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Mastering Metal Prices: 5 Sourcing Strategies That Only Pros Know

“It is a fact researchers have settled on – the 10,000-hour rule is a definite key in success.”– Malcolm Gladwell, ‘Outliers.’ For those of…

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This article was originally published by Metal Miner

“It is a fact researchers have settled on – the 10,000-hour rule is a definite key in success.”
– Malcolm Gladwell, ‘Outliers.’

For those of you who have not read Gladwell’s “Outliers,” no worries. Essentially, the key theme of the book involves the concept of practice. It states that those who dedicate 10,000 hours or more to anything can become experts. 

This is also true of becoming a metals sourcing expert. The very best procurement managers and directors have spent years studying their metal prices and movements. In many cases, they’ve done so through relentless trial and error. Some of those “errors” resulted in poor purchases, lower margins (or upside-down positions), reduced savings, and/or cost avoidance. 

The MetalMiner team has a shortcut for those of you working on perfecting your craft through 10,000 hours of experience. We’ve consolidated the five primary sourcing strategies necessary to lead you and your organization to success. We’ve put the time in studying metal prices, markets, and movements. Now, we’re sharing our secrets with you.  

Download MetalMiner’s free resource “5 Best Practices of Metal Sourcing Strategies” here.

Metal Prices: The 5 Best Sourcing Strategies and Why They Matter

After 10,000 hours, the MetalMiner team can summarize five strategies that, once mastered, will make a novice procurement manager a highly-skilled, valuable team member. Metal prices move both rapidly and often. With these strategies, you can offset losses and maximize every dollar.

  1. Always purchase by the weight, never by the “each.” Also, never purchase by the square foot. Yes, this includes tube and pipe buyers.
  2. Always split out the value-add portion of your metal from the underlying raw material cost. The corollary always splits out your semi-finished metal spend.
  3. Always award contracts using some combination of TCO (Total Cost of Ownership) or TLC (Total Landed Cost). Never award based on piece price alone. This is perhaps the most important of the five strategies.
  4. Always maintain the minimum number of suppliers necessary to serve your organization. Sourcing a category is not like buying shoes – you don’t need three dozen!
  5. Never buy all of your metal using only one contracting mechanism. Think of it like an investment portfolio. Would you put all of your money into a single stock? The same concept applies here.

With these five strategies mastered, any category manager or procurement director will be better able to manage metal prices. This includes circumventing volatility, improving margins, obtaining cost savings, and maximizing cost avoidance. Last but not least, you can feel more confident in your contract negotiations.

Hear from a Large Steel Buyer and Stainless Expert

10,000 hours is a long time. Even at eight hours a day, it would still take you years to gain this knowledge about metal prices and sourcing. In MetalMiner’s upcoming Fireside Chat, you can learn valuable insights in mere minutes.

MetalMiner’s latest fireside chat will feature Don Hauser, who spent years buying steel globally for that large green tractor company. You’ll also meet Katie Benchina Olsen, how has her 10,000 hours from Thyssenkrupp and Olympic Steel and has experience working with dozens of MetalMiner clients. These experts invite you to bring your questions and hear how these concepts can apply to your categories!

Master Metal Prices: Join Us on December 14 for a Fireside Chat

Listen in for 30 minutes as MetalMiner CEO Lisa Reisman hosts a fireside chat discussing these five strategies. You can listen on Zoom or LinkedIn Live.

Register on Zoom | Register on LinkedIn Live

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