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When Nightmares Are Made Of Steel!

Freitag, der 27. Oktober 2017 | Francesco Grillo | Events, Branchennews, Steel Available

Leider ist der Eintrag nur auf Amerikanisches Englisch verfügbar.

Lin and Luigi, our client and supplier, are fighting together against the zombies in the steel industry! Building trust, throwing the unfair competition out of the market!


 

Our Top 5 Nightmares

It has been almost 2 years since we founded Steel Available, with the scope of creating a collaborative and transparent ecosystem within the industrial world. In our Google era (and in China in the Alibaba era), finding a supplier is not difficult. All the issues come right after, and many times it’s a real nightmare, and not only on Halloween! We have been involved in hundreds of RFQs, blacklisted already a few dozen suppliers (and some clients, to be fair).

It is now the time for us to share our Top 5  nightmares, and the lessons we learned. And we would love to hear your creepiest sourcing experiences!

 

 

1. Frauds and unfair practices [1]

Certain companies are as bad at forging fake documents as they would be at forging steel! To be fair, even well-established companies are not exempted from frauds, as the recent Kobe Steel scandal reminded us.

But even if everything is clear, and a contract is signed, the worst case scenario can happen: someone violates the procurement agreement. Maybe the proper item was delivered, but at a much higher price than agreed upon, or it was delivered three months later than promised. Disputes are never fun and when two sides can’t agree on the responsibilities, the client might have to change supplier. What if there is material in stock at the supplier’s premises, as per a long-term agreement? Buyers and suppliers can protect themselves by using purchase orders to keep track of exactly what was ordered, when it was due, and what the price was. Even if this has previously always been smooth, there’s a chance something might happen in the future that makes you wish you had a better process.

 

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2. Misunderstandings

We’ve all had procurement misunderstandings: a common mistake in the steel industry is not specifying the packaging of the products, or whether a coating or surface treatment was required. For steel pipes the easiest mistake would be to consider a quote by length instead of by weight. Misunderstandings happen frequently in procurement, which is why the best thing to do is to put any order in writing, and keep all the evidence. Finalizing orders on the phone, or even WhatsApp or WeChat, could cost a lot to both parties! And, if you feel there might be a misunderstanding, ask for clarification immediately.

 

 

3. Quality issues

As Louis V. Gerstner Jr. (IBM ex CEO) once said, “You get what you inspect, not what you expect”.
We all know production managers that got very frustrated because the procurement department purchased raw materials with poor quality, which affected the performance of their production. Quality issues even just on small-scale items might cost a company much, in terms of delays and ultimately on clients trust. When procuring an item, no matter who it is for, confirm the requirements with the people who will be using it.

 

 

4. Over promising, under delivery

Nowadays customers are demanding faster, almost immediate responses from customer service, which only makes sense given the increasingly fast-paced, mobile-ready world we live in. So companies are forced to act in a very competitive scenario. Let’s consider the lead time in certain urgent projects. Should you promise a short lead time to secure the order? Or offer a longer but more realistic one, risking the loss of the order to a competitor? As usual, it is all about trust. Trust is a one time gift; don’t break it. The more heavily you rely on your brand as a marketing strategy, the more firm you have to be with procuring from companies that complement your brand. That means doing business with suppliers and vendors that share your values.

 

 

5. Duplication of Procurement Efforts

Let’s not forget that often it is the client that doesn’t provide all the information or requirements needed for their order. It is important to prepare a checklist of all client’s needs, in order to avoid making mistakes or even just duplicating the workload of suppliers, and ultimately slowing down the procurement process.

In the case of revised drawings or technical specifications, it would be vitally important to keep all the actors in the loop.

 

 

[1] Unfair competition

For Wikipedia unfair competition in commercial law is a deceptive business practice that causes economic harm to other businesses or to consumers. The most common actions falling under the banner of unfair competition include:

 

  • Matters pertaining to antitrust law
  • Trademark infringement
  • Misappropriation of trade secrets
  • Trade libel, the spreading of false information about the quality or characteristics of a competitor’s products
  • Tortious interference, which occurs when one competitor convinces a party having a relationship with another competitor to breach a contract with, or duty to, the other competitor.

 

More in general, an unfair trade practice consists of using various deceptive, fraudulent or unethical methods to obtain business. Unfair trade practices include misrepresentation, false advertising, tied selling and other acts that harm a fair competition in the market. It can also be referred to as deceptive trade practices.

 

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If you want to have more information about the article or you want to share your opinion with us, contact us at .

Please notice that you might be interested in the technical articles we’ve published:

  • Open Die Forging & Closed Die Forging – What’s the difference?

  • Hot Rolled Steel, Cold Rolled Steel & Cold Drawn Steel – What’s the difference?

  • Tubes & Pipes – What’s the difference?

 


We are Steel Available, an online supplier relationship management and sourcing platform. We aim to connect suppliers and buyers from the heavy industry. We are developing the first ecosystem in the heavy industry which will allow clients to efficiently manage and automate their supply chains using web-based tools and services. Our goal is to reduce the hidden risk in value chains. We do it by providing the information that matters, from compliance to quality assurance, creating value for all stakeholders.

To get more information, please download our brochure.

 

Written by:

   

 

Francesco Grillo

Co-founder & CEO @SteelAvailable