When Murphy created his Law (If anything can go wrong, it will) it’s entirely possible he was studying the supply chain. Long before the COVID pandemic, before the looming downturn in the economy, supply chains were problematic. The nature of the metals industry is such that there will always be unpredictable pain points, most often in the realms of inventory, logistics, and cash flow. There is a bright light though, helping to resolve supply chain issues even in the most challenging times. That light is technology. Technology is helping organizations plan more effectively, receive real-time data, and make better decisions through whatever unpredictability that may arise.
How Technology Helps Inventory
Managing inventory well is no easy task. The problem is simple: too much of what you don’t need, not enough of what you do. Technology can help in many ways, and young disruptive companies are solving this problem by bridging the gap between buyers and sellers in a more efficient way through an online marketplace. With this new platform, companies expand their sales and procurement teams instantly, reaching hundreds of new buyers or sellers at no cost to the business. This happens in real-time and allows better inventory management for both buyers and sellers.
As an example, consider a manufacturer experiencing strong growth such that their original forecast is exceeded. They need additional material from their service center to meet demand. The service center doesn’t have the material, and the fastest lead time a mill can offer is four weeks. Waiting four weeks will cost both the manufacturer and the service center missed opportunity. Historically, the service center would be limited to their relatively small network of suppliers. Today an online marketplace matches them to dozens if not hundreds of sellers, instantly. The reverse scenario is equally well served. If a manufacturer overestimates their business and cuts their order, the service center is stuck with excess material. An online marketplace connects them with thousands of buyers.
How Technology Helps Logistics
Knowing when a material is going to arrive is one of the most important aspects of efficient processing. This holds true for both service centers providing additional processing and end-manufacturers. Processing equipment is set up and labor is scheduled around delivery times. There are many factors affecting the schedule of a shipment, from loading delays to traffic and weather. The job of slotting and scheduling is much easier for companies that use real-time tracking. Today’s technology even enables companies to proactively predict changes in delivery times, leading to an entirely more efficient process.
Let’s imagine a scenario: A service center has just bought material, and the customer who they’re buying for has a line that is going to shut down in three days. In the past, the customer was at the mercy of a rough estimate of when the shipment would arrive, and valuable resources were wasted on having production ready to go (or not ready to go) when the shipment didn’t arrive at the expected time. Using live load tracking, organizations can see exactly when the order will arrive, allowing the line to be ready for production exactly when it needs to be. Larger service centers and manufacturers lose tens of thousands of dollars every week purely due to inefficiencies between receiving and processing materials. Technology empowers companies to do what makes them successful: plan and work efficiently.
How Technology Helps Cash Flow
Liquidity is a common problem in the metals industry. Organizations can’t grow because their cash is tied up in slow-moving inventory. Technology can help improve cash flow in several ways. First, modern inventory solutions help companies keep better track of inventory. This allows leaner inventory levels and identification of slow-moving materials. Second, technology helps organizations find additional buyers quickly to move unwanted inventory. Third, technology enables quicker access to financing and lines of credit. Finally, technology enables new models of financing that help companies take inventory off the books in ways traditional banks are simply unable to offer.
In a turbulent market with a sea of uncertainty, effective use of technology can be the difference between organizations that are just keeping their heads above water, and organizations that are riding the waves with confidence. The supply chain will always have variables, but companies that leverage technology to solve problems are better able to take the variables in stride.