RMDAS
Metals
The Challenge
Any company involved in the buying or selling of ferrous scrap knows that it lacks transparency and price visibility. Ask 10 different companies, and they’ll give you 10 different prices of what they feel is the current market for a given commodity.
The price discovery process is archaic and incredibly challenging, given the volatility that exists in the scrap markets today. For information, most companies turn to industry publications, yet these are often unreliable, given their survey-based approach to collecting pricing information.
These companies need accurate and timely price information, based on actual order transactions, not guesses.
A nationally recognized steel producer wanted to achieve some objectivity in the process, get more accurate starting prices and obtain the information needed to be competitive.
It found the answer it wanted with MSA.
What Did MSA Do
MSA’s Metals and Advanced Manufacturing Division recommended that the company take advantage of our Raw Material Data Aggregation Service™, RMDAS™.
RMDAS offers this major steel producer several benefits
- Improves the company’s buying performance to lower the cost of goods sold in an extremely competitive environment
- Provides access to accurate price and volume data to help determine what prices to offer or accept for a particular commodity from a supplier
- Establishes a more accurate starting price for each grade of ferrous scrap that it buys, giving a reasonable place to start negotiations
- Shows weighted average price and volume data in other geographic and product groupings, regional availability and competitive market forces
- Represents over 65% of ferrous scrap purchased by steel mills in the U.S. in geographic regions
- Forms the basis of long-term pricing arrangements
- Provides quick and meaningful comparative online graphs to benchmark the company’s performance using the powerful online reporting system
- Offers a ‘score card’ to determine how the company’s prices compare with other regions and product groupings
- Provides access to participants to weekly price data for the RMDAS index commodities
- Offers Flash Reports that show regional price and volume trends
- Acts as a reasonable modeling tool for SOx compliance
- Shows prices and availability of alternative grades for mix changes that may reduce costs
- Allows the company to track each of its locations against regions, product groupings and individual commodities
The Results
- RMDAS has helped the client improve buying performance and reduce raw material costs in a highly competitive market.
- Transaction-based data provides the objectivity and accuracy the client needs, offering statistically reliable insights.
- The steel producer now has the data required to better analyze buying strategies and understand competitive activity.
- With improved visibility, the client enhances purchase planning and identifies opportunities to make smarter buying decisions.
- RMDAS enables trend identification, monthly strategy adjustments, and real cost savings by optimizing commodities and charge mix.
