Turning a tube and steel stockholder into a metal service center
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In this article, you'll uncover the driving forces behind why several steel industry players have transitioned into metal service centers. You’ll also delve into the strategies they’ve embraced to make this shift. Additionally, you’ll get to view a segment from the seminar titled “Laser Cutting in Structural Solutions,†presented by BLM GROUP and the Steel Promotion Foundation. The video highlights the journey of SICAM S.p.A., showcasing how they utilized Lasertube technology to transform their operations.
At the heart of this evolution lies a pressing need within the steel industry. Over recent years, despite fluctuating demand, production levels have remained steady. This has led producers to enhance their bargaining power by gaining more control over the distribution network. As a result, traditional distributors, particularly those of medium size, have found themselves caught between large conglomerates that integrate steel production and smaller entities thriving through localized operations and niche markets.
To maintain their autonomy from manufacturing, distributors began focusing on adding value to their offerings. They started providing comprehensive services ranging from design support to machining, ensuring their clients received fully processed, ready-to-use products. Consequently, numerous distribution groups dealing with tubing, sheet metal, and other steel products decided to augment their equipment fleets to boost profit margins and secure long-term growth opportunities.
The transformation process involves two primary strategic approaches for distribution firms. First, they can specialize deeply in particular market segments. Alternatively, they may broaden their service offerings while keeping a wide operational scope, allowing them to later concentrate on specific segments after securing a loyal client base.
One effective method to implement the first strategy is segmenting the customer database and meticulously analyzing historical orders. With this data, distributors can engage in meaningful discussions with clients to gauge their requirements—whether they desire further processing of purchased materials, whether they can handle these independently, or if they require design or production consultation.
After mapping out the downstream supply chain, businesses can determine the optimal strategy for directing future investments. Efficient resource allocation is critical to prevent wastage and ensure comprehensive coverage across all targeted areas. This might involve acquiring essential machinery, hiring skilled personnel, or expanding existing service portfolios.
When it comes to processing tubular products like tubes, beams, plates, angles, and various profile sections, contemporary Lasertube systems shine due to their adaptability, high automation levels, and productivity. These attributes make them an excellent choice for transforming distribution companies into full-fledged service centers.
For more insights into Lasertube solutions, check out our detailed resources.
Now, let’s take a look at a real-world example. In the video below, you’ll see an excerpt from a talk given by Massimo Fasolo, the Technical Department Manager of SICAM S.p.A.’s Laser Division, alongside Luca Prasso, Area Director at SICAM S.p.A., during a seminar hosted by BLM GROUP and the Steel Promotion Foundation. Their presentation reveals how SICAM S.p.A. successfully pivoted from being just a distributor to becoming a service center, thanks to the advanced capabilities of BLM GROUP’s Lasertube systems.
This case study offers valuable lessons for anyone considering a similar transition in the steel sector.