The mechanical engineering industry is facing an ever-increasing challenge: rising costs. These cost increases can have a significant impact on the profitability and competitiveness of companies in the sector. Although machine builders have proved resilient, rising costs and occasional shortages of materials still pose significant challenges. Material costs make up a significant proportion of total manufacturing costs in mechanical engineering, and any increase can directly affect margins. This forces companies to be proactive and develop strategies that help them manage these costs effectively.
Machine builders who successfully meet these challenges will reap the benefits of working more efficiently and maintaining customer satisfaction, even amid a constantly changing market. At Martin Stolze, a renowned mechanical engineering company, this challenge is recognised and addressed with the help of 3D CAD software such as HiCAD, which supports experienced mechanical engineering companies in efficiently meeting their customers' requirements.
Addressing Cost Increases at Martin Stolze
Marvin de Klerk, Finance Director at Martin Stolze, provides insight into how the company deals with fluctuations in material costs: "At Martin Stolze, we update prices in our existing product range at least once a year, with both price decreases and price increases taking place. Price decreases are often the result of more efficient production, while price increases are usually driven by cost increases passed on from our supply chain."
"At Martin Stolze, we update prices in our existing product range at least once a year, with both price decreases and price increases taking place. Price decreases are often the result of more efficient production."
Although the company supplies its products directly to the end user, it is not always feasible to pass on all cost increases. Martin Stolze is known for its quality, a criterion on which suppliers are also selected. The company maintains long-term relationships with suppliers that deliver consistently good quality and is reluctant to switch to other materials in response to price increases or scarcity, so as not to compromise quality. For almost all critical production raw materials, the buyer has a main supplier and a suitable alternative that are matched in terms of quality.
Inventory management and cost optimisation
For a manufacturing company like Martin Stolze, inventory management is a point of constant focus, regardless of rising costs. Finding the right balance between an inventory level that matches expected production activity in the coming months, without the risk of overstocking, is essential. Rising storage costs, such as rent, have increased the cost per square metre for storing inventory. As part of the monthly close, the company analyses stock development and determines actions to convert old stock into commercial products that meet customers' needs.
Investing in Automation and Efficiency
To continue to meet customer expectations and provide stable, reliable solutions, it is crucial that Martin Stolze continues to invest in automation, including the right hardware and software. In recent years, the company has undertaken several initiatives to improve the entire production process. The engineering department uses software tools such as Helios and HiCAD, which ensures better cooperation between engineering and project management, especially for project-based jobs. These tools also help in managing drawings and preparing bills of materials for production.
In the coming year, Martin Stolze will further invest in the optimisation of HELiOS, HiCAD and other applications. The tools the company uses contribute to an efficient production process with minimal material waste. Residual material from the production process is stored and periodically returned to parties that recycle it into new raw materials. This contributes to sustainability and cost control, which is becoming increasingly important in today's market.
Conclusion
The impact of rising material costs in the mechanical engineering industry is significant. Staying competitive and delivering high-quality products requires a combination of flexibility, innovation, advanced software, strategic thinking and automation. Companies like Martin Stolze that successfully meet these challenges will reap the benefits of working more efficiently and maintaining customer satisfaction, even amid a constantly changing market.
Through strategic inventory management practices, long-term relationships with quality suppliers, and continuous investment in automation and software, Martin Stolze manages to meet the challenges of rising material costs. This approach ensures that the company not only maintains its competitive position, but also continues to meet its customers' high expectations.
Going forward, machine builders who embrace these strategies and innovations will be better able to navigate volatile market conditions and reap the benefits that efficient and innovative manufacturing processes bring. Maintaining quality, optimising inventory and investing in advanced technologies will be key strategies for success in the dynamic world of mechanical engineering.
