The global supply chain has come a long way in just the past few decades as logistics and transportation capabilities have rapidly evolved. Yet, many manufacturers find that it is still rife with challenges which must be faced head-on day by day. The importance of a robust supply chain cannot be overstated for companies of all kinds– but when it comes to precision materials, the need for security is all the more pressing. In order to mitigate these supply chain challenges it is imperative to first understand their roots, which is what we are here to inspect in today’s article about how supply chain issues impact the market of precision materials.
There are three key areas to consider when assessing today’s supply chain challenges: material supply and demand, transportation capabilities, and the costs associated with the two.
As far as precision materials go, the area of greatest concern is securing a supplier of true quality materials. As demand for a given material increases- take titanium, for example- the market will become more profitable for suppliers to enter. At times like these, it is especially crucial for material procurement and supply managers to choose their partners carefully. A supplier that is new to the field and has low prices may be enticing at first, but a well established supplier with higher rates will likely be able to provide higher quality materials with greater reliability and security in the long run.
Once a material supplier has been vetted to meet your requirements, the next consideration is how the material will get to you. Looking ahead, how will your product get from your facility to its next destination as well? With countless shipping options including ground, freight, air, and more, logistics now present more opportunities for supply chain flexibility and cost reduction than ever. It may be beneficial to partner with a supplier that provides multiple shipping methods as gas and energy costs fluctuate; likewise, providing the same variety of options to your customers can help keep costs down. The bottom line is that transportation costs like these must be considered whether you are supplying or procuring precision materials.
Find out how Boston Centerless is expanding its global reach while keeping costs low in the Q3 edition of The Precision Pulse Newsletter.
As previously noted, market fluctuations will have a significant impact on both the cost of a given material and its availability. We can once again look to titanium as an example of this in the realm of metallic materials. After remaining mostly stagnant from May 2024 to July 2024, the Producer Price Index of titanium sharply rose by 2.79% from July 2024 to August 2024 alone. This reflects an increase in global demand for precision materials in defense, avionics, and medical applications.
Similarly, the market for raw materials to produce precision plastics fluctuates with global supply and demand. According to the Consumer Supply Index by the U.S. Bureau of Labor Statistics, prices for fuel, gasoline, and natural gas have decreased over the past 12 months. This is in stark contrast to other utility items including electricity, which has notably increased. While this may bode well for petroleum based products like plastics in the short term, a future upturn in the market cost of petroleum goods may loom on the horizon due to consumption of raw materials and global tensions.
With all of this in mind, how does one begin to navigate today’s supply chain challenges? The key to sustainable success boils down to one thing: flexibility.
What many manufacturers get wrong is their approach to material procurement. In the niche of precision materials, it is easy to build a supply chain that is inflexible due to the limited number of suppliers to choose from. What we mean by this is that when a single crack in the supply chain begins to show, the whole thing is sure to fall apart soon after, as is bound to happen when one link in the chain bears all the load.
Another common issue comes in the form of inventory management, or lack thereof in some cases. While there is no one “correct” way for a manufacturer to control the flow of their inventory, having some measure of control that lends itself to their production demands is critical to success. Some manufacturers find that a self-managed system allows them to remain agile. Other manufacturers which may have less resources can turn to their suppliers or dedicated logistics specialists for a helping hand on this front.
At Boston Centerless, we work with a highly curated, yet varied network of raw material suppliers; so that when challenges do arise, we are well equipped to meet our customers’ requirements without interruption of service. We also specialize in a variety of inventory management programs suited to different needs including blanket orders, JIT systems, kanban systems, and more. In many cases, these capabilities allow us to act as a safety net for our customers’ precision material needs in spite of today’s supply chain challenges.
For more insights on the impact of today’s global market on the supply chain of precision materials, be sure to read the latest issue of The Precision Pulse Newsletter. In this quarterly publication, Boston Centerless aims to provide timely information on trends that may impact the global supply of precision materials. Along with industry updates and economic trends, The Precision Pulse Newsletter is a great way to stay up to date with what’s new at Boston Centerless- including our latest moves to stay nimble as a reliable part of your supply chain.
Stay up to date with the latest supply chain trends with The Precision Pulse Newsletter by Boston Centerless.