Distribution and Inventory

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Distribution and Inventory
Olympic Steel is one of the leading metals service centre operating in three segments namely pipe and products, speciality metals, and flat carbon products. The firm provides metals distribution and processing services to various customers. The specialty metals segment majorly focuses on the direct distribution and sale of fabricated parts, flat bar products, and processed coil products and stainless sheets (Olympic Steel n.pag). The carbon flat products segment, on the other hand, focuses on the distribution and sale of huge volumes of processed coil and plate products and flat-rolled sheets.
The firm’s major raw materials include aluminium and coated and stainless steel in the form of coil, flat-rolled sheet, pipe and tube, and carbon that is purchased from different primary metal producers. The firm usually maintains a significant stock of metals to ensure that customers get what they want within the required time-frames and to mitigate the effects of the frequent price changes in the metals industry. The inventory is based on market conditions, contracts with customers, and historical buying practices. In the recent past, the firm has entered into carbon and pass through nickel swaps to mitigate its customers’ risk of price volatility. The economic loss or benefit resulting from the changes in the value of the swaps is transferred to the customer after maturity. The sale of metal products by the firm is largely dependent on the purchase prices of raw materials.

The firm aims at sustaining supply relationships with international and high-quality metal producers and always strives to be the customer of choice for crucial suppliers. They utilise sourcing strategies that maximise the transportation economies of international supply bases as well as the quality. The firm is however not dependent on any supplier but instead purchase large quantities from producers in an efficient way. This strategy enables the company always to get the materials they need at competitive prices. It is, however, important to note that the supply base has in the recent past been consolidated, with only a few suppliers forming a large part of the local carbon steel market. The firm for example purchased around 43% and 51% of its materials from its largest suppliers in 2014 and 2015 respectively (Olympic Steel n.pag). Olympic Steel believes that though they have no major long-term supply commitments, they have maintained a good relationship with their suppliers.
The company has around 1,670 employees though it is not clear what their qualifications are. The company believes that its relationship with employees is satisfactory and this may be the reason no work stoppage has ever been experienced. Any prolonged downing of tools may, however, affect the operations, finances, and business significantly.
The firm, through its CTI subsidiary, keeps an inventory of rectangular, square, and round mechanical tubing; valves and fittings; aluminium, stainless, and carbon pipes; boiler tubing; and stainless and hydraulic tubing. The subsidiary keeps over 30,000 line items. Pressure components are also fabricated by the subsidiary before distributing to various markets.
Most of the firm’s customers are located in the southern, eastern, and Midwestern regions of the US though products are shipped throughout the country. The firm has an efficient delivery system in place as most of its customers are within a 250-mile radius of one of its units (Olympic Steel n.pag). Products are transported directly to customers through its in-house truck fleet which ensures a just-in-time delivery. Products to international customers are either shipped directly from the metal producers or to an intermediate processor and then by ocean carrier, truck or rail.
Works Cited
Olympic Steel, Inc. “Olympic Steel, Inc. – Annualreports.Com”. Annualreports.Com, 2018, http://www.annualreports.com/Company/olympic-steel. Accessed 27 Nov 2018.