The Importance of Supply Chains

The role of supply chains is a fundamental feature in the steel and construction industries. Any manufacturer of construction materials, such as Bulldog Steel, is affected by them and any shocks therein.

The greatest impact, however, is on customers of these products. Supply chain shocks that happen near the production end of the spectrum can have a massive impact on those who actually build things. Put simply, if you can’t get what you need, you can’t finish your project.

The goal of any manufacturer should be to reduce supply shocks and other logistical nightmares that might affect customers. As a manufacturer who focuses our energy on reducing risks in production to yield faster and better results for our customers, we take this to heart.

This brief article explains the significance of supply chain management – a sometimes boring, but incredibly important process that we deal with on a daily basis in the background of everything we do. It also explains why we feel there’s a huge advantage to manufacturing custom materials instead of just reselling.

What is a Steel Supply Chain?

In the big picture, a supply chain is the process of converting raw materials into a commodity to satisfy customer requests. Raw materials are extracted and manufactured.

Steel begins with iron and coke, raw materials which are turned into a commodity and then distributed for sale.

In the steel industry, the process is typically simplified into a two-part process: downstream and upstream.

Downstream refers to the distribution and delivery of finished products. This part of the process focuses on functions like order fulfillment and sales. Distributing the finished product is the only way the customer can get the goods and usually a sales team facilitates this purchase. Trucks shipping the goods to a retail location and a person helping the customer with their purchase are the segments of the supply chain most visible to your average customer, but it’s only a fraction of what is happening.
Upstream refers to getting the raw materials to the manufacturer for production. This is a complicated step in the process that involves several activities to ensure the strongest and most consistent flow of materials. For example, sourcing raw materials and procuring a vendor to extract those resources are key steps in this part of the supply chain. This is the most basic source of customer satisfaction because without the materials there are no goods to buy or services to render.

Bulldog Steel handles both sides of this process, although we do not have a steel mill with a furnace or make steel from raw materials at this point.

Our “upstream” process instead involves semi-finished steel, often in huge sheets, that we then further manufacture into finished products. The vast majority of construction suppliers do not manufacture their own finished products, having to order them from other companies. The longer the supply chain, the greater the potential for delay.

Supply Chain Disruptions

Supply chain delays are not some academic theory. They happen all the time.

In fact, since 2020, supply chain disruptions have regularly made headlines with historic consequences. Because of the intense day-to-day effects of the exposed vulnerabilities in numerous industries, the public is now more conscious of how large-scale operations, like supply chain management, affect their daily lives.

Industry analysts noted the largest manufacturing downturn in recent memory by April 2020 due to the pandemic and various responses by governments across the world. In particular, delivery delays were the highest since 2004. While the supply chain concerns seemed to turn hopeful as countries began to ease restrictions in 2021, supplier delivery delays were incredibly high throughout the year and demand decreased in the final two quarters.

The Russian invasion of Ukraine created new supply chain disruptions. Production declined in both Europe and the United States and prices collapsed from May to June 2022. Initially, the following year seemed to promise a better outlook, but by the end of the year, steel was still dealing with supply chain problems.

Despite these constant setbacks and market fluctuations, the April 2024 World Steel Association Short Range Outlook, the current state of affairs for the steel industry, predicts a modest growth of 1.3% and 2.7% in 2025. Yet, it’s important to remember predictions in the past have been optimistic without being accurate. With companies trying to rebuild their supply lines in the wake of the COVID-19 response, steel is one of the most sourced items on the planet. This turns into factories being overwhelmed with demand while prices are going up. On the whole, thriving in this market will require skillful supply chain management skills.

Imagine, then, being a company trying to source materials who does not even manufacture its own finished products. Relying on others in such an environment is a recipe for disruption and disaster – and unsatisfied customers who cannot meet their own needs.

Other Contributing Factors

Steel sourcing is tightening across the globe, increasing pressure on construction materials
suppliers.

Electric arc furnace-based (EAC) steelmaking is becoming a popular alternative to blast
furnace–basic oxygen furnace (BOF) steelmaking, and these steel mills are sourcing scrap
yards for shredded steel.

The supply challenge this poses is that with fewer larger metal items being bought and
discarded following the economic fallout of COVID-19 pandemic responses. This indicates
serious supply concerns compounded by slowing economies and recession concerns.

Similarly, prime scrap, a cleaner by-product of the manufacturing process, is highly sought
after. Construction companies’ source prime scrap for flat, rolled sheets of metal, and as
demand soars globally, this will outstrip supply in the coming years if trends continue.

This is currently forcing companies to make serious strategic decisions for sourcing. For
suppliers who do not manufacture, that calculus gets more difficult by the day.

R and U Panels

Metal paneling is popular with good reason. One look around shows metal buildings in Big Spring, Midland, Odessa and surrounding communities to be evident. These buildings are durable, affordable, and versatile.

Metal paneling has many advantages over other materials. Among other things, metal paneling is:

long-lived
durable
energy efficient

The advantages shine the most in roofing. A traditional asphalt and shingle roof needs to be replaced every 15-20 years, whereas a metal roof has a lifespan of 30-50 years or more. This extended product life translates into greater customer value. Metal is sturdier than asphalt shingles or other roofing materials, and accordingly, this means that it can withstand stronger winds and other environmental challenges. In rural Texas, that often means hail. Metal roofs are like kryptonite to hail.

In addition, a metal roof reflects heat instead of trapping it, reducing energy consumption. Metal siding has the same benefits.

Both R and U panels are usually made from 26-gauge commercial steel. R-panels are 36” metal panels with alternating raised ribbing and flat areas. They are commonly used in roofing and siding for residential and commercial functions. U Panel roofing is an exposed fastener roofing system of 36″ wide panels with 3/4″ ribs.

That means the panel is fastened directly to the roof deck with screws that pierce the metal panel. These popular metal roofing and siding sources are necessary components in the supply chain for construction companies downstream from steel production.

Saving Money with a Manufacturer

A key benefit to using a manufacturer for paneling and other finished steel products is that you can get just what you need. When third-party suppliers work with most construction materials firms to get paneling, they must order set quantities and sizes.

Because Bulldog Steel makes every order for the specific needs of our customers, we reduce this waste. Customers get what they need, and no more. This means less cost for customers and less extra material to manage.

Key Takeaway

With supply chain disruptions, resource tightening, and market instability front-and-center in the minds of producers and consumers alike, the ability to deliver a product faster than the competition is one of Bulldog Steel’s biggest advantages.

The company offers its customers the ability to consistently provide metal products for contractors and companies alike. A two-day guarantee for R and U panels is only possible due to a well-managed upstream.

This short turnaround reflects strategic efficiency in a volatile world that transforms a supply chain in a value chain for the customer. Bulldog Steel aims to make life easier for its customers, so they can make more money and have more margin. Our mastery of the supply chain reflects that.