Supply Chain Constraints & the Metal Fabrication Industry

The current state of the economy has caused supply chain constraints to become a significant issue for businesses in a variety of industries. The metal fabrication industry is one such example. Due to shortages of steel, aluminum, and copper, metal fabricators are finding it increasingly difficult to obtain the materials they need to produce their products. This has led to increased prices for these materials, as well as longer lead times. In some cases, suppliers have even stopped selling to metal fabricators altogether.

The Ripple Effect of Global Shortage

These supply chain constraints have had a ripple effect throughout the metal fabrication industry. Many shops have been forced to either raise prices or reduce production in order to stay afloat.  In a recent survey of the metal fabrication industry, 56% of respondents stated their lead times were longer than usual, compared to a much more conservative 32% across the greater manufacturing industry.  However, fewer metal fabrication manufacturers are equipped with supply chain technology, enabling order automation, when compared to other sectors of manufacturing.

This perfect storm of events has put metal fabricators in a difficult position— facing longer lead times, higher prices, and in some cases, a complete lack of available materials. This has led many shops to seek out alternative sources for their materials, as well as new financing options to help them weather the current economic conditions.

Financing Your Solutions

If your metal fabrication business has been impacted by supply chain constraints, there are a few things you can do to mitigate the effects. First, it’s important to keep track of your inventory and know exactly what materials you have on hand.  According to the study by Aptean SaaS, only 25% of responding manufacturers believe in maintaining inventory of their most-used materials (beyond JIT manufacturing).

Managing Inventory

While tracking your existing inventory is common, knowing when and how much to order can be challenging with ever-adjusting lead times.  Applying technology to this role can alleviate the risk of excess inventory or running out before capacity is exhausted.  While costs for many raw materials and shipping are increasing, planning ahead may seem cost-prohibitive for smaller shops, however there are financing options to assist with closing the gap. Asset Based Lending is one such option. This type of financing can help metal fabricators leverage the company assets for a line of credit to purchase material and keep cash flow positive with the fluctuations in the marketplace. This can give them the breathing room they need to weather the current storm and come out on the other side unscathed.

If you’re a metal fabricator who is struggling to cope with supply chain constraints, we encourage you to reach out to us. We can help you secure the financing you need to keep your business up and running. Contact us today to learn more about our ABL financing solutions.