1 B2B Organizations The Steel Industry Akcaglayan, HalitBortey, Ishmael Chang, Thomas T.Chien, Jane...
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Transcript of 1 B2B Organizations The Steel Industry Akcaglayan, HalitBortey, Ishmael Chang, Thomas T.Chien, Jane...
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B2B OrganizationsB2B OrganizationsThe Steel IndustryThe Steel Industry
Akcaglayan, Halit Bortey, Ishmael
Chang, Thomas T. Chien, Jane Y
Cukier, Juan J
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"Selling steel over the Internet is very
embryonic. It could become an Amazon.com, or it could be not much. But it would be naïve to close our eyes
to the Internet."
-- USX chairman, Tom Usher
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General Facts About General Facts About the Steel Industrythe Steel Industry
Worldwide production is over 750M tons of the 3.000 different catalogued steel types available.
China, US and Japan are the largest steel-producing countries, followed by Germany, Russia and Korea.
Steel use is closely linked to the wealth of an economy (e.g., steel “consumption” per person is about 20kg in Africa, against 420kg in the US).
The industry employs about 1.3M people worldwide.
Source: International Iron and Steel Institute
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Key US PlayersKey US Players
CompanyCompany RankRank SpecialtySpecialty
USS (usx) 1 All types
LTV Steel 3 Flat rolled
National Steel
4 Flat rolled
Nucor 8 Recycling
Timken ___ Bearings
Source: International Iron and Steel Institute
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Steel and the B2B ModelSteel and the B2B Model B2B in the steel industry is characterized
by:– Small market segments– Big amount purchases, both in money and
volume– High expectations for service– Knowledgeable buyers– Most based on auction model (value is created
by spatial matching of buyers and sellers)
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Market ShareMarket Share
By 2001, $32 billion of steel will be sold through internet portals compared to only $150 million today – Morgan Stanley Dean Witter
By 2005, 40-60% of all metal produced in the world will be sold via the Internet
E-commerce in metals sector is still in infancy – about 3% of total sales (Andersen’s global metal practice)
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Space for B2B sites to operate Space for B2B sites to operate
Supplier Producer
Intermediary
Customer
= Space for an online steel site to operate
New Value Chain for MetalSite
Raw materials, coal, iron, scrap metal
Integrated or Mini mill – about 60-80 producers
Toll process, Distributor, Service centers – about 10,000 intermediaries
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Major Players in Major Players in the E-Industrythe E-Industry
MetalSite Metal Suppliers Online Metal Network Exchange Services E-Steel
All sites are relatively new. MSO was the first-mover, on Feb 1997.
All use rigorous qualifying standards before permitting companies to sell and buy online.
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Online Front Page SamplesOnline Front Page Samples
• Membership is highly sought
• All sites provide multiple sources of information
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How Do They Attract How Do They Attract Customers Online?Customers Online?
Cold calls (most) Direct mail (most) Links from .org-steel related sites (all) Exchange of advertising for links (most) Word of mouth (all) Search engines (all) Physical presence in conferences and seminars
(all) Recommend this site button (MSO)
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Three Components of Online Three Components of Online Steel SitesSteel Sites
Buyers, who can:– Buy direct from steel manufacturers– Bid and negotiate deals– Order, ship, track and pay online
Sellers, who can:– Reduce selling costs– Select buyers (be in control)– Bring on new buyers economically– Take no cost risk of being on the Net
Industry managers, who can:– Read specialized news, industry analysis and editorials– Research and compare global metals industry specifications
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Advantages of Being OnlineAdvantages of Being Online
Provides an honest, secure and anonymous platform to trade metal distribution services.
Gives metal consumers the means to post inquiries which are immediately relayed to MNXS vendors that supply similar materials.
Further reach for sellers Better prices for consumers Lowered purchasing costs Online auctions
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Online Auction OperationOnline Auction Operation
1. Define Product1. Define Product
2. Specify Commercial Terms2. Specify Commercial Terms
3. Target Audience3. Target Audience 4. Negotiate & Conclude4. Negotiate & Conclude
• A mastery of the subject is needed A mastery of the subject is needed when auctioningwhen auctioning
Source: e-Steel
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Incentives For Customers Incentives For Customers to Returnto Return
Online utilities– Specifications search– Materials property data– Metric converter– Glossary
Subscription to newsletters (all) Online donation capabilities (most) Extensive archives, statistics, and databases Updated regulatory information
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Careers databanks (MSO) Bookstore (most) Calendar with industry’s events (MSO) Updated steel’s news (all) Industry links (all) Very strict privacy policy (all)
Incentives For Customers to Incentives For Customers to Return (II)Return (II)
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Suggested Strategic MovesSuggested Strategic Moves Create virtual private marketplaces
– These would preserve pre-negotiated terms and relationships between buyers and suppliers for future reference.
Increase security on transactions– Currently, no encryption is used, although privacy is a
major concern among customers Redesign pages; do not clot with information Offer specialized advice and counseling Implement a “guest” section
– Most of the sites are only available to subscribers
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Suggested Strategic Moves (II)Suggested Strategic Moves (II)
Grow towards “meta B2B portals”– Provides closely related products– Allows sharing of infrastructure and services
Offer educational tours about the industry Offer links to the participating companies Establish consultant / consultee relations, not only
seller / buyer Remind buyers about offers according to previous
purchases Personalize pages
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Suggested Strategic Suggested Strategic Moves(III)Moves(III)
Expand into International markets Standard Steel Language- sites should be
consistent with the way they describe steel terminology.
Create some kind of online CAD hosting software
• For product customization
Move into other types of Internet transactions other than auction/direct offers. For example.
• Sites could offer Virtual marketplace and Collaborative Direct Transaction types.