Standard Operating Procedure Disposal of Scrap Purpose: The purpose of this SOP is to provide guidelines for for disposal of scrap and ensure timely and safe disposal with minimum risks to employees, public and health and environment.
Introduction: Scrap items are parts with no useable life and includes all recyclable products. For every part that goes out from Modaraba premises a ate pass is issued. !t"s clearly mentioned on ate Pass whether it"s returnable or not. #onsumable parts are classi$ed as non returnable. Further more if the item is a #%T part a M!& is also made for it. 'hile for (ocal purchased parts only gate pass is issued. #%T parts are capitali)ed, where local parts are e*pense out.
Scrap Items: Main Scrap items are+ •
Oil #%T - (ocal/based on number of liters
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0atteries /based on battery si)e
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Tyres Tyres /based /based on si)e and type of tyre tyre Other Parts #%T - (ocal / these are disposed based on weight as one lot.
Ma1or revenue is earned through the disposal of Oil, 0atteries and Tyres.
Collection of Scrap Parts: Scrap is generated through obsolesce of parts which are originally issued because of two reasons+ reasons+ •
For Schedule Maintenance
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For Trouble Shooting
Schedule maintenance is conducted according to the guidelines provided by #aterpillar. Troublesh Troubleshooting ooting is held in case of problems in in gensets.
Documentation: !n case used parts are returned to the store, return inward note shall be prepared by the store in2charge on receiving the goods. Operation team returning the inventory is also re3uired to sign on the return inward note. 4eturn inward note shall be prepared by store incharge.
Oil Consumption ratio: • •
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Oil recovery ratio shall be as follows+ as engines oil+ 4ecovery of used oil is 30% to 35 % of total oil issued. #onsumption 5 wastage of &6O is 789 to :;9 of total oil issued. <.6.O+ 4ecovery is 80% of oil issued. #onsumption 5 wastage is =;9 of oil issued.
The #apacity of the tanker in which oil is collected when received from the sites is =>,;;; liters in (ahore and >;,;;; liters in !slamabad. Oil shall be disposed o? when the tank is @;9 $lled. &o tank is available in Aarachi and thus oil shall be disposed o? when more than B drums are available to be disposed o?.
Consumable & emains Parts: •
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#onsumable parts are consumable in nature and are not returned back. (ike seal2o2ring C gaskets etc. 4emains parts are those parts which are returnable but are not scraped to outsiders, these parts are traded o? for new parts from %6S( of the same nature, because #%T gives us special concession on new parts on return the old faulty parts. Part number of remain parts are such that these are separately identi$able.
Scrap committee+ % scrap committee has been formed comprising of members from audit department, admin manager and a representative of $nance department. 222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222 222222222222222222222 Aey areas covered under this SOP are+ •
4ecording
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Storing
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%ccounting treatment
ecording: 4ecording of scrap is essentialD store incharge of all the regions must maintain a register which shall contain relevant details. The register shall be maintained on day to day basis by the store incharge. •
On monthly basis M!& ledger should be reconciled with inward gate pass. !nventory oEcer and Store in2charge should coordinate and follow up the missing parts on monthly basis, if any.
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Site incharge shall check the 3uantity of the oil which is being returned to the head oEce. Further the store incharge shall verify the 3uantity being returned before issuing the part inward note.
Storing: The procedures to be followed in this respect shall be as follows+ •
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The scrap material shall be kept in the scrap area which shall be kept under lock and key. The key shall be kept with the store incharge and the $nance representative. sed items after inspection from store incharge are dumped into a speci$c area allotted for the purpose of scrap parts which shall be kept lock. % new part shall only be issued once the old part is received for cases of replacement of parts.reverse is happeningGB hrs Oil shall be stored in the oil tanker. Material shall properly stored and clearly identi$able at the time of audit and auction. Parts shall be kept in the container until disposed o?. sed parts should be properly tagged part name, number and rental number on the spot or when they are collected in store, so that they can easily be identi$ed. Parts shall be deposited in the scrap area with a tag which shall contain the 1ob number. !n respect of batteries it shall be ensured that acid in the batteries is emptied. Scrap item should be inspected by relevant person before being scraped. 0ecause if any part is repairable so we can save e*tra cost. Optimi)ing the use of scrap storage area by implementing proper strategies of handling used items. Proper placement of scrap items when they are received in the store will provide more space for the scrap storage. 'hen Oil return back from sites the store department should check the oil 3uality i.e. whether water does not mi* up with oil before the issuance of 4&. #onsumable and returnable 4emain Parts parts should be kept separated so that during the audit, returnable parts shall be easily identi$ed.no remain %udit department is re3uired to inspect such items before they are scrapped. %udit department physically counts the items. %nd then generate a list of these physical present items for auction.
Disposal of Scrap: The procedures to be followed in this respect shall be as follows+
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6ngineer should estimate the value it will fetch in the open market price. This value shall be considered by the scrap committee to set the benchmark bid price. . % benchmark is decided by the scrap committee below which the items shall not be scrapped. %dmin shall publish a detail advertisement in the local daily newspaper and call for closed tender from the prospective buyer, in other way they may send en3uiry letters calling for 3uotations from the identi$ed buyer in such case three 3uotations shall be collected. The bids are re3uired to be addressed to the admin department. 4egion shall decide the option based on the value of scrap, the cost of advertisement etc. The items are re3uired to be shown to bidders by the %dmin department. The fre3uency of disposal shall di?er from region to region based on the volume handledD however scrap must be disposed o? at least twice a year in every region. The tender shall be opened in the presence of scrap committee. Finance representative in the scrap committee shall ensure that the sealed tenders are kept under safe custody. Security deposit amounting to 4s =;,;;; shall be taken from the bidders 0ased on the tenders received highest bidder is selected and awarded the scrap. #omparative statement of rate shall be prepared based on the tender by 3uotations collected and the decision of selecting the party shall be mentioned therein. the statement shall be signed by all the members of the scrap committee and shall then be forwarded to the regional head. Scrap disposal shall be on cash and carry basis or the amount shall be deposited in the bank and scrap shall then be collected within GB hours of the clearance of the bank deposited. Sales ta* on scrap shall be collected according to the registration status of the scrap dealer. !n case the successful bidder refuses to take the scrap the second highest bidder shall be awarded the scrap provided that he is willing to pay the amount bid by the highest bidder, if not a reauction shall take place.
!ccounting "reatment: •
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Scrap disposal shall be on cash and carry basis or the amount shall be deposited in the bank and scrap shall then be collected within GB hours of the clearance of the bank deposited. nder no circumstances manual billing shall be allowed for such sale.