In many factories, the scrap yard is the least organised corner of the plant: piles of mixed metal, broken pallets, oil drums and old machines. Yet that corner can hold lakhs of rupees of value. A simple, disciplined scrap yard system raises realisation, reduces theft, improves safety and makes audits easy. This guide gives you a practical standard operating procedure (SOP) you can adapt.
Objectives of the SOP
- Maximise value by keeping grades separate.
- Prevent loss and theft.
- Keep the yard safe and compliant.
- Maintain accurate records for accounts and audit.
- Make selling quick and transparent.
Roles and responsibilities
| Role | Responsibility |
|---|---|
| Plant head | Approves SOP, disposal authority |
| Stores / scrap in-charge | Runs yard, maintains register, coordinates sales |
| Production supervisors | Ensure segregation at source |
| Maintenance in-charge | Returns replaced parts and electricals to scrap yard |
| Security | Gate control, outgoing vehicle checks |
| Finance | Valuation benchmarks, invoices, reconciliation |
| EHS | Safety and hazardous waste compliance |
Yard layout
- Location: Accessible to trucks, away from production, with a hard, drained surface.
- Bays: Separate bays or bins for each category, clearly signed.
- Covered area: For turnings, non-ferrous metals and anything that suffers from rain.
- Locked store: For copper, brass, cables and other high-value items.
- Hazardous waste area: Bunded, covered, labelled, away from drains.
- Weighing: A calibrated platform scale for small high-value lots.
- Loading area: Space for trucks and cranes.
Colour coding and categories
A simple scheme (adapt as needed):
| Colour | Category |
|---|---|
| Grey | MS / heavy ferrous |
| Black | Cast iron |
| Blue | Stainless steel |
| Red | Copper and cables |
| Yellow | Brass and gunmetal |
| White | Aluminium |
| Brown | Wood and pallets |
| Green | Plastic and packaging |
| Orange | E-waste |
| Purple (restricted) | Hazardous: used oil, batteries, chemical containers |
Use the same colours on shop-floor bins and yard bays.
Segregation rules
- Separate at the point of generation; never "sort later".
- Use a magnet to check ferrous vs non-ferrous.
- Remove non-metal attachments where practical (rubber, plastic, wood).
- Keep turnings separate by metal and drain cutting oil.
- Return replaced motors, cables, valves and electrical parts to the scrap store, not loose heaps.
- Keep capital equipment awaiting disposal tagged with asset numbers.
- Never mix hazardous waste with general scrap.
Scrap register
Maintain a register (paper or spreadsheet) with:
- Date.
- Source department.
- Category and grade.
- Quantity (weighed or estimated).
- Location in yard.
- Disposal date, buyer, invoice number.
- Remarks.
For capital assets, link to the fixed asset register and disposal approval.
Security controls
- Fence and lock the yard; control keys.
- CCTV covering bays and gate.
- Gate pass and material challan for every outgoing vehicle.
- Security checks loaded vehicles against gate pass.
- Weighbridge slips attached to gate records.
- Surprise checks and periodic stock counts.
Safety
- Keep heaps stable and low; secure long sections.
- Mark walkways and keep them clear.
- PPE for anyone in the yard: gloves, safety shoes, helmet.
- Hot work (gas cutting) only with permits and fire watch.
- Fire extinguishers near bays and hazardous area.
- Crane and forklift operation by trained, authorised operators.
Hazardous waste
- Used oil in sealed, labelled drums on spill trays.
- Batteries stored upright on acid-resistant surfaces.
- E-waste kept dry and secured, with data-bearing devices tracked.
- Chemical containers cleaned or disposed of through authorised channels.
- Records and authorisations as required under hazardous waste, battery waste and e-waste rules.
Selling procedure
- Monthly (or when a bay reaches a set level), the in-charge prepares a disposal note.
- Finance provides current benchmark rates.
- Quotes are invited from approved buyers or the lot is listed on a marketplace.
- Approval is obtained per delegation of authority.
- Loading is supervised; weighment at certified weighbridge.
- GST invoice issued; payment received to company account.
- Register updated.
Reconciliation and audit
- Monthly: Compare scrap generated (from production records) with scrap in yard and sold.
- Quarterly: Physical stock count of yard.
- Annual: Review buyer performance, rates achieved vs benchmarks, and SOP effectiveness.
Large unexplained gaps should trigger investigation.
KPIs to track
| KPI | Why it matters |
|---|---|
| Realisation per tonne by grade vs benchmark | Measures pricing performance |
| Segregation accuracy (% of lots sold as single grade) | Measures discipline |
| Days of scrap in yard | Long storage increases loss and rust |
| Deductions as % of value | Indicates contamination problems |
| Reconciliation variance | Indicates leakage |
| Safety incidents in yard | Safety performance |
Training
Run short training sessions for production, maintenance and security teams on why segregation matters, how to identify metals, and the gate pass process. Display posters with colour codes and examples at scrap points.
A worked example: a 90-day scrap yard turnaround
A pump manufacturer in Varanasi has a cluttered scrap corner: mixed heaps, unlabelled drums, old motors in the open and no register. Scrap sales are irregular and auditors have queried the numbers.
Days 1–15: The plant head appoints the stores in-charge as scrap owner. The yard is cleared and sold in one lot, accepting a mixed price to start fresh. A layout with eight bays and a locked store is marked out.
Days 16–30: Colour-coded bins are placed in the machine shop, assembly and maintenance areas. A one-hour training is held for supervisors and maintenance staff. A simple spreadsheet register is started.
Days 31–60: Weekly bin checks find mixing in two areas; extra bins and signs fix it. The first monthly sale is made with grade-wise quotes from two buyers.
Days 61–90: Realisation per tonne rises because brass, aluminium and copper are now sold separately. The yard is cleaner, safer and easier to audit. The quarterly reconciliation matches production records within an acceptable margin.
SOP document structure
If you are writing your own SOP, a simple structure works:
- Purpose and scope.
- Definitions and categories.
- Roles and responsibilities.
- Segregation and storage rules.
- Recording (scrap register).
- Security and gate control.
- Safety and hazardous waste.
- Disposal and sale procedure.
- Reconciliation and audit.
- KPIs and review.
- Annexures: layout plan, bin colour chart, register format, gate pass format.
Keep it short enough that people actually read it, ideally under ten pages with diagrams and photos.
Sample gate pass fields for outgoing scrap
| Field | Example |
|---|---|
| Gate pass number | GP/SCR/0425 |
| Date and time | 28-10-2026, 11:40 |
| Vehicle number | UP65 XX 1234 |
| Buyer | Kabadi24 |
| Material and grade | MS heavy, CI, brass solids |
| Estimated quantity | 9.5 t / 1.2 t / 0.3 t |
| Weighbridge slip numbers | 5521 (tare), 5534 (gross) |
| Invoice number | INV/SCR/131 |
| Authorised by | Stores in-charge, plant head |
| Checked by security | Name and signature |
Matching every gate pass to a weighbridge slip and an invoice closes the most common leakage route: material leaving the gate without being fully recorded.
Training content for shop-floor teams
A 30-minute session covering four things is usually enough: why scrap value matters to the company, how to use a magnet to tell ferrous from non-ferrous, which coloured bin each common item goes into, and who to call when unsure. Display a one-page poster with photos of each category at every scrap point and repeat the session for new joiners.
Signs your SOP is working
Fewer mixed lots, higher realisation per tonne, smaller reconciliation gaps, shorter storage times and a cleaner, safer yard are the clearest indicators. Review these signs every quarter and adjust bins, signage or training where problems persist.
Low-cost tools for a better yard
Pocket magnets, coloured bins, a calibrated platform scale, padlocks, a CCTV camera and a simple spreadsheet cover most needs.
Keep the SOP alive
Review it once a year, update photos, and ask the people who use the bins what slows them down.
How Kabadi24 supports scrap yard setup
Kabadi24 helps factories in Varanasi, Purvanchal and Gurugram set up segregation bays, colour-coded bins and simple registers, and then buys segregated scrap on regular schedules. Factories elsewhere in India can list sorted lots on the Kabadi24 marketplace to reach verified buyers. Every lifting is weighed at a certified weighbridge and documented with GST invoices.
Conclusion
A scrap yard run to a clear SOP turns waste into reliable revenue. Lay out the yard sensibly, colour-code and segregate, control access, keep a register, handle hazardous waste properly, reconcile regularly and track a few KPIs. The investment is small; the returns, in value and peace of mind, are large.