Above: By dispatching bar on a schedule from one of its three locations, Summit’s tailored inventory stocking programs provide customers material when they need it.
With a solution-based approach to tailoring inventory programs, Summit Steel ensures customers never run out of stock
March 2013 - Like any business, the steel industry is based on cultivating and sustaining relationships. It’s not just about selling a service. By navigating ups and downs with customers, suppliers can adapt to fluctuating needs. Certainly, technology makes those aspects of doing business easier. But no amount of bandwidth or emails replaces a look in the eye, a firm handshake and doing the right thing to maintain a relationship.
Summit Steel, Chagrin Falls, Ohio, balances old school customer commitment with advanced products and services—a balance the SBQ bar supplier constantly calibrates as its customer base evolves. Its business philosophy is simple.
“Do unto others [as you would have them do unto you],” says Ross Bushman, president at Summit Steel. “We try to under-promise and over-deliver. We pride ourselves on the quality of our steel.”
Since it opened in 1985, Summit has supplied all standard AISI grades of special bar quality carbon and alloy steel in hot-rolled and the majority of its cold finishes for machine shops and manufacturers. Most of them are in the Midwest. It sources the majority of its steel from qualified domestic mills.
In late 2011, Caterpillar Inc. approved Summit as a steel bar supplier, opening the door to new business. About six months later, Summit expanded its services to the Houston area to grab a share of its many steel-hungry markets, including agriculture, energy and transportation. (See “Bar in the Lone Star State,” page 45.) The company’s efforts to expand in the face of uncertain economic times is a positive indicator. Of course, being a smaller company lends itself to agility (although Summit is growing and adding staff as needed). Summit can adjust strategies quickly to optimize customer service for any supply scenario.
“We’ve grown our workforce as opposed to reducing it or stagnating it,” says Joe Baudo, Summit’s COO. “And that speaks volumes for our company and for what we’re doing here.”
In 2011, Summit was contacted by a prospective customer—a shop on the East Coast that machines transmission parts for a major OEM. Summit went to work and began supplying SBQ bar stock.
“We were pursuing some new projects with Caterpillar, and the timing couldn’t have been more appropriate,” says the shop’s logistics and materials manager. “Summit’s proactive and knowledgeable approach to the impending project played a large role in the awarding of business.”
Among the material Summit provides is tube and bar in a range of sizes that the shop mills, drills, faces, turns and hobbs (making splines for gears), depending on the part. To optimize the shop’s machining operations on one part that required drilling out its center, Summit provided a tube alternative to reduce processing time because bar stock would’ve taken too much time to drill.
“By offering value-added solutions, we’re taking an interest in the customer, what he’s making, how he’s making it and offering alternatives to benefit the customer at that point or down the road,” Bushman says.
Working with large OEMs, although they’re a strong source of business, can subject suppliers to volatile stocking schedules. As demand ebbs and flows, it can be hard to predict how much bar a shop needs and when. However, Summit ensures inventory is ready with custom stocking programs tailored to each customer’s schedules.
For instance, if a shop uses a certain size and it buys 40,000 pounds of it in the course of a month, the customer might not have room to take in a whole truckload of steel. In that case, Summit will buy the material and keep it warehoused for the customer at one of its locations in Cleveland; Chicago Heights, Ill.; or Houston, says Bushman.
“When the customer needs another 5,000 pounds, we get it on a truck and ship it just-in-time,” he says. “They get the benefit of buying the larger quantity and having it available when they need it. It keeps their costs down, allows for more space in the shop and eliminates the need to warehouse anything.”
For the machine shop, this has come in handy. It keeps Summit updated based on the unstable stocking schedules its OEM customer dispatches to the shop. Regular communication is key, and Summit’s representatives have approached the tailored service with integrity and strong content knowledge, the manager adds.
“The customer service at Summit does not disappoint and keeps us looking their direction when new projects are introduced,” he says.
Summit’s use of the Golden Rule as part of its business philosophy makes sure no needs go unmet that would prompt a customer to seek another distributor. Its success is a byproduct of its commitment to both new and established relationships.
For about four years, Summit has supplied high-quality cold-finished bar to another customer—a U.S. manufacturer of camshafts, transmission gears and other components for high-performance motor vehicles. The manufacturer had issues with delivery times from another long-time supplier.
“After we qualified Summit, they took the initiative with their stocking program so we have material when we need it,” says the manufacturer’s purchasing agent. Now, Summit supplies about 80 percent of the manufacturer’s bar material, which includes 4140 alloy and 4150 alloy bearing quality steel, as well as 8620 bearing steel.
According to the purchasing manager, Summit has taken its stocking program another step further. With other suppliers, he says, he has to provide them a projected quantity and a purchase order in advance for an amount he can’t necessarily forecast.
Summit can forecast the manufacturer’s needs using its historical data of past material use. It’s a win-win for Summit and the customer because some of its more popular bar items would likely find a home with another customer if the manufacturer had a lull in its in-house demand.
“Their program makes my job easier. I never have to worry about stock,” says the purchasing manager. “I can give more focus to other areas of my work that I couldn’t before.”
As with the machine shop, constant communication between Summit and its customers keeps the pipeline primed to deliver material.
“Any time he needs something released, we release it,” says Baudo. “We manage and customize our inventory accordingly. I don’t think we’ve ever run out of stock on him.”
Such attention to detail is where material suppliers like Summit earn their stripes, and ultimately, a customer for life. MM
BAR IN THE LONE STAR STATE
In April 2012, with its first stock of bar on the ground, Summit Steel planted its flag in Houston. Chagrin Falls, Ohio-based Summit has had customers in that region for years but didn’t have a physical presence in terms of warehousing and staff. Now it does, serving not only Texas but also the states bordering it.
Summit saw an opportunity to develop more relationships in industries such as energy, agriculture, transportation and the ancillary manufacturers spurred by their activity.
“You name it, the markets are there,” says Joe Baudo, COO at Summit Steel. “We’re not just someone on the other end of the phone. We like to shake the hand and build trust.”
Summit is ramping up its full range of sizes in SBQ, hot-rolled, forged and rough turned bars, as well as a wide array of cold-finish stock. It offers the same value-added and solution-based services like finishing, heat-treating and CTL processes there as its does at all of its locations.
“One thing about Houston we’re noticing is people need material same day or next day,” says Ross Bushman, president of Summit. “So we’re building up our supply to serve customers rapidly for just-in-time orders.”
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