How supply chain uncertainty is impacting the future of metals

Tony Barnes
| 6/29/2022
How supply chain uncertainty is affecting the future of metals

With the current volatility in the metals supply chain, how can steel, aluminum, and other metals businesses secure their future?

In this season of uncertainty, metals companies are faced with rising costs and disrupted supply chains while demand soars. Many of these companies are responding by investing in new technology. After all, they don’t want to get left behind, and so much is at stake. When supply chain uncertainty is high, the stakes are higher.

A company’s decisions affect its customers, the livelihood of its employees, and the overall success of the business. Whether it’s promising new employment opportunities and stability through retirement, guaranteeing products show up on time, or ensuring products are in spec to meet customer requirements, the need for greater certainty is everywhere.

That’s where new technology can provide confidence.

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Causes of supply chain uncertainty

Many of the current supply chain constraints can be traced back to three global challenges:

Strained relations around the world

In the past, many metals customers looked to offshore suppliers to fulfill their demand needs. These investments allowed for decreased labor costs, lower price points, and on-time delivery. However, current trade and political recalibrations make global business relationships more difficult to maintain.

Bottlenecks at the ports

The COVID-19 pandemic brought commerce to a grinding halt, including worker illness, lockdowns, disruptions in product availability, and logistical changes. With business changed everywhere, world markets have struggled to restabilize. The world watched as cargo ships sat just outside of ports awaiting a chance to unload. Not only were some shipments late, others never materialized. The culmination of these bottlenecks has led to a sharp rise in production costs and significant disruptions to the flow of materials into the United States.

War in Ukraine

No matter where a business, its manufacturing plants, and its customers are located, the increase in oil and gas prices has dramatically affected the cost to move products – and the war in Ukraine has only exacerbated the problem. Supply concerns, sanctions, and other constraints have caused unpredictability for all industries, including metals manufacturing and distribution. Without knowing how or when the war will end, a high level of uncertainty remains around the long-term impact on the cost of fuel and buying decisions.

3 ways to confidently move beyond supply chain uncertainty and prepare for the future of metals

The current global challenges have shown that an overreliance on global production and support is likely unsustainable. Steel and other metals executives need to prepare their technology solutions today for increased production and customer demand at home.

Thankfully, metals executives don’t need to be in the dark when considering what technology investments are needed as they ramp up operations over the next several years. In fact, it’s possible to have greater certainty about the future with flexible, scalable technology, and a plan tied to the goals of your business.

Here are three ways to combat supply chain uncertainty and prepare for the future of metals:

1. Establish a road map for the journey

Managing change across an organization can be difficult and made even more challenging when large-scale decisions affect business operations. In addition, investing in new technology requires training and new-talent acquisition. Creating specific steps with clear goals for digital transformation can help remove doubt related to technology investments.

2. Get leadership buy-in

Leadership must be fully on board and communicate about how new technologies can affect and benefit everyone. Organizations should plan to gather key stakeholders, discuss steps needed to make big decisions, communicate the goals of the project across the company, and allow interests across the organization to work together in choosing the right technology.

3. Choose an agile ERP system

As the industry changes, businesses change, and your technology solutions need to have the capability to grow and adjust. Many legacy technology platforms are singularly focused – some handling fabrication, others only distribution, for example. Agile enterprise resource planning (ERP) systems can manage multiple functions such as flat roll, long product, and plate, to name a few. Systems need to be flexible enough to grow and evolve with the business so that it remains competitive, no matter what the end customer demands.

A digital-first approach to operations: The key to a successful future in metals

Industry 4.0 provides a digital-first framework for businesses to use technology and innovation as cornerstones of their growth.

Metals 4.0, part of this digital-first framework, is how a metals business adopts metals-specific ERP systems to revolutionize operations, navigate the supply chain, enhance recruitment ability, and more. Without a metals-specific ERP system, companies might be in danger of being left behind as supply chains require end-to-end coordination between operations to stay competitive in a constantly changing market.

Legacy systems and manual processes might be insufficient as companies begin to scale up operations over the next several years. With the help of a specialized team, a business can identify opportunities now and begin to develop and implement a road map for a metals-specific ERP system like Microsoft Dynamics 365™ to fully support the complex scenarios of the business. It can take up to 24 months to build the digital and physical infrastructure to bring new plants online – so it’s never too early to start laying the groundwork.

Metals-specific technology is the future of steel

When choosing the right platform to help combat the uncertainty of current and future supply chain challenges, you’ll want something that allows your business to diversify. Whether it’s diversity of products, geographic location, customer bases, or something else, a singular solution, backed and supported by an experienced team like Crowe, can help you run your business more efficiently.

A metals-specific ERP system supported by Crowe can help increase certainty

Dynamics 365 plus Crowe Metals Accelerator provides real-time insight, automation, and a streamlined business process so that your business can keep up with unpredictable market demands and build long-term sustainability.

Microsoft and Dynamics 365 are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

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Tony Barnes
Tony Barnes
Principal, Microsoft Cloud Solutions Leader