Aluminum shipments rise, risk management becomes vital

Apr 30, 2012 | 07:00 PM | Gregory DL Morris

Tags  aluminum shipments, Brady Plc., Robert De Picciotto, supply chain management, risk management, OpenLink Financial Inc., Henry Bonner, PLS Logistics Services

Aluminum logistics companies have already reported a 20-percent increase in shipments so far this year. While that should be good news for the mills, it also is a problem—or at least a challenge—because low inventories mean little slack in the supply chain to accommodate unexpected changes.

Mills typically handle scheduling, loading and dispatching, but it is the consignees who pay the transport charges and they are putting pressure on suppliers to better manage those costs. As supply chain management is improved, risk management is the beneficiary, with better data available and more advanced systems to spot exposures and excursions.

"Aluminum companies are the furthest along within the metals sector in supply chain and risk management because they have had to deal with so many fluctuations in price," said Robert De Picciotto, chief executive officer of Brady Plc’s physical division, based in Geneva. "The aluminum sector has suffered from huge swings of prices down 40 percent and then up again. They have also been affected by the rapid and severe swings in the price of energy."

Even if industry analysts and service vendors consider aluminum, along with copper, to be ahead of iron and steel in supply chain and risk management, the entire metals sector is still lagging vs. other industrial and resource sectors. The oil industry is regarded as a leader in risk management, largely due to the global and highly liquid financial market options, while the chemical sector is cited as a leader in supply chain management.....

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