The metals industry faced one of the toughest markets ever in 2015 with weakened demand and poor prices. But dont tell that to Jemison Metals, which capitalized on continual improvements by having a strong year in the face of widespread adversity.
From increasing shipments 5.5 percent over 2014 levels to achieving nearly perfect customer retention rates to delivering as promised each and every time, the 2015 performance of Jemison Metals earned it the 2016 AMM Awards for Steel Excellence Service Center of the Year Award.
Our great retention and customer satisfaction goes beyond industry standards and calls attention to our ability to provide value-added services to our customers, said Jemisons Craig Mathiason, executive vice president, commercial. Initiatives to add value include:
Seamless service and execution through contract management technology;
Extensive industry knowledge and experience;
Effective cost-saving initiatives;
Supply chain optimization and competitive, transparent pricing;
Strategic purchasing programs.
Fully recognizing that quality and service are two fundamentals of a successful service center, Jemison, with headquarters in Birmingham, Ala., and five service centers in four states, also worked to achieve nearly perfect on-time delivery and quality metrics. While growing, Jemison has achieved nearly 98 percent on-time delivery. On quality, the company has outperformed industry standard quality metric of 4,000 defective parts per million (DDPM) with a company-wide average of 3,499 DDPM. Our excellence in operational efficiency in turn allows us to dedicate resources to enhance our technology and motivate our people. At Jemison, we believe our dedication to our systems has enabled us to grow our market share and our bottom line, and cultivate our employees to work hard and think smart, said Mathiason.
Jemison also uses different information technologies to help better manage its business and achieve a competitive advantage. Our cost modeling, mill/supply chain optimization and forecasting and inventory management technologies give us an incredible edge in understanding our costs and managing an SKU from a customers RFQ all the way to a finished product on a customers floor. We fully understand our costs in minute detail such as the cost difference from machine downtime from running 3,000 versus 5,000 pound lifts all the way to complex algorithms that compare all possible mill/service center combinations with their potential for millions of iterations to ensure we have the cheapest material costs on our floors, Mathiason explained.
Building on its information technology platforms, Jemison is also able to analyze trends in customers usages and forecasts that, along with market triggers and historical data, allows the company to ensure steel stock is on hand for its customers at all times. Our system allows us to plan several months into the future while any exceptions that occur on a day-to-day basis are immediately highlighted and receive speedy responses. All departments have immediate access in the cloud to all pertinent information such as part specifications, quality performance, usage trends, margin projections, yield performance and much more, Mathiason said.
All of Jemisons efforts to improve and better manage its business have resulted in metrics that would be impressive even in a strong market for steel sales. The companys gross margins (total sales less costs of goods sold, which include material costs, yield loss and delivery expenses) for 2015 improved nearly 22 percent over the gross margins recorded in 2014, which had a pretty strong steel market. In addition, Jemisons margin rate in 2015 improved to nearly 18 percent from about 13 percent in the prior year. Mathiason explained that Jemisons margin rate was on a steady up-trend throughout 2015 and ended the year as high as more than 21 percent.
With the market in a free-fall and no end in sight, we realized in early 2015 that our ability to manage our assets while still satisfying our customers would be a key to our success. While leveraging our technologies and certain operating and selling techniques, Jemison was able to significantly outperform the industry from an asset management perspective. In addition, for the second consecutive year, we experienced a zero-percent default rate and an overall decrease in current liabilities boosted by strong receivables management. We were diligent in our efforts to outperform in a down market, and I think we did succeed, Mathiason said.