot what’s coming next and help companies adopt it without blowing themselves up in the process.

With all the buzz around tech right now, this episode is a masterclass in cutting through the hype.

In this episode, we talk about:

👉 Turning data into cash
👉 Agentic automation
👉 Data over gut feel
👉 Cloud resilience
👉 Practical AI use
👉 Why ERPs fail
👉 And more!

If you’re a scrappy trying to future-proof your business, then don’t miss this one. Because over the next 10 years, the companies that use data to make better decisions will win.

Born Scrappy.

Brought to you by Buddy.

The only marketplace and trade OS built for scrappies, by scrappies.



https://www.tradebuddy.io/

https://www.linkedin.com/company/tradewithbuddy/



WHO IS STU KAGAN ANYWAYS?

27 years in the metal recycling game and still learning and growing…

I learnt from the best and worked my way up from yard labourer to Executive Director of Trading and Operations for the largest metal recycler in sub-Saharan Africa. Responsible for 4,500 employees, 85 sites, and the overall profitability of a multi-billion dollar operation.

I brought my breadth and depth of knowledge to bear and co-founded the fastest growing, most-loved, and most awarded metal recycling company in New Zealand.

I thought it was time that tech worked for our industry, so I built THE killer scrap app, Buddy - built for scrappies, by scrappies.

Father of two crazy-awesome boys. Husband to Lisa. Kids rugby coach. YPO member. Founder. Lifelong learner. Mentee. Mentor. Committed Stoic. Aspiring cowboy.

COME SAY HI ON LINKEDIN

https://www.linkedin.com/in/stukagan/

https://www.linkedin.com/company/born-scrappy/

https://www.linkedin.com/company/tradewithbuddy

Transcript

Meet Evan J. Schwartz

Chief Innovation Role

Book and ERP Lessons

Tech Adoption and Data

From Gut Feel to Data

Cloud Mobile and AI Basics

Agentic AI Explained

Blockchain Tokenization

Cloud vs On-Prem Reality

Cloud Growth Mindset

Remote Hiring Advantage

Run It From Mobile

Tech Must Add Value

ERP Efficiency

Real-Time Margin Visibility

Choose Vendor Partner

Change Management Wins

Why Implementations Fail

Measuring ROI Fast

Getting to Know Evan

0:01

The scrap metal recycling industry has always run on hustle, trust, and sharp instincts. This is the podcast for traders and operators who want to get sharper without losing their scrappy edge. I'm Stu Kagan. Bringing you insights and stories from the people shaping the future of our industry. This is Born Scrappy. Hey, e. Welcome to Born Scrappy. How are you? Hey, Stu. Loving it. Loving it. Excited to be here, brother. Yeah, man. Uh, it's, this is an exciting one for me. You know, Lisa obviously plays a big part of this for me in the background. So, uh, we've been hoping to make this happen and, uh. Really just before we start, I think the idea here is we are demystifying technology. There's all these terms that are thrown out. The purpose of this masterclass is to try and make it easily understandable, relatable, and when people come to talk to you about whether it's cloud or mobile or agentic ai, whatever it might be, that now people can hopefully just get a bit of an understanding whether it is something they should. Participated and they should listen to, they should spend their time there. Or if it's some sort of bullshit, they could just leave out for now. But first of all, you're, you're asking the right question should, right? Yeah. Too many people ask, can, can it do it wrong question. Should. Yeah. I love it. Well, ev before we get started, because uh, already you're getting into it, tell us a little bit about how you got involved in the scrap metal recycling industry and the technology, you know, that plays a part of it. Sure. Just the short version of this is I fell bass wards into value industries, resource intensive industries. I had just met my wife and she had, uh, our first son from a different environment, and I needed to get out of the house and go do something. I was a very convenient live-in babysitter at the time. I was very young, not super compatible, and I fell into a company called Infant Energy, and it was right after the deregulation of gas, and that was my first touch of a resource intensive value company. Something that you pulled out of the ground and you did some value with it and you sold it and it traded and they were doing natural gas of course. From there, it led to the entire litany from chemicals to forestry, pulp and paper. Pulp and paper, you know, led into waste and recycling. Waste and recycling led into scrap. And then before you know it, it's all people, places and things. It's all connected. Intelligence of all these resources and. You zoom out far enough and it's people buying stuff from other people trying to move stuff from one place to the next. The people, places and things paradigm. So that's what got me here. It's the similarities are there, but the specifics is where you can get tripped over and that's where I think technology helps is to smooth that out so you can get the best practices across any and all of those industries,'cause they're feeders across each other. You'd be surprised how interconnected all these industries are. You know, I guess in the first. Three minutes. You have just shown why I have you coming on to talk about this. You've just simplified something that you and I have had many discussions and gone in depth to your involvement in all these different roles and how everything plays a part. You simplified that so beautifully, so thank you, and hopefully people can understand that. This is where we're gonna go from here, and this is how we're gonna start talking about technology in the rest of this episode. Tell us a little bit about where you sit at the moment, though, eb, um, you know, what's your role look like now? How are you involved in the scrap middle space? So as we've expanded from all of those industries, my job is to put their arms around all of these and bring it into a suite of products and platforms that can come together. It, I got away from being the product person and started moving into the innovation space more and more and more until it just made sense to own the innovation space. Get out in front, start making bets on what's happening in the industry, what needs to happen, how do you get customers? To move across this space successfully and to implement digitalization. So today I sit as the Chief Innovation Officer for a MCS group, global. We're in native countries around the world. I have the opportunity to have visibility across paper industry, waste, recycle industry, scrap industry, hazardous waste, chemical mail, all of those things, even wastewater treatment in the ground has a connection into some of the other industries. One person's waste is another person's feedstock of value. It's just you. You'd be surprised how interconnected these industries are. We're getting the smell of it right now in the macroeconomics of how interconnected all of our industries are. Today is something falls. Somewhere else, you feel it all the way across the globe. So my job is to get out and find out how the next pieces of technology are gonna disrupt. Revolutionize. And then more importantly, my job is to figure out how to get our customers in a position to adopt it. Mm. Uh, let's just touch very briefly and it'll come up, I'm sure through the the episode, but you've written an incredible book to really help people through this journey. Can you just give us a quick little idea of what that's about? Yeah, so the actual book itself covers my 35 plus years. It's my story after story after story that's led me to the customer journey, which is a framework that I publish on my website that's supposed to help. Companies know what to do. The number of customers I've gone to and says, I wish I knew that. I didn't know what I didn't know. Well, there's no excuse anymore. There's a framework for that. Now you can know, uh, the book is people, places, and, um, things. It's a framework for a pain-free ERP implementation. I'm gonna tell you, the title's a little bit of a misnomer. There's no change without pain. You're always gonna have a little bit of pain. The goal is. To build a framework where you can tolerate that pain of change so that you can get to brighter days. So that's the purpose. Behind the book, Gartner released a statistic saying that 70 plus percent of ERP implementations either go drastically overrun or fail, and it's very preventable. An old customer of mine, I'm surprised. I'm surprised it's only 70%. Yeah. Look, I, but I guess it depends on what you define as as a fail, right? To me, a fail is I over went, I lost my date and I wrote down the money, and I never got what I was asking for. Mm-hmm. Right. There was a customer in Germany, 620 plus million dollars in over WestRock, reported 75 million. Right down overage trying to build a wood procurement purchasing system using a very popular, I'm not gonna down somebody else's system. Mm-hmm. Because I think there's a whole lot of blame to go around in this industry. Um, but too often we're putting a square peg in a round hole. Rather than slowing down thinking about it and coming at it the right way. So look, that's just a separate sidebar passion for me is to get this information out because I don't think any company has to endure it. And my good friend John Leonard, I've known him since sixth grade. He's in the chemical side of the industry'cause of our friendship. He didn't come to me. He's sorry about that, fell face down into this. And he is still paying for a subscriptional piece of software he can't use. It doesn't have to be that way. Alright, let's jump into it E Okay. Because, uh, you and I can get caught talking about these sort of things for days without adding enough value other than to ourselves. Let, let's get, where do you see technology has evolved the most in our industry over the last 10 to 15 years? That is a great question. I think it's a split decision. So there's a difference between what's evolved the most as opposed to what's been adopted. And I'm gonna be honest with you, a technology that's evolved that's not being used. It's not worth anything. Hmm. So for me, just the adoption of technology within the industry at the scaling, within the grading process, within the logistics and dispatching to be able to get optimizations around the collection side, sourcing quality material, those are all very powerful. And then you leapfrog and you go right into the outbound sales packaging logistics out there to be able to get your margins together. It's the visibility of data. Is what's really impacting this industry. You know, you have a strong idea on how to source material. We can get it in the yard and we have a strong idea how to sell it, but somewhere there tends to be an air gap between I've got the material in there, being able to put it into the right sales slots, be able to maximize my margins against it, be able to have visibility across my suppliers for transport to make sure that I'm not losing or eating up margins in shipping or collection sides of this and that I'm getting what I'm paying for. Through a scale, right? So those are all just little areas of touch points that we're seeing those efficiencies, and we're just beginning to see that because we're adopting technology to be able to collect data, and that data is really what's giving us the opportunity to start finding these efficiencies. There's a long road ahead. I would tell you there's other, I'd say sister industries that are close but not as complex as far as the diversity of materials that are probably 10 years ahead. Everyone listening to this podcast would do well to go talk to a paper company who went through this with land management, vertical inventory, cutting down trees and moving into a new level of material management. There's a lot that you can pull from that industry. They're just about 10 years ahead of us. You know, it wasn't even 10 years ago if you were to just go into the waste. They didn't have any tech on a truck. Now it's a mobile data center, so companies are adopting the tech at their own pace. Visibility into data is always the first step, and I'm very pleased to see that the scrap industry is finally crossing that line. That is the area of greatest values. They're being able to get their hands on their data. Makes sense of it. Ev what's funny is, I know people don't know this or wouldn't think this, but I actually do some little bit of preparation before this, and something I wrote down with this question was. Is the real shift in scrap, not rarely about software, but more about visibility. And I didn't have to ask that because you literally just said that. Yes. It obviously is, you know, it's kind of a weird way of saying it, but it's rarely that the metal industry, the scrap metal industry. Has evolved and now they look at visibility being so important. It was always gut feel. Yeah, it was always gut feel. Uh, you know, we've got, we've got 60-year-old, 70 year olds that started when they were 15 years old in this grab. And I get it. Gut feel is it's second nature for them. Right. It's not an issue. But when you've gone to college and you've then gone to become an accountant or a lawyer and then your family bring you into the business and you're 30 years old, you unfortunately can't rely on Gutfield'cause you don't have that. Now. Now what you need to rely on is data visibility. Having the correct system to actually bring you that so you can make better decisions because I just believe very strongly that over the next 10 years if you aren't the company. That is using data to make better decisions. You won't be here hundred percent this time somebody else is. And again, all of those other industries that are comparable, they all went through this. You could go back to the beginning days in the paper business and there was a guy out there that could use his thumb and tell you within plus or minus 200 pounds, how many chips are in the. Or he could just look at the back of a log truck and tell you how many thousand board feet versus the cat faces and cracks in that wood, and would get within plus or minus 2%. That skills gone. Evan, he slept in the yard for the first five years when he was building the business easily. Of course he can. But the problem is we've added those automations, we've added those conveniences on top of it. So now we've got a generation of folks that know what good looks like, but have no idea how to get there. Hmm. Right. It's every industry across the board. So unless you can look at data, you can surface data and collect data, there is no way for you to make good decisions. You will make bad decisions. So that to me, singularly, is get your business digitized, digitize it so that you have the data. Let's talk about some technology. Give me a quick, basically use it or lose it on this sort of one. Okay. Uh, cloud systems, are they essential or are they still optional? They're central probably because of some ancillary technologies we're gonna talk about. But if not, I'll come back and change the answer. If you're not gonna add any of the latest tech, if you're not looking at ai, you're not looking at blockchain, you're not looking at some of the later techs coming out here, then you're probably fine. If you're not gonna grow outta your neighborhood, if you're looking to grow your business, you better get to cloud and, and even if you're not looking at it, if you think that somebody else is going to in your company that you're going need it in the next 20 years, like. Cloud's a no brainer to me. Mobile first operations, where does it actually improve our outcomes? So being able to interface to your data over mobile tech is so that you're making decisions anywhere you are. Your business shouldn't be a brick and mortar activity. Yeah, I got an inventory location. Yeah. I'm storing stuff there. I need to be able to make decisions. I am the business. My leadership of the business, my decision makers, my sales folks are the business. This is a market that is quickly globalizing and moving into a 24 7 market. You need to be able to make decisions and interact with your data and make those calls when the call is at your advantage. To me, if you're just working nine to five in your region, you are going to be out of business. I'm sorry to tell you that, right? I mean, if you look at where blockchain is going and the tokenization capability, imagine this as a scrapper. I guarantee you very few scrappers present company excluded, Stu, I know we've had these conversations. The ability to tokenize what's in your yard and publish that into a global register, where now all of a sudden I got speculators betting on what's in my yard. I could actually sell that material and never move it from my yard. Charge a storage because a speculator's gonna buy that and wait for the price to go up and then sell it on the blockchain. It could be in your yard. Yeah. Whoa, Hussey. Alright, we're gonna bring you back. My job is to just bring you back. Let's get you relayed. But before people stop paying us to, to lease our sites because our scrap holes, et cetera, let's bring you back quickly. AI real impact today, or mostly hype. So it's real impact and you want to do it on the low value. Necessary activities of your business. In other words, things that you have to do but do not contribute to great value. Delegate that to AI and automate it quick. Squeeze high value activities into your people. Get a person plus AI strategy. Get it quick. You can rightsize your business at the end of that journey, but if your motivation is to downsize your people before you've even figured out what your use case is, you're gonna be hiring that person back at 30%. Exactly right. Don't do it. I love that. Just look at those low value activities in your business. Automate'em. AI does that really good. Keep it narrow. Don't throw an agent at like this giant workflow. Understand your processes. Slice it up, and you are gonna get tremendous uplift using today's ai. Quick question I wanted to ask about eTech AI is a breakthrough or buzzwords I'm talking about now, and I guess you're kind of touching on it, but maybe just give us a little bit more about eTech ai. Yeah, so look it, we can throw a bunch of fancy terms around, but the difference between AI and agent AI is one just talks to you. The other won will go do stuff and it will connect across an interoperability layer and everybody's supporting it. So if you think that I can't get an agent to do this thing today, then you're not looking, you can, right? And if you can't connect into that one system, change the system. That interoperability layer, it's called MCP, is standard. It is what's gonna move business. And if you're not doing, I guarantee your competitor's doing it and they're doing 10 times the amount of lift on one 10th of the amount of human resources than you are, you won't be able to compete. Here's a tough one, and this is tough because I've been on a stage before trying to answer this question. Blockchain. Yeah. Practical for scrap or impractical to implement. I think it's gonna be a disruptor to the industry. So this is what we were just talking about, the blockchain, being able to tokenize what you've got in the yard. I think it is going to disrupt your industry. I think right now when you look at it, I saw a poster of yours talking about, yay, all the prices of copper's gone up. Yeah. Now my wrists have going up.'cause I'm flipping on a tiny margin at the gate, guys, I, I'm not over here speculating. I can't run my business that way. What if you could, what if you could get your margins. Off of that material as it crosses the scale, the second it cross the scale, it's a tokenized load. It's up there. Maybe speculators do wanna buy that. Let them pay your margin, let them hold it in your yard, and now they will buy and ship that later. It's an entirely different way to look at the material that's coming into your yard. I don't have to get everything out the door to big industry. There are speculators that will. Take bets on future derivative costs. It's proven. So look, I think that this is coming into the scrap industry. Any of the resource material, when you look at the macroeconomics around tariffs and all the chaos that's going on around rare earth minerals, and what I can repurpose and get things out of the value is in the ability to digitize that material, get it into a blockchain, and then fractionalize it. And you are going to get investors that will hedge that, and then all you're really doing is carving out a section of your yard and going, I'm gonna charge you a rental fee for holding your stuff here. But I got my margin the second it crossed the gate. I love this because what I want is really to be challenged in these conversations, right? I don't believe, or let me rephrase that. I haven't believed, but I hold my beliefs loosely. I don't believe. That tokenization is a possibility for shredding yards. I struggle to believe that because I can't tokenize a car that comes in because it gets turned into thousands of tiny pieces of shred. I realized what you can do, and I had a good conversation with George Adams the other day about it. Um, actually what you can do is you're able to take the volume, so you can take the volume of it. You could say, this is the tonnage coming in. Therefore this is the tonnage I'll get out minus, you know, whatever waste that's gonna come off the car. So you can use it as volume that's come in. You can sell it as a finished product or tokenize it as a finished product. So there, I'm open to that. And I do agree with you on the copper side of things with like, yeah, I can sell it, put on the blockchain, sell it. You'd be surprised I get out of a car. I know. I know. But how do you physically move these items that are sold? I always worry about the physical aspect of it. Like I totally get the digital side, but now I'm storing it in my yard. Who's coming to collect one ton if they bought one ton?'cause the actual cost of moving it is too high. Right. So, yeah. But what you're looking at is that most of these derivative contracts never result in a delivery. Exactly. There's trade back and forth. The physical metal. I just sit in my yard. Who do I try in rental space? Let, let's just run through, let's run through one thought experiment real quick and then we can go off this topic. So you bring in a full like vehicle and you do have to shred it. So, uh, if, if I were to compare this to other industries, that's a commodity conversion. I bring in it in one form and I'm gonna convert it to maybe five or six other forms, right? There's gonna be a location processing fee for that activity. So that isn't what gets tokenized, if that's the ultimate goal of it. If there's consumable parts estimated within that material, you have to be able to grade it, right? I have to be able to measure it. So you're right. If it comes in, it's just a husk and I don't know what it is, then it's a husk, and until I've processed it, I don't know what I have out of it. And then you tokenize. Output of that. Now that becomes a material that could sit in the yard for speculators to then trade back and forth as the money goes up and down. If that's a carburetor, if that's a you pull it, U-Haul it part, and I'm now accumulating those components, right? Mm-hmm. But you're not going to get that squeeze that value over a macro component. So taking it back, let's get it out of our industry. I've got a log coming in here. The logs not valuable. It's the pulp and chips and the bark. I need to process it so I'm not tokenizing the log. I'm tokenizing the chips and I'm tokenizing the bark. Now they, they go into a chip pile and a bark pile. I'm not gonna be able to tell you which bark is yours. You just have a volume of bark that went into that pile and that's tokenized. You can hold it, you can speculate on it, you could trade it. But when I want it, I'm gonna come in.'cause I've got two tons of bark. I don't care which pieces of bark I pick up. Right. Because it, I'm not gonna sit there and paint all the tips and bark. So it's the same thing. It's once you put it into the value commodity, you tokenize it. I'm telling you, you're gonna get much more margin'cause it's gonna trade back and forth. I see it all day. I see it all day across so many other different markets. I can't wait for this to be a time where this starts out. And I think we're probably maybe a. A year even away from somebody to start trading like this might be, I was on a call with Neil Peche yesterday talking about it. They're an investment banker for this. So it's, yeah, you see late to 12 months people might be listening and saying, oh, well this is when the robots are sorting out metal. And, and I'm talking about at the front scale and this is when, you know, our cars are all flying, which actually could be in a year as well. But I guess the idea is, um, if Elon has his way, sure. Yeah, and I guess that, uh, that's why he moved to Austin,'cause I'm here. So he wanted to be closer to me to help him progress the movement of cars, uh, of flying cars. So I guess it's interesting because I think what you're gonna start to see is those innovators in our industry, those people that are looking to move forward. I mean, I post today talking about are you actually looking to be 1% better every day? Are you actually looking to, or the way we're doing it is just fine. That's gonna kill your business if you think like that. Yeah. And this is a perfect example. Like I don't wanna be narrow minded and say it can't work for industry. I'm saying I just don't understand how, but I'm willing to learn. And if I had odds now I'd be all over it, because if I can, it goes all the way back, the start of a conversation. Even blockchain is about digitalization. It's just you're treating the data at a token so that it's a digital commodity. Mm-hmm. I'm now trading custody without moving the physical object. That's it. So where else could you get money in that respect is things I know. I know, but Evan, I'm gonna bring us out of this because we are too deep in the blockchain, um, scheme of things. So let's go to things that are affecting people on a day-to-day basis and should have been changed, in my opinion, 10, 20 years ago. Cloud versus on pre. Right. Cloud being cloud systems on-prem is when you have a server in your yard, which can't be updated. People actually have to come to you, to your business to actually update it and make changes to your actual system. Yeah. For a mid-size, you know, a medium-sized scrap middle company, what are the practical advantages of having a cloud system versus an on-prem system? When you look at what it takes to stand up your facility, and even if, if. The recent pandemic taught you nothing is you need to have the ability to run essential services without having to have a heavy brick and mortar footprint. You're exposed. A storm can take you out, but if you're on cloud. Battery backup and access to the sky gets you right back online. You're still running. It's about resilience. It's about access to data anywhere.'cause imagine my data sits on a server inside of a brick house on my property, and I've got a sales guy on the road that needs to make a deal. Can't do it. Now you're adding VPA and now you're had an infrastructure. Any of these. Agility and flexibility. Resources become exponentially expensive to be able to put into that facility with redundancy, backup, and then you are wholly responsible. I'm gonna be honest with you guys, ransomware has not gone away. It's just so much harder to do in the cloud that it's now becoming a rare story'cause it's only hitting the last few brick and mortar places left. Mm-hmm. I think if you're on the cloud, in my opinion, you, you're already 10 years behind. And if you think you're going to build up, like you said, build up your on-prem system. Yeah. Like what you said, you can, you can add onto all these things. What are you doing? Like just take the hurt, make the change, and get to the other side. Yeah, like that to me. And I think that's what your book's all about as well. Like just making sure you do it as effectively as possible with as little pain as possible. It doesn't have to be the amount of pain people experience. Sure. As little pain as possible, but get to the other side because the return on that pain or the return on that investment is so large. I, I wouldn't speak about putting out fires and I'm not talking about physical fires. Like when something is so urgent, you don't wanna be in a position where you desperately now need to get on cloud, and that's then pain. Rather do it in your time, plan it have a strategy. Have a rollout plan. But when it becomes urgent, like you say, ransomware becomes urgent, all of a sudden you desperately need something. It's too late. Yeah. You're paying premiums on top of that. Look, here's just the simple. Simple scenario to think about. If you're in the cloud, you don't have to have physical buts and seats to grow. Your sales folks, they have all the access they need from the convenience of their home. You can grow. You could immediately create a sales pod in a region you're not in because you could access your inventory across all of your locations from anywhere in the world, and now you're selling in every market in the world. You could have built the best sales team. You only have so much inventory, so now you start selling inventory for the local scrappers who aren't good at it. So now you're selling their inventory. That's growth. You are not in a growth mindset if you're just still sticking to a server, sitting in a brick and mortar, plugged into a battery backup, hoping for the best. You are not in a growth mindset. You're, you're as good as you're going to get. In our industry, people are always stressing about hiring good people. Now, if I'm in a yard and I have a business on the east coast of the United States and. I'm struggling to find the right people to sell for me. Like you say, I want to set up a sales team, I want to open up new regions, et cetera. I'm stuck with only being able to hire people in that coast, in that area that's right in that region.'cause I have to come into the office often. Whereas if I'm in the cloud and I have those resources or that ability, all of a sudden I can hire the top sales guy, the top guy who's in the West Coast, and I can hire him and he can do what I want from him, but he doesn't have to be based in my yard because everything's in the cloud. That's exactly right, and that's just one scenario. Yeah, right. Yeah, I get it. Absolutely. You have some physical boots on the ground with a physical facility. I'm not getting around that, but the reality is that should be the areas and the exceptions of your business. Everything else should be removable. You should be able to run your business from your cell. You're not gonna get that with an on-premise system. You just won't. That, that leads me to the next topic, right? So let's go back to a bit of mobile, which kind of, this is a similar topic, right? What you're able to do on your phone. Where do you find that it has the biggest impact today? Uh, mobile operation. So is it way and paid dispatch, warehousing, buying out on the field, operating a CRM system internally, whatever it might be? So my experience is it, it supports two areas. One is. Your ability to make decisions anywhere so that it's the ability to send out notifications and data to your decision makers who have to make decisions. That is very easy to do over mobile. The other is being able to pull in data from like an iot or sensory data to location. So imagine I've got a fleet that I'm sourcing material, we're not talking about peddlers, and that guy drives up and he's got his phone in his pocket and I put an app on there. It knows him. He knows why he is here. He knew what he just did. He drives up, GRE goes up, weighs gets off, goes. No interaction. Because I've GPS tracked him. I know what he's doing. I know what the vehicle he is in. I know the material he just picked up. I already know all that stuff. I sent him off to go do that work. Why do I now have to collect that again at, so I've just streamlined a whole section of my business because I've got a mobile tracking device sitting in this guy's pocket or on his dashboard, or however, if, if I get a larger fleet and I need to start tracking telematics and I wanna be able to see quickly where are my trucks, where if I'm the dispatch guy and I'm managing to make sure that I'm taking care of my fleet. I can see that at a glance wherever I am at. To your point, what if I'm managing a large region, not just one single location, but maybe I've got five or six yards around the state. You, you go to a state like Mississippi or Arkansas, that's a big state. It could be two to three hour drive time between locations, right? Yeah. Mobile works for those use cases. Mobile for the sake of mobile. It's a fancy term, right? Again, this is all about using tech that works for you in the use case that you put it in, but you have to somehow think a little bit outside the box. S Steve Deacon the other day from EMR, chief Commercial Officer. I had him on the show and he said something so simple but so vital that we should all be thinking of. Um, he had put forward that he wanted to do something with regards to data, and I think the owners replied to say, does it add value? So not technology for technology's sake, right? It's about does every time you're looking to do anything, it's does it actually add value or am I just doing it because I heard on a podcast I should be using technology? Yeah. Because I'm holding myself up to some metric against peers and they said, everyone needs to be this. Don't look at tech that way. If you're looking at tech that way, you're wasting money. Sometimes a pencil's better use it, right? So understand the use case. Totally. Um, ed, we're gonna now start talking a bit about ERPs. Now, unfortunately, most people in our industry. Don't know what, what we're gonna start talking about now. We are talking about what the scrap metal industry calls the software system. Yeah. Um, so even though there are multiple other software systems, you could be using A-A-C-R-M system. You could be using Buddy. That's a software system. Yeah. They still. Carry on calling their inventory system, which is an ERP. They're calling it the software system, but I'm gonna change it to ERP. We are gonna talk about the correct language. We're gonna call ERP. Hopefully people in the industry start understanding that that is, there will be a lot of different softwares in our industry over the next few years. This is not the software system. It is your ERP. It tracks your inventory. Obviously you can integrate with a whole lot of other systems. Yeah. Um, what is the biggest innovation in ERPs in the last decade? Across the board, it's operational efficiency and they're essentially becoming free cash flow engines. I mean, if you're a CEO, your job is to figure out how to get free cash flow outta the system. And your operational costs is where you would look. How can I get my material in the door at the least expensive I can? Get it in the door, get it across my scale. Time is money, resource people or money, get it into my yard. Get it valued. The ideal location is, or opportunities to have that thing sold. All you're doing is taking a wait and turning it around and go back out and delivering the sale and making your money right without those operational systems, which depend on what we started. This conversation, of course, depends on the digitalization of your environment. Those ERPs aren't gonna be helpful to you if you haven't digitalized your business. You've gotta get the data up. Then from one step to the next, we have a tendency to look at the buy side. Then we look at the scale. Then we look at grading. We look at inventory management. Then we look at sales slots, and we look at outbound, right? We, we carve up our business, but the ERP ties all that together. That connected intelligence between those steps. That's where most of the value is. The ability to predict, to be able to have early indicators on your dashboard. Is things going off rails or not? Did I just sell a bunch of material at a loss? Right? You don't wanna find out tomorrow at the end of the settlement that you just lost money. You should know before that truck gets outta your yard that you're about to make a mistake. But wait, even I really don't want to, but in now, but it's really important.'cause I get asked a lot of times when we release our podcast, but how so? Everybody tells a good story. But how so what? What I mean by that is. How does someone tell that they're just lost on a parcel that just left their yard? Talk about practically, how does an ERP, and if your ERP isn't giving you this, well then you probably need to be looking at one that does. Yeah, that's a great question. So you should know once material comes into your yard and you've settled on a buy price, exactly how those funds are divided across suppliers, the source, the transportation to get it, what your overhead costs are. To be able to process that. If there's processing costs where you're gonna store that in inventory, if you're filling demand orders on the way out, you better have a better than just a general idea of all of all of your costs. Otherwise, you've got leakage in your business. If you're not looking at your financials until the end of the week or end of the month, sometimes. There's no way you're making the best margin you can on this material. There's no way, or there's no way. You are competitive in the market. You're being outsold by everyone around you that has greater visibility and faster visibility to the data. Like up to the second real time visibility to that data is, it's moving. That's the whole point of it, is that I can see everything from the purchase of pick it up, what I'm going to pay for it, how's it gonna process? A very, very, I love this customer, so I, I quote him too much. It's'cause it's so great. And he goes, look, dashboards don't tell you what the problem is. They tell you where to look. Right. And his other big quote is, you can't cash my check for me. So you're gonna gimme this system that's gonna build this very efficient system and I'm, and my first run at it might shave$20 here, two hours there, a little bit of work there, but I, you know that that person's still working an eight hour day. So I don't feel like I made any money just because it made their life easier. The whole point is you're building efficiencies across the board now. You have to consolidate, you have to optimize, you have to change your processes to get the most out of those efficiencies. So that's you cashing the check. So if you think an EER P is gonna drop in and give you the efficiencies and then you're, there's a check printed out the, out back into that thing, you did it wrong, right? That's one of the big lessons in the book is you're gonna get these efficiencies, but now you're gonna have to re-engineer your system to take every one of those little bits, those quarters, and pack that into something that produces a real bottom line impact. But you couldn't do that if you didn't have an end-to-end operational system digitalized to show you how your business is running. You're blind, you're using intuition and your intuition's probably gonna get you to a point. It absolutely will, but it's not gonna get you beyond it. And then when you exit the business, it's gonna collapse'cause you're the only one left that has that intuition. And, and we're at a stage where previous generation is starting to exit. So it's exactly this time where we spoke in the beginning about intuition is actually heading out the door. So That's right. We need the data. But I love what you're saying. We're all aging out, man. Speak for yourself. That's fake. I'm here. I'm here for a long time. Mm. And what you're saying is it's so vital that people understand this when you use a system. Whether you're using the buddy system and it's telling you which buyer you're having claims on, it's telling you data about which person in your yard is getting the correct weights, how long it takes him to pack a container. When the claims come back, it actually tells you who the operator was in the yard and pack that my system doesn't fix it for you. That's right. It can't. The person has to do the fixing. Once they have the data, we can help them make data-driven decisions. That's what that is. At the end of the day, people would like to use that too. I make data-driven decision. That's exactly what we want from you. But you need the data. You need accurate data to make those decisions. If you're not utilizing your system correctly, you don't have that data. And number two, you can't do anything if you don't have the data. So you need, firstly, get all the data. Secondly, utilize that data to create efficiencies, to save money, to make money. Right, and then you have to action on it. At some point, you're going to have to make a change somewhere. Somewhere. That dashboard is pointing out an area of of visibility where you have to make a change, otherwise you're not cashing your check. We've given you every tool we could possibly give you to find that opportunity, and in this same customer was able to service their area. Now, this was in a different industry, from 13 trucks down to 10. And that's almost a million dollars a year. Bottom line impact, free cash flow for that company to be able to park three of those vehicles. And now their job isn't, to get rid of the vehicles, is to go grow their business to see how much more business can I do with 13 trucks. Mm-hmm. Right. A hundred percent. I mean that's, that's exactly it. We give you the data, the system, we give you the data you have to execute. Tell me though, what is the smartest way, so say we've got listeners who are now going. My system probably isn't doing what I needed to do. Hmm. How can they identify narrow and, and then select the correct vendor or the correct supplier of the service? My, my recommendation is by the vendor don't buy the product. Now that's gonna be a tough ask of people, but here's what I mean by that. Mm-hmm. You could start today, look at this product, go, okay, that has everything I need. Or It's missing a handful of things, or whatever your review process comes down to. But I guarantee you, whatever you're buying at that moment isn't what you're gonna need. 16 to 18 months from it. It just isn't. So get to know your vendor. Is your vendor gonna open up their backlog to you? Is your vendor gonna be there for you in 18 months to work with you as a partner to evolve that system to the needs? Are they doing this sort of thing out in the market so that they're ahead of you? Right? Because sometimes you do have blinders on. You can only see the world that you're living in, but they can't see other areas. So is your vendor exposed to markets and areas that they could provide intel? Right. What you're saying is exactly what I've said so many times to people. You're not choosing a system, you're choosing a partner. Right? It is hard to make that change. It is extremely hard to change your ERP system. Your entire company relies on it. Everybody's trained on it. I've seen systems where they don't even understand it, but they know Click one, click six, click seven, and then I get a report. You can't now ask those people to use a new system and now click 7 8 3. It's just too difficult. You have to choose the partner that you're gonna be doing this long term. So, you know, I go through the pain, but these are the people that I need to use going forward, and they can make the changes with me. They will grow with me. Right, right. And understand that it is painful. But it is tolerable. So I think most companies underestimate their own personnel, and this is where most of these implementations break down is you think that Gladys, who's been doing the same thing for 30 years isn't gonna change. If you were to just put together a vision statement around your ERP limitation, why are we doing this? We're doing this to grow the business. We're doing this for these four or five big reasons, and these four or five big reasons have these. Handful of non-negotiables. This is the reason we're buying the system. We might have a setback over here in this other thing. This went from three clicks to 15. But that's not why we're buying it. We're buying it for this growth opportunity, and it does do this. So Gladys, I'm gonna ask you, would you take the hit for this whole team so that we can grow this company? And I've talked to the vendor, they'll close that gap and get that down to three clicks, but it might take a little while for us all. If you have that conversation internally and you have those right championships, and you put those right expectations, you'd be surprised what people will do. Loyalty can be there if people understand the why they're in pain. But if you're putting people in pain and they don't understand it very quickly, they turn on you. You know, I had a system that did this two days ago and no one's talked to me about why we made this change, why we're doing it. Those are principally the reasons in the OCM organizational change management of why most ERP systems fail is it does not get internal championship enough. Mm-hmm. And what ends up happening is you start seeing the company. To protect itself is chasing a replica of the system they have. Yeah. Oh man. I've seen that all the time. And that starts to spiral and spiral and, and you never get anything. Yeah. You don't believe me, my old system, but my old system could do that. Yeah. But that's not the correct way of doing it. This is why we do it, that we hadn't thought about it. We just do it differently because this makes more sense. So what are the questions that people should be asking their vendors that they usually don't? I think there's a huge assumption by most customers that because you have software in this space, it does everything I needed to do. So my recommendation to most customers is what are those mission critical non-negotiables? If you didn't have these things, you cannot effectively run your bill. This isn't a laundry list. If you get to the point where you're describing a checkbox on the screen, you've gone too far. That is not what I'm talking about. Mission critical outcomes. Stop talking about how it let your vendor do that. They're the software expert. Let them handle it. Stop describing the solution to your vendor. Describe the problem, and let your vendor come back with the solution. If your vendor is outcome based and your vendor is telling you, look, I don't have that right now, but we could do something for you. Or to your point, we do it, but we do it differently, we do it this way, it's gonna be a little bit of change. Those are great conversations to have with a strong partner. Those are the conversations, but if you yourself do not have that short list of non-negotiables, you're in for a rocky ride. I call it the customer journey for a reason. It's your journey. You decide how rough or not rough this journey's going to be for you. Why do you believe that they fail? Why do these implement implementations fail? The number one reason is we kind of danced all around this on the tribal lore and, and intuition. There's a whole lot of things that run a business that most, what I consider your leadership executives have no visibility to. They just know that it happens, right? So. Not understanding what your current processes are, not understanding what your non-negotiables are, what you can be flexible on. That creates almost a guarantee off the cliff within the first two months of a build cycle of when you're beginning the implementation because you're gonna, you are inevitably gonna discover something. And if I don't have a vision and I don't have those articulated, and I find this thing, I have nothing to hold it up to, to go. Do I need that to go live? Can that sit on the side? Do I integrate with that thing? You know, I, the, the number of times I've found an access database sitting in the corner that's mission critical, producing a report for some compliance, and nobody had talked to us about until go live day. I, I tell the story in the book of we're at the scale, we're turning it on, and I've got the scaler, who's a security guard telling me that he needs to sell these chips. And we're at the mill and I'm like, we don't sell chips at the mill. You cook'em up. I'm being arrogant. It was hubris for me that day, by the way. And he's like, well, Mr. Wizard there, there's a. There's a truckload of chips that need to be sold.'cause the foresters are selling these chips for more than we're making in paper. So what do you want me to do now? And I had to call back up and go, guys, do y'all sell chips outta this place? He goes, well, only once in a great while. Oh, okay. So there's things happen. Yeah. Yeah. That would've been nice to know for the six months we sat around that conference room. But the reality is those things are gonna happen. Those will happen. But if you don't understand what your victory is and how to measure it, that's the other piece. So you might have a good idea of what you need, but if you don't know how to measure success, how do you know when you've won? Hmm. You know, I bought this system'cause I'm expecting X percent of increased efficiency of this. What do you have Right. Today, like the biggest success I've seen was at rest. Uh, they were SMU at stone, Jefferson Stone, SMU at stone. At the time where they were calculated it was$12 and 95 cents to bring a load of wood across their scale. When they implemented our system, it got it down to a a dollar 50. They do a million loads a year. That is really easy math. So this whole system cost you about 500 grand a year and it's saving you 10 and a half, 11 million. It was the easiest thing for them to budget every year on that one outcome. That was just one outcome we have. We have. It's so funny. We have a similar thing on Buddy. I'm always like, well, let's just get you your first sale and see how much you make from your first sale. There you go. And just the other day, this is a true story. Just the other day, somebody sold chops and they made$15,000 more on copper chops on one container, copper chops because of a winning all over the place. And every person that uses Buddy always starts with the same thing. I'm already getting the best prices. Hmm. Okay. Well. How do you sleep at night knowing that, like, how do you know that? Why don't you test it? And then they test it and we have like a 52% conversion rate. So 52% of the material that gets put on the platform is sold to a buddy buyer, which means you're not always getting the best price. More than half of the time you're not. He. But I don't think you're right. Yeah. So it's easy to, to calculate that very quickly when they start making that sort of money. Um, if we're gonna run out of time, so I need to cut us short here. And we could've spoken about this for, for days. I need to ask you what your favorite TV show or movie is. All right. TV show, that's a great question. So you have to go back in time to get it. You can get it on YouTube. It's called Connections. I think it's either Tim or Tom Burke. I know his last name's Burke, and it's not the current Americanized version of connections. It's the original BBC British version three hours long where he'll start with a daisy and go, let me tell you how this Daisy. Results in the space shuttle lifting off and they walk the entire journey of all of the connections between one discovery, scientific, another. If you are into that kind of stuff and understand how connections, one little discovery leads to another connections is your show. I wish they would bring that back. Um, favorite place to travel. Uh, home. I live in St. Augustine. I live in Florida where there's 200 miles of beaches. So I, I, this is really it for me. You are living the life best book. Have you got a favorite book? I'm gonna have to say it's mine right now.'cause it's, it's helping companies save millions of dollars. I know you do lots of podcasts, so, uh, when my book comes out in April, I expect you to say it's mine now, but also Stu Hagans is really, really good. Done. Done. Alright, we're gonna finish with your favorite quote. Uh, I actually send this around, I say it all the time. So it's at William and William Hakim. That's Latin for. I'll find a way or make one and I live it. That is awesome, EV I've loved recording this with you. I can't wait to release this. Um, thank you so much, EI appreciate it brother. Thank you. That's it for this episode of Born Scrappy. If you have any questions, stories, or topics you want us to dig into. Send it my way Until then, keep it scrappy.