Management Information System –

MFT4CCIMO1

MBA-FT (2020-2022) – Term II

Submitted by:

Simrandeep Singh-201250

Section-B

Submitted to:

Prof. Balakrishnan Unny R

Submitted on: 14-12-2020

Identification of Main Issues / Problems
In the Given case study several issues have cited at various points of times between 2009-2020
from the perspective of Industry as a whole and multiple companies on standalone basis,
depending upon the type of product and service provided by them. The main industry involved
in the case is stell and metal distribution and the overall issue revolves around digitization in
this Industry.
The main issue from the Industry point of view is lack of Digitalization in the Sector and
growing B2B dominance in other industries which Gisbert Ruhl, CEO of one the worlds largest
independent steel and metal distributors, Klockner & Co. identified.
To overcome and capitalize on the above issue Gisbert Ruhl set up two companies, KCI and
XOM. Where KCI was set up to support the companies own digital transformation and client
Consultancy, XOM was an online B2B industry platform aimed to solve the transparency and
supply chain issue faced by the industry.
Industry Issue

• Requirement of Digital solutions and Digital tranformation

• Solve the transperancy and supply service chain issue.

• Growing B2B platforms in other industries and threat from biggest B2C
platforms from entering the industry and disrupting the market.

• Overcapacity in the steel Industry

Issue faced by Klockner

• Issue faced due to cyclical nature of business

• Issue in setting up KCI and XOM

• Introduction of digitization in the traditional business model

Issues faced by XOM platform

• Issues faced with the regulators for potential collusion and market
Manipulation

• Changing the Industry mindset and selling them their service by

developing a potential strategy

• Onboarding issues with the vendor

Analysis and Evaluation of Issue/Problems

Issues Faced by the Industry

• Requirement of Digital solutions and Digital transformation

The industry is stagnated by traditional mindset and lacks technological innovation and
digital transformation requirements. Both Manufacturer and seller and buyers are not
ready to change the traditional business methods.
The competition is stiff and the vendors are generally under price pressure due to low
switching cost.
• Solve the transparency and supply service chain issue.
The current linear supply chain is highly inefficient and intransperant which leads into
Longer delivery times, Incorrect deliveries and large inventory levels.

• Growing B2B platforms in other industries and threat from biggest B2C platforms
from entering the industry and disrupting the market.

The threat included that the dominant B2C market platforms such as Amazon and
Alibaba will move into B2B market space of metal industry and disrupt the market. The
threat was real since these companies were technologically more experienced and
having a great technological savvy talent pool and other resources which can help in
making the transition easily.

• Overcapacity in the steel Industry

There is global overcapacity in the steel industry with China and India being dominant
players, due to which a lump has been observed in the market.
Issues Faced by the Klockner

• Issue faced due to cyclical nature of business

Due to the nature of the Industry the Co. faces pricing issues, the model of buying large
quantities of steel, storing it and distribution was a major challenge.
The changing in the steel prices had to be met with reorganizations and cost cutting.
Being on the lower side of the cost curve and even if any marginal improvement was
gained by the company it had to be passed on to the consumer.

• Issue in setting up KCI and XOM and in Introduction of digitization in the

traditional business model
Ruhl understood the requirement and need for the disruption in the Industry, he was
focused in setting up a digital environment in the company, but was faced with lots of
scepticisms. Setting up of KCI was still easy since it was for the company but the idea
of setting up of XOM and providing service to ones own competitor was looked as a
far-fetched idea. The other issue was hiring the right talent pool and setting up the
company from the scratch. From renting share spaces to facing issue of higher turnover
in the industry, all the issues faced by a start up was faced by both the companies.

Issues faced by XOM platform

• Issues faced with the regulators for potential collusion and market Manipulation
The regulators were concerned about Klockner’s access of data through XOM (Pricing
and client Information) and required confidentiality from the side of XOM. XOM was
required to have to restrain for advising pricing and refrain from any price
manipulation.

• Changing the Industry mindset and selling them their service by developing a
potential strategy
As mentioned above the Industry was plagued with traditional model of conducting
business. After creation of the platform, it was hard for the company to find clients and
subscriptions. The company followed a top to bottom approach where the top key
personals of the company had to be explained the benefit of the platform and the
remaining employees will follow the lead.
 • Onboarding issues with the vendor
The sales cycle took months to complete. It was an extensive procedure where multiple
conversations and presentations were held. Even after the conversion it was difficult to
make the client personals to understand and use the platform and many man hours were
required to do the same.

Effective Solution / Strategy

The strategy of the Klockner Company was to gain first mover advantage by adopting fast
digitalization transformation in this industry. The offline business of Klockner, plus online
business with help of KCI and XOM platform nearly covers all the requirements of the
Company, with the help of these 3 all the principle business model is covered and is home
grown and is helping in generating additional revenue too apart from the main business
activities.

The issue faced by XOM in terms of regulation was avoided by only providing limited access
to Klockner as a stakeholder.
The Internal and external digitization drive helped drives efficiency and sales.
It resulted into:
• Acquisition of new Customers
• Extension of sales range
• Elimination of business hour dependency
• Increasing focus on customer service
• Extension of portfolio through 3rd party products (For XOM)
• Less transaction and administration cost
• Lower stockholding level
• Higher logistics and warehousing efficiencies
• Increased Flexibility

The Strategy would be creation of Value for all the participants and getting them understand
the benefit of the XOM platform. The value creation can be explained to the different
participants in the following manner:
For consumers:
• Efficiency in placing the order, real time stock update and processing
• Better pricing due to transparency.
• Faster delivery time as per the requirement
For Distributers:
• Lower transaction cost will lead to better margins
• Greater customer pool, global market availability for sell
• Better demand forecasting with the help of data and analytics’
• Better competition for small and medium vendors as they can now directly
compete with large vendors.
For Manufactures/Suppliers:
• Higher direct sales
• Better forecasting of demand and can help into better planning and inventory
management due to which lower NWC can be achieved.
Expanding the XOM Platform by funding and acquisition
strategies:
The company to expand, would be accepting funding from investors, it can increase its
geographical reach with strategic acquisitions. Not only can the company can increase its
footprint in the same industry, it can also increase its investment in other ventures to leverage
use of the knowledge and experience while setting up KCI & XOM.