Why aimINSIGHT for steel distribution?
Steel products are made from carbon or alloy, stainless or specialty steels, and come in the form of sheets, plates, bars, rods, tubes, and structural items like rails and I-beams. In addition to selling steel mill products, distributors sell various processing services that customize products for particular customers. Because of the large number of steel products, most distributors specialize in the types of steel they carry and types of processing operations they perform. Different grades of metal and the varying thicknesses and sizes of materials result in a large variety of products. A large distributor may handle more than 100,000 products.
The two types of distribution operations are pure distributors and steel service centers. Pure distributors buy standard grades of metal in bulk from producers and resell them in smaller quantity to local end-users, mainly providing an inventory service. Steel service centers also buy in bulk and resell products in smaller quantities, but provide additional processing services that make the products more suitable for subsequent handling by the end-user. Such services include cut-to-length; leveling (cutting wide coils of steel into sheet lengths); slitting (cutting coils into a narrower width); coating; bending; blanking; cutting, pickling (using acid to remove surface corrosion); welding; and a large variety of other fairly simple manufacturing processes. At service centers that provide inventory management services and just-in-time (JIT) delivery services, 35 percent or more of orders typically involve some type of processing.
Suppliers include local steel mills and foreign suppliers, with which distributors often have long-term relationships. Long-term supply contracts are usually sought only if a distributor has long-term sales contracts to cover. Local suppliers are favored because of transportation costs. The lower cost of foreign steel sometimes makes it an attractive source for US distributors.
Inventory management is important for all steel distributors, especially those that provide inventory and JIT delivery. Many large distributors use sophisticated inventory/distribution information systems developed specifically for the metals service industry. These systems use bar coding on products, take electronic orders, and can link directly into a customer or supplier’s computer system.