Digitalisation improves distributors’ processes, not necessarily pricing

Tim Milde of Berlin-based software forge Xom Materials

Steel distributors need to digitalise their processes to enhance customer relationships, although digitalisation might not help pricing orientation. So said participants during a panel on enhancing the value chain at last week’s EUROMETAL convention in Hamburg.

Distributors have to invest time in building up digital services and platforms to see improvement in traffic with customers, said Tim Milde of Berlin-based software forge Xom Materials. He gave the example of one steel distributor where the process took two years to get ready. “You need a lot of preparation. But then you can sell on digital channels – you guys should get ready for this,” he said at the meeting attended by Kallanish.

His experience was confirmed by Norbert Thumfart of Austrian distributor Weyland, who advised to tie in the customers early on. “We started two years ago to ask our customers, and now we are prepared – customers come to us and asked to be linked into the processes,” he said. He noted that 75% of customers polled signalled openness to e-commerce, but also requested the supplying distributor to go ahead and come up with offers.

Robert Kay of Prague-based Ferona agreed that “…we need to show customers that we are proactive.” He was not so sure if price indexing should be handled this way. “We have been approached by mills for indexing when prices were low, but we said no,” he explained.

However, Daniel Guinabert of ArcelorMittal said that his unit decided to launch such a tool, and that 12 months later gross margin had increased by 30%. Kay still maintained that “…I prefer direct contact,” and software man Milde stated that Xom would stay clear of index pricing in the foreseeable future.