Fast delivery of steel plates is only one route to faster production schedules.
I was talking to a customer earlier this week who has come under increasing time pressure from his customers over the past few years. Like many fabricators, he has less time to deliver in. End users want to get their projects operational faster so that they can get a return on their money sooner.
That provides us all with challenges:
- How do you improve your project management to cope with compressed time scales?
- How do you manage the increased risk with trying to do things faster?
- How do you recover a project successfully when you incur a delay?
All these things are more difficult.
As a result fabricators put pressure on the steel stockholders, and they have responded in two main ways: Deliverability and Availability.
- Delivery is how fast you can deliver steel.
- Availability is the amount of steel that you have in stock.
This curve on the graph shows the potential options. If you increase availability, deliverability decreases. And vice-versa.
That is unless you do something different and change the rules of the game (think how shipping containers drove down the cost of shipping for example).
The first route has been to improve deliverability by opening more warehouses. These generally have limited stocks to serve local markets.
Speed of delivery is increased but many of the benefits of the main warehousing facility are foregone.
- RFID tagging of plates for easy trace-ability
- faster and heavier cranes to improve picking speed and loading times, and
- algorithms that optimize plate movements
For example for one order today we have to move 600 tonnes of plate in order to access the plates that we are selling and it was done simply and quickly because of all the above factors.
So for small warehouses there is:
- an increase in cost,
- a decrease in efficiency, and
- many operations are running below the minimum efficient scale.
So the last few years we have seen an increase in small stocks of special grades – especially in Singapore. This has meant that delivery speeds have been significantly reduced but there are few plates in each thickness, and little choice about dimensions.
This has increased costs and destroyed profitability. One major local stockholder has seen its pre-tax margins fall from 8% pre 2010 to 0.5% for 2011 and 2012. This is good news for fabricators but few stockholders have seen the benefit and with so much cash tied up in stock none can escape the pain.
The alternative route is to improve availability. Here stockholders have argued that by increasing the size of their central stock they are able to increase their chance of offering customers the exact plates they require. This reduces wastage and excess cost. There are also scale advantages to be had in operating a 40,000MT stock over eight 5,000MT stocks which translates to a reduced cost and better efficiencies.
These large facilities also have a key advantage in that the full range of value added services are provided. So profiling, shot-blasting and priming can be done in-house and quality tightly controlled and that can be effectively combined into the supply chain to reduce the production time.
So for one customer this week we have done some complicated profiling with bevelling on a curve. This will save them an estimated 2 weeks over having to do it once they collect the plates from Port Klang.
The advantages that this offers to you are:
- Wider choice of better materials
- Faster production cycles
- Improved quality of the end product
We stock 40,000 MT in Antwerp with transit times to Singapore as low as 21 days and plates up to 3m wide shipped by container (subject to a number of constraints)