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Significance of Working Capital Management for MSMEs
How SCF is better than other financing options
Why SCF is synonymous to easy financing
How SCF is Transforming MSMEs in B2B Industries
Make your business credit ready through SCF

Expert Insights You Should Know for Procuring Steel Billets in 2024

April 3, 2024
min read

Steel billets are becoming increasingly important for India's plans in manufacturing and infrastructure growth. However, the process of Raw material Procurement, like Steel billets, is a bit tricky due to uncertainties in both local and global supply and unpredictable policy changes. As we get closer to 2024, understanding different perspectives can help Indian companies make smarter decisions while procuring raw materials.

Where are Steel Billets used?

Steel billets have unique qualities that make them essential for a wide range of applications. From meeting the complex demands of automotive engineering to the sophisticated requirements of aerospace technology, these Steel Billets prove absolutely necessary.

Whether the goal is crafting something lightweight yet robust for aircraft frames or fashioning a component with the flexibility essential for piston rings, Steel Billets stand out as a compelling solution.

Steel billets are a dependable option in the world of materials and engineering. They're good at meeting the needs of industries that want both strength and flexibility. Usually, they look like long rectangular bars with a square shape – the kind you find in places making TMT bars, steel wires, and such. The type of steel used can be different, like mild steel, carbon steel, alloy steel, stainless steel, and more. What you pick depends on what you're planning to use it for.

1. Local Supply Will Tighten Further

As India's need for more infrastructure grows, there might not be enough steel billet capacity within the country by 2024. Private mills are working pretty much at full capacity (90%), and new projects are making it more competitive to procure steel billets. If you're procuring, it's a good idea to think about possible delays, allocation problems, and when it might make sense to diversify suppliers for steel billets in your plans for 2024. It's a situation worth keeping an eye on during raw material procurement. 

2. Supplier Development to Counter Supply Chain Disruptions

The supply chain nowadays is pretty complex, making it more prone to disruptions. One significant issue is the lack of supplier development. To tackle this, businesses need to diversify their suppliers and plan ahead for alternative sources in the evolving raw material procurement landscape.

This helps deal with supply chain challenges and reduces risks that could delay product delivery.

Procurement professionals, considering things like inflation and geopolitical issues, should put effort into finding and bringing in alternative suppliers to keep operations running smoothly.

According to a 2022 study by Ernst and Young (EY), 62% of industrial companies have seen big changes in their supplier base in the last two years. Those who widened their supplier network and diversified where they sourced from found their supply chain to be more resilient. This trend is expected to continue into 2024, showing how crucial supply chain resilience is for companies.

Besides just adding more suppliers, there are other ways to diversify, like using different logistics methods or spreading suppliers out geographically. The main goal in diversifying the supply chain, no matter how it's done, is to be more resilient in the face of uncertainties. 


3. Use Consolidated Raw Material Procurement Platforms

Streamlining the Raw Material Procurement process, such as steel billets, by using consolidated platforms has several advantages. When businesses centralize this process, they can significantly improve their operational efficiency and save costs.

By bringing together the purchasing of raw materials on a single platform, businesses can negotiate bulk deals. This means they can buy larger quantities at once, taking advantage of economies of scale. Essentially, the more you buy, the lower the average cost per unit, leading to cost savings for the business.

Additionally, centralizing raw material procurement allows businesses to establish long-term partnerships with suppliers. Building these relationships is beneficial for both parties. Suppliers gain a stable and consistent customer, while businesses secure a reliable source of raw materials. This stability is particularly crucial in industries where a steady supply of materials is essential for continuous production.

4. Supplier Qualifications

Carefully assessing raw material suppliers is crucial for a dependable and top-notch supply chain. This includes a detailed qualification process that looks into production capacities, technology, and financial health. Certifications like ISO-9001, metrics such as credit ratings, and past performance evaluations play a vital role in forming reliable partnerships with suppliers.

The aim is to guarantee operational sustainability, confirm adherence to quality standards, and evaluate the financial stability of the supplier. This thorough evaluation process aids businesses in building strong and lasting relationships with suppliers, promoting a reliable and efficient supply chain.

As we look towards 2024, procuring steel billets in India will become more complex due to tightening domestic supply and unpredictable disruptions.

Businesses can tackle these challenges through strategies like supplier diversification to improve resilience, leveraging consolidated procurement platforms to streamline purchasing and get bulk deal savings, and thoroughly vetting supplier production capacity, finances, and certifications to ensure reliability.

With thoughtful preparation and supply chain risk management, companies can secure the steel billets they need despite the turbulent landscape. By implementing expert recommendations around supplier relationships, centralized purchasing, and qualification processes, businesses can set up an efficient and sustainable steel billet procurement framework for the future.

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