A profitable trade that was the wrong use of the yard

An owner-managed yard trading ferrous scrap in volume. The business was profitable, the grade in question sold reliably, and nothing in the management accounts suggested a problem. The owner's concern was less specific than a number: the yard felt busier than the results implied.

Did the headline trading spread on that material represent the actual commercial return, once haulage, yard labour and the capacity it consumed were taken into account — and if not, what should be traded instead?

Three months of trading activity were reviewed: purchase prices, selling prices, haulage costs, the operational involvement each movement required, and how yard and transport resources were allocated across the period. The records already existed; none were rebuilt for the review. Transport had been absorbed centrally rather than attributed to material, and handling time had never been recorded against a grade.

The material generated revenue and the spread was genuine. The return after operational demands was materially lower than the headline margin implied, because yard labour and transport capacity were being consumed by comparatively lower-margin activity. The gap was invisible in the existing reporting rather than absent from the business.

Attribute haulage and handling to the grade that caused them, before the next buying decision. Prioritise selected higher-margin non-ferrous opportunities, including relevant aluminium grades, where the expected commercial return justified the use of finite yard and transport capacity.

The findings and the recommendation were accepted by the business. No measurement of financial impact was carried out, and none is claimed here. What can be stated is what was recommended and that it was adopted — not what it subsequently earned.