Kloeckner Metals has made no secret of its plans to develop a digital platform to serve the metals distribution industry. And that, by itself, is just one way the Roswell, Ga.-based company is treading uncommon ground.
“How often in the steel industry do you telegraph exactly what your strategic plan is?” Matt Meyer asks rhetorically. Meyer is the vice president of digital innovations for Kloeckner Metals, heading up a 10-person team that delivers the solutions to the many questions posed by the sales and operations teams.
Kloeckner has been visible at conferences, speaking to trade and business journals, and bringing in mills and other stakeholders into the discussion. For the U.S. team, it’s simply a matter of following the lead of the parent company.
“The CEO (Gisbert Rühl) started the ball rolling. He’s been super visible, and he’s put it out there so aggressively,” Meyer says. “We just want to get the message out.”
That visibility is driven by the fact the platform won’t simply be a way of selling Kloeckner products online. To work, the platform must bring in much of the metals supply chain, becoming the vehicle for the business-to- business world that Amazon has become to the business-to-consumer segment.
“This is where the industry has to go. Yeah, I want to be the only one, but realistically they need to hear it from everywhere,” Meyer explains. “This is what we need to do to maintain our competitiveness. So when I go to a conference and say this to our competitors, it’s for the good of American manufacturing and American steel distribution. It needs to be done.”
Kloeckner Metals’ digital efforts began under the leadership of retiring CEO Bill Partalis. Now, it will be up to the new leadership team to fully implement the changes. New CEO John Ganem and COO Bart Clifford are tasked with overseeing the transformation. Like others in the company, they know the change is coming whether Kloeckner is on board or not.
“We don’t fool ourselves that the guy today who is 55 years old and has been buying steel a certain way his entire career is the guy embracing these technologies and the new way of business we envision. It’s the guy replacing him who’s 32 years old and has never stepped foot in a mall,” says Ganem. “We see it internally from the young people coming up in our organization. They look at things and say, ‘Why don’t we have an app to do this?’ It challenges us.”
Ganem says the metals distribution business has the same characteristics of other industries that have been upended by disruption. The industry is highly fragmented, the product is primarily a commodity and the supply chain is inefficient. And when the disruption comes, it will arrive in a hurry, which is why Kloeckner wants to get out in front of it.
“History tells us these things happen quickly. What we keep telling ourselves is we can’t will it. We have to come up with the tool that makes the process better for our customers,” he says.
Customer buy-in, Clifford agrees, is the key. “It’s great to build something and say ‘Here,’ but what does that get you? The customer wants and needs to like to use it. It’s got to have value,” he says.
Of course, the digital transformation involves more than the development of the sales platform. Meyer and his team are looking at how the company can get more efficient in every facet of the business. That can include operations, most notably involving the movement of material through the factory floor, and beyond.
Kloeckner is testing this idea at its Oklahoma facility. The company’s operation there is a full Bluetooth-tagged factory. Through RFID and Bluetooth technology, the Oklahoma operations know where every piece of metal is in the factory at any time. “You can track flow through your building and better understand the movement of the metal with an eye toward improvement. We can do inventory in five minutes or less, at the click of a button,” Meyer says.
But it doesn’t have to end there. Once the metal is fully tagged, the system can extend to its customers as well. “The big OEMs have the same problem we do – the manual reorder process is a pain. They can’t count on their guys on the floor to communicate properly with purchasing. RFID and Bluetooth fix a lot of internal problems. It’s not them going into a portal and telling us what they need. We know what they need because our tag just told us,” he explains.
Meyer spends much of his time working with Kloeckner customers, finding what they need then taking it back to his team to see whether the problem has a digital solution. “We don’t come up with a thing and show it to a customer. A customer tells us exactly what they want, and we draw it up and take it back to them.”
Kloeckner Metals launched its digital team in early 2016, a few years after the parent company created KCI in Europe. Meyer, whose background is in sales, started with a few employees and some consultants, then slowly phased them out in favor of in-house talent. “It’s expensive to go with consultants, but we had to learn. Now we’re standing on our own two feet.”