Metal companies are "Material Conversion Experts" to compete within the industry and against other materials. Material science plus production engineering equals a high-tech metal product. Here's why it is important:
- 75% of steel grades are less than 20 years old.
- Aluminum and steel compete to offer lightweight options in the automotive industry.
- Using Niobium as an alloy in steel makes a car 100 kg lighter.
- Steel competes with concrete in the construction industry.
Unlike consumer goods companies, metal companies typically do not develop and produce standardized products; instead, they receive specific technical requirements from customers and provide quotes and tailored products accordingly. For instance, a customer might request a steel plate with specific dimensions, quality, and coating. To respond, the company must assess its technical capabilities and material suitability, considering factors like maximum size limits and machine requirements. The interplay between materials and machinery, coupled with rapid advances in metal production, creates a dynamic range of options.
A Metals company that excels in integrating these aspects into a seamless process can gain a competitive edge through swift responses and superior product options.
In the Metals industry, product standardization is challenging due to extensive customization. Key considerations for a Metals company include:
- How to consistently define and describe products tailored to customer specifications?
- How to accurately document the final output?
- The impracticality of using simple product numbers due to the vast number of potential variations
Consider a metal plate - its dimensions can be customized to the millimeter, with various coatings or chemical compositions. This is akin to a kitchen, where finite ingredients yield infinite dishes based on equipment and expertise. Moreover, just as cooking can result in variations, metal production can deviate from its intended properties. Capturing these deviations is crucial, as they can impact subsequent production steps. For instance, a rougher-than-planned surface might necessitate an additional cleaning step before coating.
A common approach to tackle this challenge is to use attributes that serve as placeholders to describe and define product properties. For example, attributes for a metal plate could include length, width, thickness, and coating. These fields are populated throughout the business process with desired customer specifications and actual production values. This structured approach enables a more organized and efficient workflow.
The success of a metal company greatly depends on how well material properties and processing capabilities are defined and captured within a data model. This forms the foundation for executing core business operations. Also, metal products require specialized logistics.
Metal products, given their substantial weight and size, present specific logistical challenges. To ensure precise, timely, and secure movement, companies implement:
- Internal Logistics: Advanced warehouse management solutions with automated equipment, for example, automated cranes
- External transport: Coordinated use of multiple transportation modes (ships, trains, trucks) for efficient delivery
Effective logistics management is vital to prevent production failures and ensure timely customer delivery. It includes handling material dimensions for warehousing, machine staging, and truck loading, planning and tracking multimodal transport, and optimizing yard management and intra-plant logistics.
Assets in metal production are costly to install and operate, making regular maintenance crucial for product quality. Maximizing machine capabilities, such as processing speed, is key to operational excellence. Also, timely and accurate material movement within and outside the plant is essential.
However, frequent machine failures and process deviations require constant operational reassessment. The ability to synchronize production, maintenance, and logistics processes drives performance and provides a competitive edge.
Metals companies typically have cost structures heavily influenced by material, energy, and freight costs. Material prices, often set by exchanges like the London Metal Exchange, can be volatile. For instance, copper and aluminum prices fluctuate daily. Companies must manage this volatility to avoid losses stemming from raw material price increases between product sales and production.
Product configuration also influences final product costs and pricing. Each configuration aspect can affect production costs and potential sales price changes. Therefore, it is crucial to maintain a synchronized manufacturing, costing, and pricing structure.
Effective cost management is vital for metal companies, as it enhances sales and production reliability and agility, ultimately providing a competitive advantage.
Summary
- Customized Metallurgy: Metal companies custom-make products based on specific customer requirements, factoring in technical constraints and materials and machinery evolution. A fast, efficient process can give them a competitive advantage.
- Metal Product Customization: Metal companies face the challenge of defining and describing their custom products, as standard product numbers don't suffice due to the diverse variables. The key is to work with attributes that denote properties of the product, capturing both customer requirements and production realities. This data builds the foundation for successful business operations and logistics.
- Logistics-Driven Metal Production: Managing logistics in metal production ensures on-time, in-shape delivery while optimizing machine capabilities and maintenance. Despite challenges from machine failures or process deviations, synchronizing production, maintenance and logistics drives operational excellence and competitive differentiation.
- Cost Strategy Essentials: Metal companies' cost structures are strongly affected by material, energy, and freight costs. They must manage price volatility at material trading exchanges and address impacts of product configuration on production costs and sales prices. A well-managed cost structure provides competitive advantages for these companies.