In today’s steel market, mill allocations are tighter than ever. Supply is inconsistent, lead times are longer, and everyone is competing for limited tons. For VPs, that creates a brutal challenge: how do you manage constrained supply without putting your most valuable customer relationships at risk?

The answer isn’t guesswork. It’s strategy. Because when allocation pressure hits, how you prioritize, communicate, and act will define whether you come out stronger—or leave customers looking elsewhere.

The Reality of Allocation Scarcity

Let’s face it: when the mills tighten up, everyone suffers. You don’t have enough to go around. And even with strong supplier relationships, there’s no guarantee your forecasted tons will arrive on time—or in full.

This creates a domino effect across your business:

High-demand products are suddenly unavailable

Backorders pile up

Sales teams scramble for alternatives

Customers start shopping around

That’s the moment when VPs step in to make the hard calls—and protect what matters most.

Step One: Know Who Matters Most

Not all customers are created equal. In a constrained market, you need to prioritize based on more than just order size.

Use data to rank accounts based on:

Historical margin contribution

Lifetime value

Strategic importance (e.g. new market entry, multi-year contracts)

Reliability and payment history

AI tools can help segment customers in real time, so you’re not making emotional decisions when the pressure’s on. This creates a clear view of who gets priority—and who might need to wait.

Step Two: Align Sales and Operations

One of the biggest risks during allocation crunches is internal misalignment. Sales teams overpromise. Operations can’t deliver. And the result is a credibility crisis.

To avoid this:

Hold weekly alignment meetings focused on available inventory

Use AI-based demand forecasts to guide allocation planning

Set clear service-level tiers and communicate them consistently

This helps sales manage expectations and ensures operations is working from real data—not assumptions.

Step Three: Build and Communicate a Fair Policy

Customers understand that supply is tight. What they don’t tolerate is inconsistency. If one buyer hears “no” while another gets special treatment, you’ve just created a trust problem.

Establish and communicate a clear allocation strategy:

Share how you’re prioritizing orders

Offer alternatives (different specs, substitute products, delayed delivery slots)

Be transparent about lead times and realistic on ETAs

Customers don’t need perfection—they need consistency and honesty.

Step Four: Expand Your Options—Fast

While you’re protecting what you have, you should also be hunting for new sources.

Diversify mill relationships where possible

Explore toll processing or subcontracted services to buy time

Shift demand to underutilized SKUs or alternative specs

AI planning tools can simulate the impact of these moves, helping you reroute supply intelligently without overpromising.

Step Five: Protect Your Core with Pricing Discipline

It’s tempting to open the floodgates to anyone willing to pay more during a shortage. But short-term profits can damage long-term loyalty.

Instead, protect your best customers by:

Locking in pricing tiers for priority accounts

Offering bundled programs to encourage loyalty

Charging premiums only when justified by cost and lead time shifts

This approach keeps your top customers close, even when supply is tight.

Step Six: Learn From the Squeeze

Allocation issues aren’t going away—they’ll be part of the landscape for the foreseeable future. Use every tight cycle as a chance to get smarter:

Refine your forecasting models

Upgrade internal communication tools

Track customer behavior shifts during allocation windows

Invest in capacity planning tech that gives you a faster edge next time

Every squeeze is a stress test. The goal isn’t just to survive—it’s to come out of it more agile and resilient.

Final Thought: Lead With Clarity and Backbone

Mill allocations will ebb and flow. But your customer relationships? Those should stay strong regardless of the cycle.

That strength comes from how you manage pressure. Do you hide behind excuses—or lead with transparency? Do you panic—or prioritize with precision?

As a VP, your role isn’t to make everyone happy. It’s to make sure the business survives the tight times and thrives in the next phase. And that starts with knowing who matters, telling them the truth, and showing them you’ve got a plan.

Because in the end, customers don’t leave because you couldn’t deliver every ton. They leave when they feel like they don’t matter. Show them they do—even when it’s hard—and they’ll still be with you when the steel starts flowing again.