Have you taken notice of raw material prices lately? Depending on which industry you're focused in, you may notice increasing prices, or you may see decreasing prices. You'll be glad to find out that you're not the only person out there being conscientious of how much money you're spending.
As seen on TTI Inc's website, "raw material prices have been on the rise and are impacting every company in the electronics supply chain." Now, this doesn't have to focus primarily on the electronics industry, as these materials are used in industries across the board.
Focusing in on Aluminum, Copper, Gold, Lead, Nickel, Oil, Platinum, Silver, Steel, Tin and Zinc - the website gives a nice graph of the impact of these material prices on the cost of connectors.
That being said, you can see there was a surplus back around November '08 through July of '09 and we've been steadily increasing ever since. Many industries are affected by this increase, including defense/military, aerospace, architecture, retail displays and storefronts, automotive, and more.
Now take a look at steel prices. The opposite can be said of this raw material, for the spike it took around April of '08 through December of '08 (around the same time as aluminum's downward spiral) was the highest steel prices had been in rougly three years. As for right now, steel prices are still relatively high according to the mean (excluding the peak stated above).
(Source: http://www.ttiinc.com/object/ME_Materials_Steel)
How about copper? A widely used material in automotive, architectural and more; has prices soaring as of late. Customers in this bracket have become weary of the high prices that started increasing back in January of 2009 and has made it up to $8,000 per metric ton as of late. This material, though expensive in general, has become even more costly to process.
How about copper? A widely used material in automotive, architectural and more; has prices soaring as of late. Customers in this bracket have become weary of the high prices that started increasing back in January of 2009 and has made it up to $8,000 per metric ton as of late. This material, though expensive in general, has become even more costly to process.
Rubber, a major resource for numerous industries, has climbed almost 74% this year after rising 92% in 2009 (Wall Street Journal, April 23, 2010). While it's supply is 'tight', says the Wall Street Journal, due to "wet winter weather in the rubber-producing nations in Southeast Asia". Lumber costs (construction costs) also take a hit and are up nearly 59%.
So what can we do?
It's inevitable that if your industry relies on these materials, you will need the materials. There's simply no working around it. But there are some options to how you can keep your processing cost-effective instead of paying high fees to get the job done.
1. Nest your material. As you can see in the image on the right, these parts have been tightly nested into the material to really make the most of the material (minimize drop/scrap). This method of manufacturing saves customers money by cutting down on material costs.2. Make sure your vendor shops around. Your job shop has loads of contacts where they can get pricing on material. Some of these shops have gotten material at times when material was cheaper and thus can save you money on your material. Other shops may have just gotten a new shipment in and paid a higher price for it. Make sure your job shop does their homework and gets you the lowest price possible. As a general rule at Fedtech, this is the way we make our projects work.
3. Combine your projects for higher quantities. If you think you'll need more of the parts that you are producing, let your supplier know. Usually when you produce higher quantities, prices will drop. Low quantities will provide you a higher price, so see if you can't combine this month's order with next month's order and save yourself the time and capital.
4. Produce your own files. Do you have a CAD/CAM whiz in the office, or some way to create a print of your project? If so, do it. You will save yourself the cost of a programmer engineer or estimator. Not only this, but your project will be easier to quote, and can likely obtain a shorter turn around time on your project(s).
In an economy where budgets are tight and every penny counts, make the most of your resources by following these four rules. It may not get you free manufacturing, but it can save you significant amounts of money in the long-run.
Have a great Monday!
Sarah
