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May 2008 – Steel creates a strong supply chain

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The strength of the steel construction supply chain is one of the sector’s most notable features – yet many are unaware of just how strong it is, what role the constituent parts of it play and how intense is the level of cooperation between them. In this issue we launch a news series on the supply chain, starting with steel stockholders.

There have been great changes in the stockholder’s role over the past 20 years or so. Stockholding was given a big boost in the 1960’s when British Steel introduced a price structure designed to encourage the growth of investment in processing facilities by diverting small quantities away from the mills.

Stockholders have responded enthusiastically. More constructional steel is now sourced via them than is bought directly from the mills. Stockholders have invested heavily in a wide range of processing equipment like saws, laser and plasma cutters, and machines for decoiling, slitting, blanking, shearing, notching, shotblasting and painting.

Customers, mostly BCSA member steelwork contractors, have also responded enthusiastically. Initially they enjoyed the convenience of being able to buy more material cut to length, but today over 50% of structural sections supplied by stockholders have been processed in some way. Some of the stockholder’s customers have been able to make their own operations more economic as a result, by relying on the stockholder’s ability to process steel.

Other cost saving benefits have come from electronic communications between stockholders and customers, as material lists and drawings provided via e-mail are downloaded to the stockholder’s own processing equipment.

The provision of just in time deliveries and material provided by phase or zone to construction projects can now be taken for granted by site managers.

Cooperation between steel manufacturer Corus and stockholders is very high, as is cooperation between stockholders and their steelwork contractor clients. The outcome is a more efficient service from the steel construction sector that has been given a conclusive thumbs up from the market, as steel’s dominance in market share surveys shows. Productivity gains have been substantial and the cost benefits have been shared with clients.

Later articles in our Supply Chain series will highlight similar success and gains being made thanks to investment and cooperation by other parts of the steel supply chain, starting with light gauge steel and steel decking manufacturers in the July/August NSC.

Nick Barrett

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