Disrupting Your Own Company
“Digital for us meant email,” Kloeckner’s vice president for digital innovation Matt Meyer told Tubular Products Conference attendees. After all, he noted, the steel industry has not exactly been known to be cutting edge.
“We could see there is a war on with all these digital disrupters coming at us that are both threats to our industry and threats to our own business model,” he said. “We decided the only effective answer would be to disrupt our own company.”
The objective is, and it is an ongoing process, to make the company, and beyond that the industry, as efficient as possible. “We thought it made sense to begin with our supply chain touch points, identify the pain points and see if we could replace our very inefficient manual processes.”
Kloeckner set up a stand-alone unit. “We operated like a start-up,” Meyer said. “The goal was MPM, a metal parts manager that would streamline purchasing and shipping. The RFID tag, radio frequency identification, makes it possible.”
First though, the start-up team had to identify the problems it was trying to solve with this new digital system. “Like a good start-up, we began by interviewing our customers and listening very carefully,” Meyer said. “We needed to know where they saw inefficiencies and room for improvement so we would be developing the right tools to remedy the problems.” We soon realized that inventory availability, purchasing forecasts, our invoicing and purchasing systems were all serious problems. “So we began developing a platform that would integrate and process those key functions, a platform that perhaps at some point we could make available to the entire industry.”
Kloeckner, as Meyer describes it, was looking at “a major cultural and strategic change that had to involve the entire organization.” They used social media, including an internal Facebook-type service called Yammer to nurture that involvement.
The result? From blank white boards to company-wide roll out in six months. Meyer and his team developed a system that pulled a constant flow of information from company customer information and transformed it into useful operational data. By digitizing its supply chain, Kloeckner has been able to lower inventory levels, but still improve product availability. The MPM created far more efficient product management processes, more transparency and clarity on prices at the same time.
“The entire metals distribution industry is ripe for disruption,” Meyer declared. “We have converted perhaps 40 percent of our business. It has entirely changed our customer relationships for the better. And we have only scratched the surface.”