Page 39 - MetalForming November 2022

Managing Pricing
DURING SUPPLY-CHAIN UNCERTAINTY
Metal formers require optimum visibility and control across raw-material inventory, work in progress, and finished- goods inventory as they strive to manage their businesses. Case in point: a pass-through pricing model at Ramcel Precision Stamping and Manufacturing, where managers have visibility into real-time cost data.
BY LOUIS COLUMBUS
Louis Columbus is principal of Delmia- Works, www.solidworks.com/delmia- works-manufacturing-erp.
As supply chains become more unpredictable, the more chal- lenging it becomes to manage pricing. No one understands this more than metal formers and fabricators. Hot-rolled coil steel prices have soared by 30 percent or more in recent months. Before the latest price increases, the largest price variances had been mini- mal. However, many metal formers say they’ve experienced as much as six- fold increases in pricing variances.
As a result, metal formers must negotiate raw-material price variability into their production contracts on every order, even as they see price increases of more than 200 percent for steel, 60 percent for aluminum and 20 percent for copper. Lead times also have climbed, with steel mills consid- ering allocations for the rest of 2022 and into 2023.
Metal formers say that inventories are the "shock absorbers" they need to lessen the immediate impact of fast- rising and unpredictable prices. How- ever, they can face severe pressure to
manage inventory levels, costs and pricing in real time, which requires optimum visibility and control across raw materials, work in progress and finished goods inventory as they strive to manage their businesses. At the same time, metal formers must receive alerts on price variances and adjust pricing in real time across work in progress and finished goods, while updating their customers to align the business with rapidly changing prices.
How Metal Formers
Can Stay Ahead of Pricing
Metal formers and fabricators say they face a much more competitive, fluid real-time environment in 2022 than any previous year. As a result, they’re more closely tracking customer orders, monitoring pipelines with weekly calls to customers to confirm orders, and fine-tuning demand fore- casts. They also are balancing the tim- ing of receipts and often deciding when to swap out high-priced materials for even higher-priced materials that have
36 MetalForming/November 2022
www.metalformingmagazine.com