reliance-steel

Businessmodel of Reliance Steel

Customer Segments

Reliance provides a range of products and services to a large client base. According to its annual report, the Company has more than 125,000 customers across multiple industries, primarily serving customers across the following business sectors:

  • General Manufacturing, comprising various original equipment manufacturers from a variety of industries;
  • Non-Residential Construction, comprising various contracting and commercial development companies;
  • Transportation, comprising rail, truck trailer, and shipbuilding companies;
  • Aerospace, comprising various aerospace manufacturing and engineering firms;
  • Energy, comprising energy producers and transmission companies;
  • Electronics and Semiconductor Fabrication, comprising semiconductor manufacturers and commercial and consumer electronics producers; and
  • Heavy Industry, comprising agricultural, construction, and mining equipment companies. Reliance also serves customers operating in the automotive industry, primarily through its toll processing operations where the Company do not take ownership of the metal. While Reliance sells products directly to large manufacturing customers, the majority of the Company’s sales are made to small machine shops and fabricators, in small quantities with frequent deliveries.

Reliance primarily serves a domestic customer base in the US, which accounts for the majority of its business. The Company, however, also serves international clients, including across Europe and Asia Pacific.

Value Propositions

Reliance provides value to its customers in the following ways:

  • Its industry standing and reputation, with the Company established as one of the most reliable metals processing companies in the US, with a track record of providing high-quality products to a broad range of customers reliably and efficiently;
  • Its international sales reach, with the Company serving a large domestic client base in the US, as well as a range of customers form various industries across Europe and Asia Pacific;
  • Its specialist personnel and industry expertise, with the Company employing highly-trained specialist personnel across its enterprise, as well as a team of experienced industry executives;
  • Its extensive processing and distribution infrastructure, with the Company operating more than 300 metals service centre processing and distribution facilities across 39 states in the US and in 12 other countries worldwide; and
  • Its use of up-to-date technology systems, with Company employing state-of-the-art IT systems to manage its data and operations. ### Channels

Reliance operates a website at www.rsac.com, through which it provides information on its products, processes, and locations. The Company does not operate a digital sales channel or an online customer portal.

Reliance make sits sales through a dedicated in-house sales force, which interacts directly with customers. As of 31st December 2015, the Company employed approximately 2,080 sales personnel located across 44 states in the US and 13 other countries. The Company’s sales personnel are organised by division or subsidiary and are divided into two groups: outside sales personnel, who travel throughout a specified geographic territory and maintain relationships with existing customers and develop new customers; and inside sales personnel, who remain at the facilities to price and write orders.

Reliance provides services through its network of more than 300 metals service centres operates in 39 states in the US and in 12 other countries, including Australia, the UK, Belgium, South Korea, Canada, Malaysia, China, France, Mexico, Singapore, Turkey, and the UAE. Additionally, the Company serves clients through its network of subsidiary companies and affiliate companies, including Sunbelt Steel, Valex Corp, American Metals Corp, and Chapel Steel.

Customer Relationships

Reliance does not provide products or services to its customers on a self-service basis. The Company makes its sales through an in-house sales force that works closely with clients to establish the details of sales and distribution contracts. The Company consults with its clients over a period of time to ensure their individual needs are met, and employs sales personnel who are dedicated to maintaining existing customer relationships. In this way, Reliance seeks to establish longstanding relationships with its clients.

Reliance provides ongoing support to its clients. Customers are able to contact the Company’s various facilities and offices over the phone, or can make enquiries and place equerries with the Company through an online contact form. Alternatively, customers are able to interact directly with Reliance through its social media accounts, including with Twitter, LinkedIn, and Facebook.

Key Activities

Reliance is a metals service centre processing company. It provides a range of metals processing services and distributes a line of over 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium and specialty steel products, to more than 125,000 customers across a range of industries. The Company is also engaged in toll processing of aluminium, carbon steel and stainless steel.

Reliance operates an extensive network of metals service centres across more than 300 locations in more than 40 states in the US, as well as in other countries, including Turkey, Malaysia, Australia, Belgium, France, Canada, Singapore, China, Mexico, South Korea, the United Arab Emirates, and the UK. Its various metals service centres process and distribute only specialty metals.

Key Partners

Reliance works closely with a range of companies to ensure that it provides its customers with high-quality products and reliable services. These partners can be categorised broadly as:

  • Supplier Partners, comprising suppliers of raw materials, equipment, tools, and services that support the Company’s processing, distribution and sales operations;
  • Joint Venture Partners, comprising a range of metals companies with which the Company’s participates in joint processing and marketing activities;
  • Channel and Distribution Partners, comprising various distribution, logistics, and sales and marketing service providers that assist the Company in delivering its products and extend the reach of its in-house sales and marketing force; and
  • Technology Partners, comprising technology services providers and IT and communications companies that support and maintain the Company’s IT and technology systems. Reliance has two joint venture arrangements with non-controlling interests, including Oregon Feralloy Partners LLC which it owns in partnership with Oregon Steel Mills. The Company also owns controlling stakes in the following joint venture companies Acero Prime S, Feralloy Processing Company, FP Structural Solutions, Indiana Pickling and Processing Company, and Valex Corp’s operations in South Korea.

Key Resources

Reliance’s key resources are its processing facilities and distribution centres, its portfolio of metals products, its sales and marketing channels, its IT and communications infrastructure, its partnerships, and its personnel.

Reliance own and or leases a number of properties both domestically and internationally. This principally comprises the Company’s network of processing and distribution facilities across the US, as well as other locations across North America, Europe, Asia Pacific, and the Middle East. These properties are key to the success of the Company’s ongoing activities.

Searches of records published by the US Patent and Trademark office identified two patent applications in which Reliance or related companies are named as the assignee: ‘Shaped charge liner and method of manufacture’ and ‘Aluminum-containing welded grating’.

Cost Structure

Reliance incurs costs in relation to the operation of its processing and distribution facilities, the operation of its sales and marketing channels, the maintenance of its IT and communications infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 Reliance recorded cost of sales totalling $6.8 billion, and total operating costs in the amount of $2.00 billion. The Company’s operating costs related principally to warehouse, delivery, selling, general and administrative costs, which totaled $1.73 billion for the year.

Revenue Streams

Reliance generates revenue through the sale of various steel and aluminium products, which are distributed under sales and distribution contracts with companies from a range of industries. The Company organises its sales into five product categories:

  • Carbon Steel, including revenue derived from the sale of carbon steel plates, carbon steel structurals, carbon steel tubing, carbon steel bars, hot-rolled steel sheets and coils, galvanised steel sheets and coils, and cold-rolled steel sheets and coils;
  • Aluminium, including revenue derived from the sale of aluminium bars and tubes, heat-treated aluminium plates, common alloy aluminium sheets and coils, common alloy aluminium plates, and heat-treated aluminium sheets and coils;
  • Stainless Steel, including revenue derived from the sale of stainless steel bars and tubes, stainless steel sheets and coils, and stainless steel plates;
  • Alloy, including revenue derived from the sale of alloy bars and rods, alloy tubes, and alloy plates, sheets and coils; and
  • Other, including revenue derived from the sale of other metals products. In 2015 Reliance generated $935 billion in net sales, down on the $0.45 billion recorded by the Company the previous year. More than half of the Company’s sales related to its carbon steel products, with aluminium and stainless steel products accounting for 19% and 14% respectively.
Written on October 25, 2017