In the world of steel and building materials, it’s tempting to chase volume. Big orders feel like big wins. They keep machines running, help you hit revenue goals, and satisfy the urge to “stay busy.” But as any seasoned VP will tell you—volume doesn’t always mean profit.
At some point, every steel VP faces the critical decision: when to chase volume, and when to hold the line for margin. Drawing that line can mean the difference between healthy growth and a bloated, break-even operation.
The Volume Illusion
On paper, volume looks great. It fills your schedule and keeps headcount justified. But not all tons are created equal:
Some come with wafer-thin margins.
Some require complicated processing.
Some tie up your best capacity at the expense of more profitable work.
If you’re not careful, you end up burning resources to feed low-value jobs—while high-margin opportunities go underserved.
The Margin Mandate
In today’s tight market, where costs are volatile and capacity is constrained, margin needs to be your north star. That doesn’t mean ignoring volume. It means filtering it through a smarter lens.
The most effective VPs ask:
What’s our true cost-to-serve on this job?
Will this order improve our gross margin per hour?
How does this job affect our ability to serve other, more profitable customers?
These aren’t just finance questions. They’re strategic decisions that shape how you run your business.
Understanding Cost-to-Serve
Cost-to-serve analysis is where many VPs find hidden gold—or hidden landmines. AI tools can now model the full impact of a job, not just its price:
Labor hours
Changeover time
Freight complexity
Packaging requirements
Customer service load
You might find that a high-revenue customer is actually one of your worst-performing accounts. Or that a mid-sized job with tight specs consumes twice the capacity of a larger, simpler one.
When you see the full picture, margin clarity improves dramatically.
Segmenting Your Customers and Orders
Not all volume is bad. But it needs to be segmented and managed with intention.
Strategic Volume: These are high-value, long-term accounts where volume helps anchor your plant utilization. These can justify aggressive pricing.
Transactional Volume: These are one-off or short-term orders that should only be accepted if they meet clear profitability thresholds.
Loss Leaders: Sometimes you take on low-margin work to win share or unlock future business. That’s fine—if it’s strategic and temporary.
This segmentation allows your sales and operations teams to prioritize with clarity—and avoid chasing every ton like it’s gold.
Using AI to Balance the Equation
Modern AI systems give VPs real-time visibility into which orders drive margin and which ones drain it. These tools help:
Forecast job profitability before quoting
Simulate plant capacity impacts
Recommend job sequencing based on margin per machine hour
This isn’t about replacing human judgment. It’s about giving your team the data to make faster, smarter calls—especially when the line between volume and value gets blurry.
Sales and Ops Must Be on the Same Page
The biggest source of friction in many organizations is sales chasing volume while operations chases efficiency. As a VP, you need to align both sides around a unified goal: profitable growth.
That means:
Equipping sales with tools to see margin impact at the quoting stage
Encouraging ops to flag low-margin jobs before they clog the schedule
Building incentives around margin performance—not just revenue
When both teams speak the same language, decisions become more strategic—and less reactive.
Knowing When to Say No
One of the hardest skills for any VP to master is the strategic “no.” Turning down volume can feel risky, especially when the shop floor is quiet or revenue targets loom.
But in a constrained market, every hour of production matters. Wasting that time on unprofitable work hurts your best customers, your team, and your bottom line.
Instead of fearing the empty slot, ask: what better business could we make room for?
Final Thought: The Smart Middle
This isn’t a volume vs. margin debate. It’s about balance. The best-performing steel companies know when to say yes, when to say no, and when to renegotiate for smarter terms.
As a VP, your job is to define that line and enforce it—not just in spreadsheets, but in day-to-day decisions. You’re not just managing throughput. You’re managing profitability.
So the next time a big order lands on your desk, ask yourself: is this keeping us busy—or is this keeping us better? Because in the long run, better beats busy every time.
