There is a new tool kit to much better analyze sales opportunities in the stainless steel market. It contains the Triad, which includes Artificial Intelligence + Industrial Internet of Wisdom + Industrial Internet of Things (AI + IIoW + IIoT). With AI, the performance of stainless steel can be monitored continuously. AI can be utilized to provide new meaning to accumulate data. The IIoW can maximize the value of the information that is derived. There is the tendency to buy at the lowest cost rather than the lowest total cost of ownership. With the Triad, the right choice becomes clear.
By Robert McIlvaine, President and Founder – The McIlvaine Company
Sales of stainless steel in the pump and valve industry exceed $10 billion annually. This represents 5% of the $200 billion market, which is in terms of Volume Adjusted Revenue (VAR). These revenues reflect the list prices of the product including the stainless-steel based sales in high-cost countries such as Europe, the U.S., and Japan.
To derive the actual revenue in a country such as India, the VAR must be multiplied by 0.6. The quantity of stainless steel is directly related to the VAR, so it is a much better tool than using actual prices and then trying to adjust to the quantity.
In the past, it was easy to underestimate the quantity of stainless steel purchased in India, China, and other low-cost countries since the reliance has been on revenue in dollars or euros rather than in the local currencies. The total air, water, and energy market, including filters, air pollution control, dryers, etc., is close to $2 trillion. Stainless steel purchases are close to $100 billion.
The quantity of stainless steel is best assessed with these numbers. Most of the stainless steel sold in the low-cost countries will actually be produced in the low-cost countries and sold at prices lower than the world prices.
However, since there are so many factors affecting the pricing, VAR is the reliable starting point.
Thanks to the Triad, it is now possible to determine the location of every pump, filter, valve, and compressor in a new plant. The conditions at that location are also known and the selection of the best material of construction can be assured.
Not only can the quantity be predicted, but the best material selection can be made thanks to the Triad. With AI and performance monitoring, corrosion and erosion of existing products can be analyzed on a continuing basis. This is important information for stainless steel suppliers and critical information for sales teams to show they have a superior product.
For the production and R&D departments, the performance information is critical in determining product improvements. Coupons are a poor substitute for actual performance. A classical case involves FGD scrubbers where C276 was originally used but was quite expensive. The 2205 coupons were tested for many months and performed well. However, in practice, there was buildup on the 2205 shells. There were crevice corrosion and entrapment of sulfuric acid underneath the deposits. The result was hundreds of millions of dollars in repairs.
The Triad is a new tool kit to help stainless steel suppliers make the best decisions about their products and to market them most effectively.