Supply Chain Risk: Good logistics creates success in markets
A SOLID logistics operation has ensured Sheffield Forgemasters Steel has made successful relationships with world markets.
The business, one of engineering giant Sheffield Forgemasters International’s seven subsidiaries, provides molten steel for the company’s casting and forging operations and sells ingot and forged bar into the world markets. It is a major producer of steel ingot for the forging and ring-rolling industries.
Mark Tomlinson, operations director for Sheffield Forgemasters Steel, said: “We bring in materials from all over the world, refine them and then have to resend them all over the world to Asia etc. This means we have a very extended supply chain and we manage this by aligning ourselves with producers rather than traders.
“It is vital to know what is happening in the marketplace and react accordingly. With the internet we have access to real time, up to the minute information and we are therefore able to react to it.”
The company has supply agreements that go on for one to three years, therefore buying forward or ‘hedging’ is a must.
Tomlinson said: “It’s also always important to look ahead, where can I get the best deal? How do I ensure I have the materials I need in six months time?
“The materials bought in are not necessarily manufactured in the UK or the EU so this leads us to have more global arrangements, meaning the supply chain gets extended, forcing us to think ahead. Therefore having good logistics in place is a must.”
Operating in an energy intensive industry, another supply chain risk that SFIL has to watch is energy price shocks. World events, such as the Japanese earthquake and Tsunami, can have an immediate impact on UK gas and energy prices, so it puts plans in place to protect itself.
Malcolm Lee, energy and commercial manager at SFIL, said: “You can always expect to be exposed to these kind of risks and you have to put plans in place to protect yourself as much as possible from them. Our energy strategy recognises such unknowns.”
Tomlinson also said that the cumulative impact of climate change policy levies and taxation policies have an effect on the business. To read the full story, click here to download our new Supply Chain Risk supplement.
Sheffield Forgemasters Steel works in fields including aerospace, offshore oil exploration, power generation, shipbuilding, seamless tube, railways, bearings, defence, metals re-rolling, paper, dies and chemical engineering.
