Steel distributors’ endeavours to drive digitalisation and processing services should be questioned at least for some areas of the distribution industry, says Hanns-Jörg Westendorf of German tubes company Hoberg & Driesch.
“Digitalisation is the magic word of the times, but you need to differentiate as to where you stand,” he tellsKallanish. In line with many other managers involved in the topic, he notes that e-commerce works best for standard homogenous articles where price is the main criterion.
Tubes, however, is a business of wide variety. Westendorf therefore dismisses the idea of necessarily having an online market place, but agrees that digitalisation should be used to optimise a company’s handling processes, and to provide the customers with a better overview of inventories.
In this context, he also questions the common opinion that offering added value means better business. Following customers’ ideal of one-stop shopping of processed material in small lots may not be worthwhile for the supplier, he states. Hoberg & Driesch, for example, bought a saw for hydraulic oil pipes ten years ago, which added a value that could be given in percentage figures. Other ancillary factors, such as operation costs, maintenance, packaging of the products, and a more difficult utilisation of truck capacities, were harder to grasp.
“I am very much convinced that the core distribution business is subject to other criteria of success,” Westendorf says. “You can make good money with pure distribution and a bit of size cutting, if you do it right.”
