As a key part of purchasing negotiations, TVM has far greater scope than just price. To ensure an optimum competitive supply there are a number of factors to consider and for the supply chain to perform there should be a range of benefits identified and targeted, for all parties in the supply partnership.
Stainless International Ltd defines TVM with the banner ‘Evaluate – Innovate – Supply’ (see homepage for full description). We aim to create a sustainable supply solution – ‘a two-way transfer of understanding to optimise supply’.
We deliver improvements and benefits through a long-term working relationship with our customers, in which both parties seek continuous improvement. Savings in production processes are delivered over a period, not just as a one-off.
For this to operate successfully there needs to be an agreement for a material schedule in full production quantities. Spot purchasing can affect yield adversely, creating scrap and increasing unit production costs, packing and transport costs. For a planned schedule, all these costs can be optimised and the benefits shared.
Factors affecting Stainless Steel supply currently are:
* The Covid-19 crisis has been causing disruption to mill production runs and logistics.
* Brexit; the threat of no-Trade-Deal at end year brings risks for mill sourced S/S supply via certain supply routes and potential delays at ports.
* There are EU quotas and anti-dumping duties for Cold Rolled Stainless from outside the EU, and it is not clear yet whether, or when, these may be removed. The UK has no home production of CR S/S, but is subject still to these protections for EU manufacturers and this may remain the case in a ‘level playing field’ scenario. Anti-dumping duties for China, Taiwan, Indonesia, will likely remain for now, as these are part of EU competition law, which has been taken into UK law also.
For smaller orders on a non-scheduled or spot basis, then supply is subject to variations in coil width and quantity which affects metal yield and processing set-up costs. For these orders, prices need to be calculated on an order by order basis and logistics risks are increased in the current uncertain period.
For a large proportion of EU supply and in Asia, S/S is offered on an Effective Price basis. The monthly variations of Alloy Surcharge (AS) are an indicator of forward price movements and can be driven by volatile commodity investor sentiment and other factors can have a big price impact also. A partnership and supply schedule can help to manage price risk for customers and supplier.
Stainless International Ltd remains committed to taking cost out of the supply chain in total. We commit to working closely with all parties in the supply chain, to develop the business relationship, achieve ongoing, shared, commercial benefits; and reduce supply chain risk.