With declining metals prices, metals buyers around the world might look like rock stars right now. But your CFO ought to be asking the question Is our firm beating the market? And the answer for most companies is a resounding NO. Why?
We would contend that companies either:
- bid out their requirement monthly (thinking that will allow them to beat the market at least on a monthly basis)
- believe their spend is too strategic, or critical to the operation ” therefore, it may be too complex to undertake a formal cost reduction initiative
Never has the pressure been so great to achieve cost savings above and beyond the current market price. For many companies their very survival depends on it. But most companies are missing out on additional single or double-digit savings opportunities that would still allow them to maintain relationships with high quality suppliers when growth returns.
What’s the catch to eking out every possible savings cent, you ask? It must take time, you say. That’s it — the problem is time to savings. Our spend is so complex it would take months, may be a year to see a return, you think? Is this right? Nope. Wrong, read on ¦
You wouldn’t expect to be able to get faster, better cost reduction results with complex metals requirements, but if you find that your metals purchases match any or all of the following descriptions, you are likely an excellent candidate for a 120 day cost reduction ROI:
- Critical material for manufacturing operation
- Typically service center spend but can be mill-direct
- JIT/Kanban required
- 24 hour turnaround required
- Broad mix of metal products ” steel, aluminum, copper and stainless
- Broad range of product types ” flat rolled and long products, bars and extrusions
- Multi-million dollar category
- Can’t/don’t want to go global with the category
Does this appear counter intuitive? Aren’t we always told multiple line items, fast turnarounds, sheet, plate, coil etc, kanbans are all major hurdles in identifying and achieving solid long term savings? It’s not, especially today. Our recent experience proves suppliers are hungry for business, responsive to opportunities for new business and more than willing to work with consumers to achieve costs savings ” even in highly complicated environments.
The issue is one only of expertise and manpower, both of which can be brought in on the basis of a guaranteed ROI.
If your firm wants to beat the market in 120 days or less, give us a call.
–Lisa Reisman and Stuart Burns