Customer supplied material makes sense in so many ways. This is particularly true in the crazy steel industry of 2022. Piping Supplies has been machining pipe flanges and custom made parts for the pipe, valve and fitting, PVF, industry for over 50 years. We have seen our share of market ups-and-downs. Nothing compares to the steel pricing we are seeing today.
All raw material from forgings to plate to bar stock are at all time high prices. And, the prices change daily. For the past year and a half it is common to get a price quote on material which state the price of the material is only good for ONE DAY. How do you price items out in this environment? Piping supplies is the expert when it comes to making pipe flanges so we understand the increased problems for our friends building things with the products we machine. That is why customer supplied material to us, the machine shop, makes more sense than ever.
Bigger is Sometimes Better
Piping Supplies is a small machine shop by most international standards. Being small has it’s advantages like speed, adaptability and implementing the latest machining techniques. Buying raw material at bulk rates is not our strong point. Most of our customers buy much higher volume of raw steel than we do. Therefor, they get better pricing. Why not buy the material you need machined yourself at a lower price and have Piping Supplies machine parts to your specifications? This makes sense and saves you money.
Traceability of Material
Most of our customers consider traceability of all the material on a job just as important as having the parts made correctly. Traceability of metal parts is through heat numbers. Heat numbers are assigned by the company who made the raw metal and is transferred to all items made from it. Piping Supplies assures heat number traceability through our Quality Assurance Program. Raw material is received and checked for heat number-to-MTR matching. The heat number is then put on all shop orders and parts travel folders while the steel is processed through the shop. Finally, the heat number is permanently marked on the finished pieces with all other required identification. A way to insure a subcontractor, like Piping Supplies, is using the correct material is to purchase it yourself and have Piping Supplies provide just the machining.
Getting The Best Price
Raw metal prices have been very volatile. Our cost to machine items have not changed much. The factors which go into machining a product are relatively stable. Our mortgage has not changed. Electricity and other utility costs are pretty stable. Machine shop employee pay rates have always been high so that has not changed. A lot of times, we make the same amount of money per hour in the machine shop with the only variable being the raw material cost. By providing customer supplied material you have better control over the cost of the products you buy. Also, you can be sure the contractor doing the work is not marking up the raw material as well as charging for their services.
In Conclusion
Supplying raw material to Piping Supplies for machining will be more work for you. But, the benefits listed above far outweigh the costs. Consider customer supplied material for your next project. Worst case scenario is it is too much trouble and we go back to providing the steel and machining quoted together.