10 Questions You Should to Know about Industrial Steel Wholesale

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Charlie Frye works with 20 different suppliers to get the parts and materials to build brewing tanks for his Portland, Ore., business Metalcraft Fabrication LLC. From valves to raw stainless steel sheets, every component needs to be just right and on time. But from shipments that never went out because of payment confusion to those that were sent with unfinished materials, Frye has learned what can go wrong. Now, he stays in close contact with suppliers to make sure his needs and the terms of payment and delivery are made clear from the outset.

Small-business owners should put together a new vendor checklist, advises Jason Bader, managing partner at The Distribution Team, a Portland, Ore. firm that specializes in inventory management and distribution consulting. "It really makes you a much better judge of who you ought to be working with."

Here are 10 key questions you should consider asking suppliers before doing business with them:

1. What are my payment terms and are they negotiable? One of the primary ways Frye sustained his business was by negotiating terms with his vendors. While payments for invoices are often due within 30 days, you can talk to your vendor about getting 60 or 90 days. Receiving a discount if you pay in advance should also be part of that discussion, Bader says.

Related: 10 Ways to Trim Shipping Costs

2. What will my total costs be? While a supplier might give you a quote for the cost of a product or materials, be sure to ask about other fees, says David Akers, founder of Cleveland-based Sourcing Office, which provides group purchasing and shared services programs for the public and private sector. For example, will you have to pay delivery fees, fuel surcharges or restocking charges for returns? "Have [suppliers] go back to the contract and identify any line item that is going to cost you money," Akers says.

3. Can you give me a liability insurance certificate? Your suppliers should provide written proof that they have adequate liability insurance in the event that their products or parts malfunction. Get a new copy of the liability insurance certificate each year to make sure the policy is being renewed, Bader advises.

4. Are you going to sell direct? If you're a distributor buying a finished product, you want to make sure your supplier doesn't sell it directly to the end user at such a sharply discounted rate that you can't compete. Sometimes manufacturers will use distributors to help get their brand established, then cut them out of the picture. "It's kind of the cardinal sin of supply chain if a manufacturer jumps directly to the end user," says Bader, but you'll never know unless you ask.

Related: 7 Ideas for 'Greening' Your Shipping Strategy

5. Can I have a guaranteed sell-through?
You don't want to get stuck with a finished product that flops or the parts and raw materials for a product that doesn't sell. Talk to your suppliers about their return policies. You want to negotiate what Bader calls a guaranteed sell-through, which gives you the opportunity to return unsold products or materials, whether for credit or cash.

6. What happens if materials don't arrive? It's inevitable that orders will sometimes arrive late. But what happens then? You want to find out whether your suppliers will offer a discount for goods that don't arrive on time or pay for goods they didn't deliver and you had to get from another source, Akers says.

7. What is my expected gross margin? If you're a distributor, ask the manufacturer how much you should expect to make selling particular products. For example, if your company generally averages a 32 percent gross margin and your supplier says you should be getting only 25 percent on its products, Bader says you probably don't want to carry them.

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8. Under what circumstance might prices change? You need to be prepared for suppliers to spring price increases on you. Ask them what determines a change in price. Is it tied to inflation or an industry index? If prices go up, how much notice will you receive? Conversely, if a supplier's own costs go down, will your price go down, too?

9. Do you have a volume rebate? Often suppliers offer incentives. You want to ask about discounts you could be eligible for. If you agree on a certain purchasing goal and reach it, find out if you can receive a rebate, Bader says.

10. When do I take ownership of the product? Does the product you ordered become yours as soon as it's delivered or after a certain grace period? You want your supplier to give you time to inspect goods and ensure they are in proper condition, Akers says. He advises including a delivery and inspection clause in your contract that allows three to five days to check out an order before taking full ownership.

1. Can You Build My Spec?

This might seem like a no-brainer, but a detailed spec sheet is the first and most important step in ordering the right equipment and finding a manufacturer. When your manufacturer knows your production volume, materials, process requirements, electrical needs and other requirements, they can build a system that fits seamlessly into your facility. The more specific your spec sheet, the more accurate the build. For this reason, one of the first questions to ask your equipment manufacturer is whether or not they can build the spec for you. 

• Make sure your spec sheet includes following:

   

• Production amount

   

• Electrical rating

   

• Environmental hazards (combustible dust, extreme heat, moisture etc.)

   

• Material hazards (caustic materials, respirable dust hazards etc.)

   

• Build material requirements (stainless steel, food grade, polyethylene etc.)

   

• Sanitation regulations

   

• Safety requirements

   

• Upstream and downstream system operations

   

2. Do You Have Any Questions?

It&#;s essential to ask your manufacturer the right questions, but it&#;s also important to address their questions as well. If the manufacturer doesn&#;t ask for any clarification about your spec or requirements, this might be cause for concern. Be wary of too many easy answers; make sure your manufacturer thinks about your constraints or potential obstacles as hard as you do. 

3. Are All Specifications In The Quote?

From the small details to the big-ticket items, all of your specifications should be written in the quote. If it&#;s not written down, miscommunications between sales and manufacturing can happen and you get might not be what you thought. There are just as many important questions to ask manufacturers about the quote as there are about the build itself. 

4. Is This Quote Accurate?

A lower price is tempting, but low-ball offers tend to pile on extra costs and frustration later on. Make sure you know the right questions to ask manufacturers about the price; how accurate is it? What could cause it to change? Are testing, delivery, and maintenance included? When comparing quotes, make sure all the same considerations are included on each. 

5. What Components Do You Use?

If you, your technicians, manager, or client prefer certain brands of controls or other manufacturer components, ask if these are available. Make sure your manufacturer uses off-the-shelf components; specialized equipment can make later maintenance, upgrades, and repairs much harder and more expensive. 

6. Who Can I Call About This System?

One of the best questions to ask manufacturers about your system is, who else uses it? Your manufacturer should be able to provide references you can talk to. When checking these references, make sure the system and process is the same. Remember that differences in the process, additional parts, or a system purchased more than five years ago might not be the same. 

In addition to information about the system, the reference can also tell you about the manufacturer. Consider the following questions for your reference: 

• What system and process do you have?

   

• When did you purchase it?

   

• Have you seen any problems?

   

• Was the purchase price the same as the quote?

   

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• Did the manufacturer provide maintenance or assistance?

   

• Was delivery on time?

   

• After purchase, was the manufacturer easy to get back in touch with?

   

7. What Testing Do You Provide?

Testing is the best way to make sure that your system integrates properly and completes the process without a problem. Factory approval testing should be available before shipping. The manufacturer should also be able to conduct ingredient testing to address any potential problems with bulk density, angle of repose, particle size, materials hazards, and more. 

Make sure you know the right questions to ask your manufacturer about equipment testing; when have they conducted this testing before? How much does testing cost? Is it written into the quote? 

8. Are You Certified?

It&#;s better to double-check that your manufacturer has required certifications and adheres to standards rather than find out later your equipment might not be up to par. 

Consider the following certifications and standards; 

• UL wiring and control standards

   

• ASME and/or AWS welding standards and codes

   

• ISO standards

   

• OSHA equipment safety standards

   

• IEEE standards

   

• Canadian, European Union, other international standards

   

9. What Service Do You Offer?

Knowing the right questions to ask about the service department will make sure good service continues after purchase. Do they have an in-house service department? How many technicians are there? Do they offer set-up and training? An extra investment in an in-house, top-notch service department can prevent costly downtime later. 

10. Can I Purchase Wear Parts?

The majority of your system should have a long, effective life, however some parts do inevitably wear down. Ask about sprockets, nozzles, replacement belts, screens, strainers, belt and valve calibration, etc. Addressing these concerns at purchase will reduce downtime drastically later. 

11. Will This System Age Well?

Durability isn&#;t the concern when it comes to system aging. If regulations change, new technology becomes available, or ingredients change, can the system adapt? Consider potential changes on the horizon, or industry upsets you&#;ve seen in the past. 

Can the system adapt to: 

• Stricter sanitation requirements

   

• Stricter safety requirements

   

• More precise measurements

   

• Changes to ingredient mixing

   

• Additional nutrient needs

   

• New software capabilities

   

• IoT integration

   

As the saying goes, the key to success is 90% planning and 10% execution. Once you know and verify that your manufacturer can and will build the system you need, the hardest and riskiest part of the job is done. Ask your manufacturer the right questions from the start and you can have confidence in your system when it arrives.

Having difficulty finding a manufacturer to make your product for your exact system? Contact us today to find out what we can do for you.

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