The True Cost Of Raw Materials: Supplier Performance Vs Initial Cost

It’s human instinct to try to save money and, if you’re a business that is striving to balance your costs during times of economic challenge, obtaining raw materials from the cheapest supplier may seem to be sensible. After all, with the same materials sourced for the lowest price, surely it’s better to boost profit margins and guard against financial hardship?

However if you’re considering which supplier of metals is the best choice for your raw materials, it’s important to understand that there are factors other than price that should be at the heart of your decision-making.

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Do Low Prices Always Reflect Value for Money?

It is a common fallacy that cheap prices always secure the best deal. Some would argue that, if you are purchasing large quantities of raw materials by weight, even minor savings in the price per kilo could generate a substantial savings once the entire purchase is scaled up. While this could be true on paper, opting to purchase the lowest per unit cost is a strategy that is laced with risk. Perhaps you should consider why the supplier is offering such good prices and what your total cost may be?

So, what problems might your business face by choosing a supplier based purely on the low unit cost of raw materials?

Payment Terms

Are you having to pay proforma or on restricted credit terms?

Delivery

Do you lose some of the headline price saving with high delivery and packing charges – or is the supplier charging you full price for a haulier that is unreliable?

Source

Where is the material from?   We all know the horror stories of material from less than reputable companies in China, India, or the Far East, with falsified certification, or even fabricated results in some instances.  Is the supplier able to supply the material certification with the quote?

Knowledge

Is the material you are buying from stock, or are you buying from a trader?   If you need advice, there will not be much point asking the latter – “buyer beware” can be an annoying answer to a technical query.  Similarly if anything goes wrong and you need replacement material, a trader may not be able to source the same cast, giving you material traceability issues as well as increased costs of having to buy a small one-off quantity, whereas most stockists will understand the need to buy small additional quantities.

Delayed Delivery Times

Is the supplier running a “cheap” operation, interested only in where the next sales order comes from?  Delayed deliveries can be troublesome and costly, disrupting production schedules and causing problems for your clients, with long-term brand loyalty a potential casualty.

Investing Early to Avoid Costly Complications

It is important to bear in mind that the price of raw materials are not the only costs that can be accrued during production. Purchasing cheap metals, which lack consistency or quality, may increase production costs overall, if remedial action must be taken to solve problems later.

Broder Metals Group: Success Built on a Commitment to Quality

At Broder Metals Group, we do not believe that being the lowest cost is the number one factor our suppliers want.  Yes, we have to be market competitive, but our clients also work to the highest  standards and, as such, demand outstanding customer service and performance. By providing a streamlined supply process, we offer an efficient, accurate, and cost-effective service that ensures our customers receive the highest quality resources when they need.

We do not stock  the cheapest metals from wherever in the world simply to obtain business.  We  recognise that reliable supply chains, outstanding quality, and consistent stock availability are central to your success. We will supply the right materials for your needs, and provide consistent, trustworthy service you can depend on, so get in touch today to find out how Broder Metals Group can support your business.

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Image source: Shaun Flannery

The True Cost Of Raw Materials: Supplier Performance Vs Initial Cost