Stocking raw material reduces both the risk and working capital for the customer. While the actual value of the raw material stock held by Premier fluctuates in accordance to what projects are being worked on, an average of £300,000 worth of bar, billet and cast raw material is the norm.

Managing director, Stuart Grant, explains: "If we buy the material the customer's risk is significantly reduced, as scrap becomes our liability. This becomes even more important as customers move towards higher value materials. In fact, the cost of the raw material could be half the value of the part when it leaves Premier, and as much as 35 to 40 per cent of the value of the finished component. Customers do not want to commit working capital to raw material that may not be required as a finished part for six to eight weeks when the value of the material is so high. It is a large working capital penalty to carry."

With economies of scale Premier achieves good prices and material procurement means the company can handle the project from the initial order right through to the completion of the part when required. At present there are no raw material supply issues and the company purchases a wide range of raw materials, from aerospace grade materials to castings. Even materials specifically for very high pressures for the compressed gas and air sector are sourced.

"We buy a small percentage of titanium but much more Inconel and high alloy steels, aerospace specified steel and aluminium, as well as high pressure material for the oil and gas sector," says Stuart Grant.

Long-term contracts have 12 or 24 month agreements set up with suppliers and Premier manages this on behalf of customers. "Effectively we have a final schedule and then decide how much material to pull in," says Stuart Grant. "Our larger customers work in this way; giving us the visibility of the production schedule. We take the parts right through from the raw material procurement to, in some cases, include heat or surface treatment. We take all the risk and carry all the stock, but it ensures that we get 100 per cent on time delivery, in full, because we are managing the supply chain at that point."

This schedule visibility helps Premier be more efficient on the shopfloor, which in turn helps with production costs. Says Stuart Grant: "Normally, working this way does not affect the price of the component, as long as the contract is firmly in place and we can see what we are trying to achieve."

Long-term contracts and ongoing strategic relationship rely on Premier's material supply service and they account for around 60 to 70 per cent of the company's turnover. "For the majority of these we source any treatment processes as well," he says. "As part of our AS9100 aerospace quality accreditation we have to collate information and keep an approved supplier register. We have an obligation to meet our quality standards and to ensure any external process providers are both capable and approved."

Customers in the oil and gas sector benefit from this stringent quality system, although their demands are often not as controlled. "There is certainly a difference in the level of certification required between the aerospace and oil and gas industries, even though the quality levels for the parts are very similar," concludes Stuart Grant.