Here in California, we’re fortunate to have one of the largest vendor networks in the country just a stone’s throw away. With a plethora of skilled, reliable service centers out here, we don’t have to search far and wide when it comes to sourcing materials. In fact, some states intentionally source metal from the Southern California suppliers that we are fortunate to have right in our backyards.
The challenge for Southern California manufacturers isn’t just finding companies that stock specific grades of material; it’s finding a supplier that meets all their requirements. That’s where SoCal NTMA comes in. When members connect with their local manufacturing network, they gain best practices to guide their material sourcing strategy.
Let’s explore some best practices for working with service centers and how SoCal NTMA offers the support and connections for logical material sourcing.
Be in the Know
Working in precision machining and contract manufacturing, you’ve probably got a million things going on at once. So, while we don’t expect you to be commodity experts, it still behooves you to have a pulse of what trends are happening in material sourcing.
Schedule time once every three months or so to connect with your material supplier. Speak with a buyer to gauge the market, more specifically pricing and sourcing trends. That way, you can be forthcoming with your customers and mindful in your sourcing plan.
Consider LTAs – If Possible
We understand this is easier said than done. Long-term agreements aren’t always feasible for machine shops for forecasting and cash flow reasons. But if you’re in a position to bulk purchase or enter an LTA, it could be advantageous to your business. Here’s why:
Locked-In Pricing
Material prices are constantly fluctuating. By entering an LTA with a supplier, you’re guaranteeing the same pricing for months at a time.
A notable example of an extreme price fluctuation occurred in the midst of the Russia-Ukraine War. Russia is a major exporter of nickel, a substance used in many stainless alloys. As the war progressed, pricing for a pound of stainless steel doubled and nearly tripled in some instances. Those with LTAs were locked in at the lower price despite significant changes to the market.
Steady Material Inventory
Many service centers will hold and release material at regular intervals so machine shops don’t have to deal with excess inventory. Be sure to ask your material supplier how often they can ship material when entering a long-term agreement.
Guaranteed Availability
For many shops, the assurance of material availability is reason enough to enter an LTA.
Recently, there were supply chain issues with 15-5 and 17-4 stainless steel, essential materials for aerospace and defense manufacturing. As soon as there were murmurs about shortages of this material, shops started panic-buying these materials. Manufacturers that had LTAs with suppliers could still access these materials at this time, but shops that spot-bought had more sourcing issues.
Ask the Right Questions
As mentioned, there are plenty of service centers in Southern California. This gives us the luxury of being selective, not just going with the first supplier you can find that carries 316 stainless. When entering an LTA or spot-buying, make sure your material supplier checks all your boxes. Here are some examples of questions to ask potential material suppliers:
- How much material do they stock?
- What grades?
- What sizes?
- Do they have any material niches?
- Do they handle outside processing capabilities?
Get Recommendations from Fellow Manufacturers
Naturally, machine shops should partner with material suppliers that are reliable, trustworthy, honest, and transparent about availability and lead times. But what salesperson wouldn’t say all the right things to secure your deal?
Instead of speaking exclusively with individuals who work for these service centers, connect with the peers that make up your Southern California manufacturing network. Communicating with like-minded precision machining professionals offers invaluable insight on the good, the bad, and the ugly of sourcing material from specific suppliers.
Join SoCal NTMA to Stay Up-to-Date on Material Sourcing Trends
When it comes to navigating the complexities of material sourcing, SoCal NTMA members have immediate access to reliable material suppliers that are involved in our local chapter. In addition, they can leverage their extensive peer network for tips and tricks on who they’re using for various materials and grades.
Interested in becoming a member? Connect with the SoCal NTMA team to get started.
