What Defines a Metal Service Center — Explained by MSCI
Choosing the right supplier in the metal industry means understanding the role they play in the supply chain. The Metals Service Center Institute (MSCI) puts it best—this excerpt defines precisely what a metal service center is and why it matters.
As a certified metal service center, ALMETCO aligns with this following definition in every aspect:
"Metals service centers are the key link in the supply chain for most users of metals in North America. Service centers:
- Buy from the metals producers (mills) in large quantities
- Warehouse the metal close to the customer
- Transform the metal into a form that can be used by the customer
- Provide services ranging from credit to just-in-time (JIT) inventory management and even full supply- chain management for customers
- Sell relatively small quantities to a very large number of customers.
Service centers are both the largest customers of the mills and the largest suppliers for most metal users. They are not metal procedures. While the economics of service centers have some similarities with that of the mills (e.g. higher prices ten to increase profits), there are also major differences of which investors should be aware. We believe that the long-term economic picture for service centers is brighter than that of the mills (particularly steel mills).
The original function of service centers was "break-bulk distribution," which involved
- buying a large quantity of metal
- cutting the metal into smaller lots
- selling the smaller lots to a large number of customers.
This is essentially the wholesale function. Although service center activity has grown far beyond this simple function, it does remain the core of the business. A closely related function is warehousing. Because metals are heavy and expensive to transport (particularly small quantities), inventory must be located close to the customer.
The ability to deliver metal to the customer quickly on short notice – the core of JIT – is a second reason why inventory needs to be located close to the customer. While it can be cost effective to shirone large coil to one location, it is cost prohibitive to ship many small quantities of metal to several locations over any great distance.
Hence, service centers maintain inventory in warehouses strategically placed about the country, from which they then sell to customers. These warehouses (also called stocking locations) are a key indicator of the size and scope of a service center."
This quote captures the full scope of what a metal service center does—buying in bulk, holding inventory close to customers, processing to usable form, and providing value-added services.
That is exactly what ALMETCO does. With over 75 years of experience, we continue serving as the critical link between metal producers and diverse industries—locally and internationally.
