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September 8, 2021

Procuring Forgings: Brokers v Buying Direct

There is a big difference between what a forging manufacturer can do to ensure success and what brokers do to put a good deal together – and the difference could cost you.

Technology provides the means to procure components like never before. You have the information and freedom to buy what and when you want, from whom you want to. Although the choice can seem as simple as Nike or Adidas, Starbucks or Dunkin', and John Deere or Cat, at the core of these decisions is really just preference – they are priced about the same and have about the same quality.  However, you can't put a forged component in this same purchasing category. There are many things to consider when purchasing a forging. These considerations are critical to the cost and the ability of the component to meet your requirements. So, understanding what you are buying is key, which is why there is a big difference between what a forging manufacturer can do to ensure success and what brokers do to put a good deal together – and the difference could cost you.

Functioning under the guise of a "contract manufacturer," brokers don't physically manufacture anything. Instead, their expertise lies in the business of drop shipping, logistics and outsourcing. Because brokers don't have expertise in manufacturing or producing forged parts, they don't have a need to staff engineering personnel to pre-engineered components. Instead, the primary function of a broker is to take your desired dimensions and shop them around to manufacturers, essentially looking for the lowest-priced provider. Because brokers work as middlemen looking for the cheapest way to produce a finished product, they are more like mediators between forge shops, machines shops, heat treatment facilities and customers. They'll arrange for only the purchase and delivery of components for you but might not give you vast options that could save you on overall price - or total cost of ownership. Essentially, you're committed to the decisions of a broker, which may not consider every aspect of your project or your business model.
On the other hand, working with an experienced forging manufacturer could result in finding a better way to produce your component. This better way could be to choose a more suitable material for your application or manufacture your parts closer to the final shape, which would enable producing your part more economically to save on material and downstream operations like machining, heat treatment, and shipping. 

Furthermore, when working with a forging manufacturer, the interest in your business is long-term. At Scot Forge, we value relationships and don't view your project as just the "one and done." Since our minimum order quantity is one, there is no project too small as long as your component falls within our minimum size requirements. Additionally, because Scot Forge has metallurgists in-house, along with the process and forge engineers, your component is more than just the lowest price option - it is cost-effective and reliable. By understanding what you value, we can determine how we can help meet your objectives, which allows us to find opportunities for adding more value. 
To support this thought, according to the Total Cost of Ownership Best Value Whitepaper, published by the University of Tennessee, even government agencies that traditionally relied on competitively bid "lowest price" policies have started to deploy Best Value concepts.  The example in the paper is of the rebuilding of the I-35 bridge in Minnesota. To balance cost, quality and timeliness as key factors in choosing the contractors that rebuilding the bridge. As a result, they selected a contractor with the highest price – yet had the overall Best Value resulting in one of the most successful bridge construction projects in history, winning dozens of awards and being erected in a staggeringly short timeframe of fewer than 18 months.

So, when it comes to forgings, finding a partner who understands your project will be far more cost-effective in the long run than working with a company that will put together the lowest-priced option. This is not to say there aren’t brokers out there that do invest in customer relationships and seek to understand the needs of the end-user, but working with a manufacturer such as Scot Forge will help ensure you get your parts to spec on time. 

 Learn more by watching our Forging Buying 101 videos