Manufacturing Sales in the Steel and Metal Industry

Posted by Sabine Kempe on Aug 25, 2021 3:05:34 PM
Sabine Kempe
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The steel and metals production industry is undergoing a profound change. Demand fell in 2020, while China is ramping up its output, with a market share that is fast approaching 57%. Analysts are confident that current epidemiological trends will keep the industry afloat. For an industry that uses raw metals to fabricate structures, machines, tools, and parts, your business is part of the pillar that holds the entire manufacturing industry up.

But even with value-added processes that include welding, cutting, forming, metal stamping, forging, casting, and machining, the volatile raw material prices and a general slowdown in demand can take a toll on your business. As a result, steel and metal manufacturers like your business are taking extra care in aligning supply and demand while keeping track of highly diverse customer requirements.

The complexity your business faces is piling up. Managing it can be increasingly difficult without transforming how your business sells. But to transform your convoluted sales process, you would first need to understand why it's complex before you can take it to the next level with digital sales solutions. 

5+1 types of manufacturing that define sales in the steel and metal sector

Manufacturers in this sector employ sales strategies that help them navigate market conditions. However, their strategies can also be influenced by their business model. Here is a brief description of the various business models they use to meet market demand.  

1. Make-to-stock (MTS)

Why this model is used

  • Demand for products is predictable and easily forecasted

How it works for steel & metal manufacturers

  • Expends capital to produce goods in advance
  • Capital is bound to the finished goods until they are sold
  • Incoming orders use existing inventory, keeping lead times low

Ideal for manufacturing products that:

  • Are mass-produced at low costs and high quantities
  • Are readily available with extremely low lead times
  • Requires little to no engineering and design

2. Make-to-order (MTO)

Why this model is used

  • Standard products and specifications are clearly defined

How it works for steel & metal manufacturers

  • Products are only produced when orders are received
  • Lowers risks of overproduction for manufacturer
  • Increased production costs and lead times

Ideal for manufacturing products that:

  • Cost more, but can be produced in large quantities upon order
  • Requires some engineering and design
  • Can be manufactured and delivered fairly quickly

3. Make-to-assemble (MTA)/Assemble-to-order (ATO)

Why this model is used

  • A flexible model that allows for speed and reduced waste

How it works for steel & metal manufacturers

  • Parts and components are pre-produced
  • Assembly only happens when orders are received
  • The manufacturer is ready to fulfill orders instantly

Ideal for manufacturing products that:

  • Are ordered in lower quantities
  • Requires some engineering and design
  • Do not offer options to configure

4. Configure-to-order (CTO)

Why this model is used

  • Enables mass customization and faster response time

How it works for steel & metal manufacturers

  • Products configured and assembled according to requirements
  • Standard subassemblies made-to-stock and instantly available
  • Final assembly is postponed until the order comes in

Ideal for manufacturing products that:

  • Are ordered in lower quantities
  • Offer a large number of configuration options
  • Requires moderate engineering and design

5. Engineer-to-order (ETO)

Why this model is used

  • Extremely complex or specialized product or solution

How it works for steel & metal manufacturers

  • Project-based work starts only when order is received
  • Comprises a long timeline of design, engineering, and production
  • Final product is engineered according to unique specifications

Ideal for manufacturing products that:

  • Are ordered in low quantities
  • Requires a high degree of engineering and design
  • Has highly specific customer requirements

+1. Manufacturing-as-a-Service (MaaS)

Why this model is used

  • Highly optimized by emerging Industry 4.0 technology
  • Fast, low-cost, high-quality production of almost any product
  • Resource consumption can be kept under tight control

How it works for Medtech & High-tech manufacturers

  • The manufacturer is equipped to produce anything a customer wants
  • Uses shared infrastructure to reduce costs and improve quality
  • Process expertise instead of products is sold to the customer

Ideal for manufacturing products that:

  • Are highly innovative and new to the market
  • Requires high customization or personalization
  • Needs to be low cost even in low quantities
  • Has fast time-to-market requirements

Different manufacturing complexities

Steel and metal manufacturers often use the MTO and MTS business models. However, some manufacturers may choose to go higher up the value chain and perform functions that require more complex engineering. Regardless of the model they choose, incumbents in this industry need to pay close attention to material prices, as slight movements can have a significant impact on their bottom line.  

The success of the business would require sales strategies that consider functions like supply chain, stock management, production, design, engineering costs, and quality control.

For example, iron and steel manufacturers’ that deal with ores as opposed to scrap metal are primarily concerned about material prices. But at the same time, they would also require precise demand forecasting. If they have an excess in materials, they would have to spend more on storage, and dips in material prices can affect margins.  

The business can be straightforward, but the wide variety of factors that can affect the business comprises most of the industry’s complexity. The data needed to fully manage the business can exceed what legacy systems are equipped to manage. Forward-thinking steel and metal manufacturers are now turning to Industry 4.0 era systems to help manage their sales data and the complexity that comes with the rising number of business functions and sales strategies.  

These are challenges that a powerful digital sales platform can overcome through seamless integration with a manufacturer’s ERP, and existing IT systems sales depend on (e.g. Salesforce CRM). Ultimately, it is a strategic choice that leading manufacturers make to meet the demands of the market today, and take advantage of the opportunities that come in the future.  

Valuable sales data Electrical Equipment manufacturers can extract from their ERP

Valuable sales data steel and metal manufacturers need to extract from their ERP

That’s because a leading digital sales platform built for manufacturing is built to support all variables that affect sales in the steel and metal industry. Its seamless integration with your ERP allows it to extract sales-relevant data like costs, prices, and product information, while its manufacturing-focused features use this data to cover the full spectrum of your sales needs like:

With a powerful digital sales solution like the In Mind Cloud Digital Sales Platform, your steel and metal manufacturing business can perform better. Your goal can be to reduce costs, increase revenue, improve efficiency or simply to prepare your business with a competitive advantage--and our Digital Sales Platform is built to get you there.

To find out more about the role digital plays in modern manufacturing sales, download our Manufacturing Sales Handbook here.  

Part of this blog post appeared in an article that was first published on the G2 blog

Manufacturing sales handbook 2021
Sabine Kempe

Written by Sabine Kempe

Sabine - a digital enthusiast at heart, she is dedicated to matching the challenges of manufacturing businesses with the opportunities of a digitalized world.

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