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 steel frame manufacturers vs. standard roll forming or extrusion projects? And what can you do to smooth it out?
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.
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, extrusion manufacturing) 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.
For example, 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:
That second one requires some explaining. 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 systems (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.
This isn’t just a problem for the parts supplier -- there are struggles on both ends.
You need a solar power supply chain of raw materials with plenty of capacity. Problem is, that’s tricky in the metals market, especially when there is price volatility.
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 thickness 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 steel 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 easier 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 easier for you to manage on-site.
A great supply chain requires no weak links. Here are some other steps you can take to keep things moving:
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.
Do you have questions about how you can streamline your roll-forming costs? Check out our guide for more information:
(Editor's note: This blog was originally published in September 2019 and has been recently updated.)