Jan. 06, 2025
When working with steel vendors, they must be knowledgeable about the products they supply to your business and all the different steels they sell, their applications and specific properties. They should also have a good idea about products they don&#;t sell but which are crucial to the industry.
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Steel is used widely in modern society by manufacturers of a wide array of products and those who construct buildings, bridges and other infrastructure. Regardless of why a business or organization requires steel, vendors should be able to answer the following questions:
Steel is an alloy primarily made from iron that contains less than 2 percent carbon, with other elements like manganese, oxygen, phosphorus, silicon and sulfur added to give the steel certain characteristics. It&#;s also a relatively inexpensive alloy with high tensile strength, which is why it&#;s widely used.
Steel has myriad uses, including as a component in automobiles, buildings, home appliances, infrastructure, ships, tools, weaponry and many other modern-day products. Steel is also used in engineering applications and as an important construction material.
While iron occurs naturally in ore form, it&#;s also the primary element making up steel alloys. The main difference is that steel is stronger than iron, with superior compression and tension properties.
One of the most frequently asked questions of steel vendors involves why it&#;s not considered a metal. This has to do with the fact steel isn&#;t a pure element but rather an alloy comprised mostly of iron, which is a metal, and carbon, which isn&#;t a metal.
Various steels have differing properties depending on the elements within the alloy. But generally, steel:
While titanium can be alloyed with other metals &#; including aluminum or vanadium &#; to make it stronger than many types of low to medium grades of steel, the highest-rated stainless steel grades are stronger than these titanium alloys.
Steel is generally categorized into four types: alloy, carbon, stainless and tool steels.
Alloy Steel -These steels are alloyed with other metals in various ratios to make them better for specific applications.
Carbon Steel &#; These steels contain iron and carbon, with other elements like copper, manganese and silicon to create an alloy.
Stainless Steel &#; There are many variations on stainless steel, though normally, they&#;re made up of between 10-20 percent chromium. The primary element in stainless steel alloys, besides iron, is chromium, which makes it much more resistant to rusting; this is especially true for those stainless steel alloys containing at least 11 percent chromium.
Tool Steel &#; Alloyed at extremely high temperatures, these steels are combined with hard metals, such as vanadium, tungsten, molybdenum and cobalt. Not only are tool steels heat resistant, but also durable, making them ideal for cutting and drilling implements.
The specific grade of steel that&#;s considered the strongest is in the 400 class of stainless steel, specifically, type 440. The 440 stainless grade is a type of cutlery steel with a higher carbon ratio. The 440 grade retains edges much better when properly heat-treated than other steels.
As one of the hardest stainless steel grades, it&#;s classified into four subsets. Categorized into 440A, 440B, 440C, and 440F stainless steel, these differ only concerning the amount of carbon they contain. Of these, 440C stainless steel is considered the strongest, comprising between 0.95-1.20 percent carbon. During the annealing process, 440 steel can be easily machined, worked, and manipulated into shape to increase strength further.
The most commonly used and versatile steel grade is also stainless. Type 304 stainless steel contains 18 percent chromium and 8 percent nickel, sometimes referred to as 18/8 steel.
There&#;s not just one kind of stainless steel. The term applies to a group of iron-based alloys that contain at least 10.5 percent chromium, making stainless steel so resistant to corrosion. This chromium forms a very thin layer on the steel&#;s surface to prevent rust and other types of corrosion.
In addition to chromium, carbon content in stainless steels can be no more than 1.2 percent. Stainless steel alloys also contain varying amounts of other elements, such as manganese, molybdenum, nickel, niobium, nitrogen, silicon, and others. These other materials contribute to the properties of specific types of stainless steel.
Yes, and yes. Though many believe stainless steel won&#;t rust wrongly, it&#;s possible under certain conditions for stainless steel to rust, though its chemical makeup helps prevent rusting. Additionally, there are other types of corrosion besides oxidation that makes steel rust.
When stainless steel surfaces are exposed to chemicals or other corrosive substances for too long and aren&#;t properly cared for, they begin to pit. This pitting affects the performance of a stainless steel surface and its aesthetics.
All steels are uniquely sustainable and capable of being used and recycled repeatedly. Steel production also requires less energy than producing other types of materials. Further, the steel industry has made great strides toward limiting the pollution it produces. For example, fabricating a ton of steel requires just 40 percent of the energy it took to make in .
Yet steel knowledge isn&#;t the only thing to glean from questions posed to steel suppliers. Vendors should also show that they&#;re trustworthy and honorable when doing business. To ensure that they are these things as well, another set of questions should be asked of steel vendors:
It&#;s important to understand the final cost of materials like steel. Vendors sometimes charge a restocking fee for returns, while others may invoice for delivery or fuel surcharges. It&#;s important to ask a steel supplier to identify these costs so that the total cost for material is known and can be compared with prices from other vendors.
This is an important aspect of any business, including steel suppliers. If there&#;s a problem with the steel that leads to other costly expenses, the steel vendor&#;s policy must cover it. it&#;s also a good idea to get a copy of their liability insurance certificate.
For distributors, steel vendors mustn&#;t sell to end users at sharply discounted rates. Some manufacturers will work with a distributor until they&#;re established, then cut them out to make higher profits. That&#;s not good for any distributor&#;s business.
Sometimes the product doesn&#;t sell, so it&#;s important to understand a steel vendor&#;s return policy. A guaranteed sell-through allows a business to return unsold materials for either cash or credit.
With COVID and current world events having caused issues with supply chains, this is a very important question to ask steel vendors. A lack of vital materials will strangle a business, so relying on suppliers that don&#;t deliver isn&#;t an option. Steel suppliers that offer discounts for a product that doesn&#;t arrive on time, or who will pay back customers for steel they had to get from another source will help allay the costs of delays or mistakes.
For distributors, it&#;s important to get a price that gels with the profit their business needs to make in order to grow. For instance, if a steel vendor states that the gross margin should only be 25 percent on the steel they sell, while your business needs a 30 percent margin to stay competitive, this relationship probably won&#;t work out long term.
Knowing what might make steel vendors change their pricing structure is also important. Sudden price increases in material or services can cause havoc with any business. It&#;s important to know if prices are tied to inflation, and how much notice will be given should steel prices rise. Additionally, it&#;s not a bad idea to ask steel vendors if they reduce prices to their customers should their price go down.
Steel vendors sometimes offer discounts for bulk buys. This can affect profits, so it&#;s a good idea to know in advance about such incentives.
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It&#;s important when a supply of any material arrives to ensure that it&#;s in good condition, and this also applies to steel. Vendors should be asked whether there&#;s a certain grace period after receiving their product. It&#;s important to check contracts to allow at last three days to check an order prior to taking responsibility for it.
This final question can be applied to any vendor of products or services. It&#;s these traits that businesses working with steel vendors should look for:
Dependable Deliveries &#; The steel industry often needs to deal with tight deadlines. Steel vendors&#; deliveries arrive when they should ease the burden on their customers. Make certain that a steel supplier has a history of timely deliveries.
Solid Customer Service &#; This trait goes beyond steel vendors, as excellent customer service should support any partnership with a supplier. Knowing that a vendor listens to issues and communicates honestly when seeking a solution to an issue is what any business wants from such a working relationship.
Receiving Undamaged Goods &#; With the toughness of steel, vendors might take less care than with more fragile alloys or metals. However, orders can still be damaged during transport to a point where the steel is unfit for application. If this happens, it can hamper efficiency and push back deadlines. A steel vendor&#;s shipping and packaging processes matter and orders must be delivered undamaged.
Regulatory Compliance & Quality Control &#; Though certain uses require higher quality steel, vendors should always ensure that the material they provide meets or exceeds the standards for which it&#;s required. Depending on the application, steels must comply with various regulations and standards.
Organizations like ASTM International help steel vendors classify, evaluate and specify the best steel type for an application based on its properties. For rolled steel used in the aerospace or auto manufacturing industries, this might entail certification from SAE International. Specifications regarding stainless steel used for structural purposes could include following ANSI/AISC 370-21 requirements.
Regarding defense contracts, DFARS compliance is necessary to protect the US defense industry from becoming too dependent on foreign steel vendors and materials. For steel vendors operating in the European Union, it may be necessary to comply with RoHS restrictions on materials used for electronic and electrical equipment containing certain toxic substances.
Sourcing Material Reliably &#; Often, raw materials go through multiple hands before reaching their end user, including products like steel. Vendors help facilitate this supply from steel manufacturers to distributors and end users. It&#;s a good idea to maintain good relations with steel vendors that have access to steel from multiple mills, ensuring they can always provide an adequate supply of materials.
The situation in the European automotive industry is challenging. Difficult economic times meet the industry transformation. In particular, suppliers are facing important decisions in order to shape their business for success. We take a look at possible fields of action and the most urgent questions in the market, as we at Schlegel und Partner are currently experiencing them.
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It is no secret that the automotive industry - especially in Europe and Germany - is currently facing tremendous challenges.
It feels like almost every second trade article describes the problematic effects of global geopolitical conflicts, vulnerable supply chains and increasing competitive pressure as the automotive transformation moves towards electrification, digitalization and decarbonization.
The European car manufacturers have got off relatively lightly so far. Until the end of last year, EBIT figures were largely stable at an average of around 12 to 13 percent - with double-digit sales growth compared to the previous year .
The current slowdown in demand and increasing price pressure &#; mainly from Tesla and the highly competitive Chinese market - are reducing the OEM's flexibility for planned investments in the electric powertrain including power electronics and battery as well as in E/E architecture and software. In addition, measures to reduce CO2 emissions and establish product and material cycles must be pushed forward.
The ecosystem is changing and the traditional linear way of doing business is increasingly becoming a phenomenon of the past. Established OEMs must think and act more in networks and partnerships, especially with regard to connectivity and software-defined vehicles - the basis for autonomous driving and data-based value-added services along the entire vehicle life cycle.
For traditional automotive suppliers, the sandwich position between OEMs and the pre-chain with the large raw material and component suppliers is becoming even more uncomfortable due to the OEMs' current cost-cutting measures.
Last year, many large tiers already had EBIT margins of between two and six percent. Smaller (Tier 2) suppliers and those with a particularly high need for transformation even struggled with operating losses.
The current weakness in the already volatile demand for e-components, coupled with further price pressure from OEMs, is causing suppliers' sales expectations to fall. Consequently, many are cutting costs, for example by relocating production and laying off employees, as the prominent examples of ZF, Bosch, Forvia and Continental show. Further consolidation in the industry is foreseeable in the coming years.
For a successful future, suppliers must accelerate change processes even further - with the appropriate know-how, personnel and financial resources. Innovative new business and more profitable existing business often have to be rebalanced in order to remain viable in a competitive environment. Key management task is to continue the profitable existing business to the satisfaction of the customer while allocating the internal resources in a way that enables new (often not yet profitable) strategic fields of business to be successfully rolled out.
In addition to typical strategic issues relating to technology, value proposition and target market, Schlegel und Partner's clients are now increasingly looking for solutions with a short to medium-term impact. Solutions that can be implemented as quickly as possible are currently in demand.
Shortened, agile and focused development processes and the digitalization of production can help to reduce costs. In addition, there are several fields of action that suppliers can address.
Opportunities and requirements vary depending on the company's individual background. However, it seems essential to focus on core competencies that enable competitive products or services with high added value. Given the often diverse range of innovation topics, each with unclear monetization and/or profitability, it is crucial to prioritize topics with high market opportunities and good profitability prospects.
The basis for this is an understanding of the target market - i.e. existing and potential customers (or "customers' customers"). In China in particular, the largest vehicle market in the world with a lot of potential for suppliers, the rules of the game are often different. However, new business relationships in this market must also be seen in the context of imminent market consolidation, which will cause some OEMs to disappear from the landscape.
Diversification of target markets can also be a viable option, as long as other (growth) markets outside the automotive sector can be conquered using existing expertise. The prerequisite is market knowledge and acceptance that automotive processes and volumes cannot simply be transferred.
The outlined fields of action for automotive suppliers give rise to a number of typical questions that Schlegel und Partner deals with on a daily basis.
Following is a subjective selection of the top 10 most critical questions:
Which topics are at the top of your agenda?
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