Years ago, metals were distributed mostly by small companies. They typically pro
ID: 369972 • Letter: Y
Question
Years ago, metals were distributed mostly by small companies. They typically processed and shipped small quantities to small metalworking shops. Today metal service centers play a key role in the supply chain. They stamp, cut, and otherwise transform plate steel, coiled metals, bars, and other semifinished metal products into other forms that metalworking companies can use in further processing or assembly.
These days, few so-called metal distributors simply warehouse metal. As manufacturers continue to curtail in-house production and administrative functions, the service centers are evolving from simple distributors to complex providers of processing and information technologies. In many ways, this evolution reflects the trend toward out-sourcing: As producers concentrate on making metal, and steel customers concentrate on making their own products, each side is willing to outsource more tasks to the metal service providers.
As we note the changing service standards in the field – metals with greater strength, more complex shapes, and other attributes; JIT deliveries; and materials management services – it's important for manufacturers, top service centers (such as Reyerson Tull, Thyssen, and Russel Metal), and customers in construction, automotive, machinery, and other fields to anticipate the needs for the future.
Based on globalization trends, technological advances, and economic policy, what are some of the key avenues for growth we might see in metal distribution in the next five years? Expand, explain and justify your responses.
Explanation / Answer
Following are some of the trends that are observed and will form the shape of metal distribution sector in the future.
1.Extension of the metal distribution to a higher number of mainstream, niche and new sectors which require more specific metal products.
2. Shift towards becoming an integrated metal solutions provider ( Including procurement, warehousing, supply chain and IT related services of material handling) instead of providers of isolated solutions (that force the customers to deal with a number of vendors, consuming much time, money and effort). This kind of outsourcing enables the customers to focus more on their mainstream activities, leaving the secondary functions to the provider.
3. Use of information technology to make the ordering and supply processes more agile, lean and efficient to make the processes more cost effective and responsive.
4. Increase in geographical coverage through globalisation of the business to reach out to cutomers in far flung areas in least cost and time to gain competitive advantage
5. Offering customized solutions to meet different customer needs by developing sector specific expertise.
6. Development of knowledge centres and advisoy services backed by subject expertise and research and development to provide solutions to technical and business problems of the customers.
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