The cost of completing a solar installation project continues to drop. Part of the reason is that component manufacturing changing from being outsourced to multiple suppliers to single sources.
Managing these complex relationships can be quite a challenge for the vendors that serve PV racking manufacturers. The very nature of the situation hampers on-time delivery goals and inflates costs.
The combination of multiple or even several suppliers doesn’t tell the whole story, though. What makes supply and replenishment so different for solar panel frame manufacturers vs. standard roll forming or extrusion projects? And what can you do to smooth it out?
Supply & Replenishment for Solar Panel Frame Manufacturers Vs. Everyone Else
What It’s Like Usually
Typically when a roll forming manufacturer works with a customer, it supplies a fairly consistent consumption profile. The roll former holds some inventory, and then replenishes in an assembly line-type fashion as the product is consumed.
That’s a fairly predictable, straight line, though it has its share of seasonality. In the most extreme cases you might have a 125-150% consumption rate during peak periods. In the slowest times, it might be 40-60%
As a roll form manufacturer comes to understand the average OEM customer, it learns when that curve goes up and down. It then manages the release sizes based on forecasts from the buyers. In Dahlstrom’s case, we also use historical data.
The goal, of course, is to maximize inventory and make sure we aren’t making too much and sitting on it for 6 months.
What It’s Like for Solar Panel Frame Manufacturers
With solar projects, there are some forecasts that exist, but it’s much more like supplying for a fast-paced construction project.
It's not something the roll forming manufacturer (or extrusion manufacturer, if that’s your thing) can develop a consumption forecast for. We might get word from a customer that says, “Here’s what we see coming for the next 3 months,” but the volume tends to be all over the map. As you know, one order may be 100 pieces, while the next is 10,000.
What also makes the forecast unique is that it never comes true. (See also: any construction project ever.) So, it’s a lot more tricky to make sure you have enough raw material when you need it.
Example time! Let’s say you’re planning a project that needs 20,000 parts. That’s a lot of steel, and you don’t want to buy it until you’re sure exactly when you’ll need it on site.
Unfortunately, the dates are rarely reliable. There are two culprits:
- The permitting process -- government red tape is always a lead-time killer
- Last-second shopping by the general contractor for solar panels
That second one requires some ‘splaining. In the solar industry, there’s often a surplus on solar panels and you can get a great deal. So, the contractor waits until the last second and gets his bargain. Good for him.
The problem for the roll formed component maker is that the type of panel you buy determines what kind of features need to be on the mounting parts (holes, etc.) and spacing requirements for the most efficient use of the available area. So if Joe in Purchasing just found 100,000 panels in surplus, the roll former has to shift with him too. It has to react, get that steel, and program the component with the appropriate hole punches.
Hole patterns and part length are different for each solar project, so the roll former never gets into any groove. The engineers have to be careful, even though the project is often expedited.
Other Quirks for Solar Panel Manufacturers
This isn’t meant to be a sob story for the parts supplier -- there are struggles on both ends.
You need a supply chain of raw materials with plenty of capacity. Problem is, that’s tricky in the metals market, especially when there is price volatility.
- When do you buy?
- How much do you buy?
- How long will you need to hold it?
Also, the roll former ships directly to the people putting these components on the roof or ground. Those people are using equipment that’s expensive to rent, not to mention you have to pay them too. That's a lot of cost per hour waiting around to receive a component shipment if you’re not on time.
Here are a few issues we’ve seen, along with potential fixes.
You need to have a lot of product available on short notice. But you don't want to hold a lot of extra stuff you won't use. So, what do you do?
Use a metal type and thickness that’s readily available. This means your metal service center of choice keeps it in stock regularly.
If you order a special thicknes or hardness, and you have a high order volume of that raw material, you’re on the hook for a lot of obscure stuff. Eventually you’ll get an invoice if you don’t use it in a timely manner.
This is less of an issue if it’s a metal that service centers always have on hand. In recent years, 50 KSI and 80 KSI steels have been stocked more readily because its hardness is popular in the solar industry. Remember, those panels hold snow (in most of the U.S.) and are subject to high winds, so most solar racking manufacturers use higher strength steel.
Offloading the shipment and the timing of installation at the job site is a pain.
Approach shipping strategically and in advance. Will the components be shipped together, or will they be delivered in smaller, staggered shipments that are more easy to manage on-site? Remember, components shipped all at once need to be stored on-site or nearby until it’s time to use them.
Another point: When delivering solar panel mounting rails or other custom solar panel shapes, the packaging quantity is unique to that particular job site. This is unlike typical OEM Kanban replenishment systems, where, say, every bundle will have 100 pieces in it.
Solar projects are a little harder to package for the roll forming company. This is because Joe in purchasing wants, say, 114 pieces and no more for the Arizona job site.
At Dahlstrom, for example, we keep a bundle sitting open so we can quickly get the odds and ends you need (in this case, an extra 14 pieces). Your supplier must also be careful with that odd batch to make sure it ships safely.
Meanwhile, on your end … consider that you usually need a few extra solar structure components anyway. Someone drops one, a few get misplaced -- things like that. If you let your manufacturer round your order off to, say, the nearest 20, it’ll make packaging faster to deliver, cheaper, and more easy for you to manage on-site.
Anything Else You Can Do to Grease the Supply Chain?
A great supply chain requires no weak links. Here are some other steps you can take to keep things moving:
- Select a metal component manufacturer that offers a value-added supply chain solution. Evaluate suppliers based on industry expertise as well as total cost of doing business (not just initial part cost). By “value-added” we mean ease of purchasing, trusty engineering assistance, finishing services, and strategic shipping.
- Be in constant communication with your roll former about the project’s latest development. This should start when the project starts -- get us the component specs as soon as possible.
- Make sure your engineering team designs flexibility into the product. You’ll save yourself a hassle if your design fits as many different roll form profiles as possible.
The New Frontier of Supplier-Developer Relationships
Whether you like it or not, your project’s success depends on others -- suppliers that can add value beyond a cheap per-part quote.
Just 10 years ago, the joining of the solar panel and roll forming industries was like the Wild West. Now the solar industry better understands metal market pricing, and roll forming companies have figured out inventory management considerations.
That’s not to say things are perfect. If you have concerns about roll forming and your supply chain, drop us a line. It doesn’t cost anything to ask a question!
There are six words that can quickly ruin a business: “That’s how we’ve always done it.”
Metal is in style. Each metal creates a different aesthetic, meshes well with other materials, and is highly functional for a variety of applications. Metal is striking, enduring, and practical - just like your design.
When it comes to roll forming cost, if price is the battle, total cost of ownership or -- TCO -- is the war.
TCO is an analysis of the complete life cycle of your purchase. The number includes every phase of ownership.