Having enough inventory is necessary in a tight supply chain
Having enough inventory is necessary in a tight supply chain.
CBSA Roundtable
Stocking up
Red metals suppliers boost inventory

A roundtable discussion at the Copper and Brass Servicenter Association’s annual meeting, held in April, covered a wide range of topics. Most of the CBSA members who spoke said they have revised their purchasing strategies in order to meet consistently strong demand for red metal products.

Although raw materials aren’t necessarily tight at the source, the obstacles in terms of port and ocean freight capacity worldwide, and trucking capacity domestically, have compelled producers and distributors to increase inventory, pay more for everything, and even create supply contracts for spare machinery parts and consumables.

“We are inventory heavy,” said the executive of a Michigan-based service center network. “We work to our needs and usage. Everyone knows we have metal, [but] we had to tell some customers that they couldn’t have all of our supply.”

“We had to change our buying patterns,” one distributor said. “We are buying higher quantities, and we had to persuade our suppliers to sell us more. Material that comes in goes right out the door,” she added.

keep the knife sharp but keep the customer supplied.

Another participant reported that eight- to 12-week backlogs were once normal. “Now, order deliveries are measured in customer lead time needs. We have to re-evaluate our metrics,” he said.

A distributor of long products said, “If we could buy all the material we wanted, we would still be busy, across all sectors. Everybody is booming. We have asked customers to focus much farther forward.

“We threw some of our traditional purchasing metrics out the window,” he continued, echoing others’ comments. “Securing supply is more important than shopping on price. Keep the knife sharp but keep the customer supplied.”

An executive for a rolling mill worries about the 60 pieces of equipment his company runs. “We must figure out how to secure parts if one of our mills goes down—where to get a bearing or a lubricant. We formed a supply chain team and hold a larger inventory of spare machinery parts.”

The long products distributor concurred. “We are making contracts over little MRO items because the lack of a little widget can shut you down.”

In terms of transportation, a bronze producer noted that carriers “cannot accurately predict whether they will be able to help us out in a timely fashion.”

One buyer said that shipping from the EU “has been difficult. Containers sit in port there and again in the U.S. It takes time to pick up containers and get them to us. You have to have good relationships and communicate regularly. Bad news? Tell the customer right away,” he advises.

An importer who buys metal from Asia, South America and the European Union said that global suppliers “cannot lock in freight costs. It could be 20 cents a pound or 50 cents a pound. The is the first time we have experienced open-ended transportation costs.”

Containers are in short supply and there is overbooking on container ships, said another importer.

“I have customers requiring me to have built out a robust supply chain, including redundancy,” said the long products distributor. “I foresee that trend will remain in place.”

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