Reduce costs for steel construction: 5 Tips for 2020

The spend on steel construction is a significant part of direct purchasing costs for many companies in machinery and plant engineering. However, steel construction is also of great importance in terms of indirect purchasing costs.

Claim raw material price reductions

Especially when using high-alloy steels or castings, purchasing should always keep an eye on raw material prices. In particular, nickel, which is used in heat-resistant steels, is highly volatile. A fall in commodity prices should be used immediately as an argument for a reduction in purchasing costs. Appropriate data are collected and made available by the Federal Statistical Office. However, there are also various magazines and websites that prepare this data clearly, e.g.

Observe protective tariffs for steel products

At present, tariffs on steel and steel products are being increased rather than reduced worldwide. However, the pendulum will certainly swing in the other direction again. For this reason, you should closely monitor price increases from your suppliers due to protective duties.

Promote competition

Long-term supplier relationships reduce interface risks and generally have a positive effect on quality. Nevertheless, they should regularly compare their steel construction suppliers with alternative suppliers in order to keep purchasing costs low and to prevent supply risks. We are happy to support you in this matter. Make an independent cost comparison for your steel components now!

Observe indirect purchase costs

When reducing purchasing costs, direct costs are often taken as a matter of priority and indirect costs are hidden. At first glance, this results in a nice project result, but in the long term the costs increase again. Indirect purchasing costs can best be reduced by bundling and process optimization.

Bundling of request packages

There is a lot of potential to reduce purchasing costs in bundling enquiries with a few qualified suppliers. As a result, internal expenses and interfaces are significantly reduced through synergies in delivery, quality assurance and administration.

Observe transport costs

Many companies, whether customers or suppliers, consider transport costs to be secondary. A lot of potential is wasted to reduce purchasing costs. Most companies prefer that the supplier takes care of the transport. Only very large customers usually have frame agreements with forwarders.

For the suppliers the transport costs are costs they can forward to the customer. They will not invest exeptional efforts to lower them, unless they are included in a tender or relevant for the decision between two vendors.

Especially for small deliveries and pallet goods the price differences are sometimes enormous. Some forwarders can bundle these better than others and pass this cost advantage onto the buyer.

Although it usually pays off to organise the transport yourself, you should always consult your supplier. Some suppliers regularly deliver steel components from serial production to Germany or Austria and can offer very favourable transport conditions on their regular delivery routes.

Conclusion: Always pay attention to the balance of direct and indirect costs when it comes to purchasing costs in steel construction

The direct purchasing costs can be easily compared, but this is precisely why you should be careful here. Especially with simple steel components with simple calculation, one has to question whether the cheapest supplier really brings the lowest purchase costs permanently. The prices of steel and labor are quite transparent and if they are not comprehensible, then a supposedly favourable price will not be long to be maintained. This may be irrelevant for one-off requirements, but in the case of long-term projects, there is a risk that the supplier will have to increase the price, lowers the quality or, in the worst case, be unable to deliver at all.

The reduction of indirect purchasing costs, on the other hand, has the advantage that process optimization saves on ancillary costs that do not have a negative impact on the quality and economic performance of the supplier.