INSTITUTE OF MANAGEMENT,

NIRMA UNIVERSITY

MBA FT (2021-23)

MANAGEMENT INFORMATION SYSTEMS

GROUP ASSIGNMENT 1
CASE SUMMARY ON
“Klockner & Co: Steeling for a Digital World”

SUBMITTED TO: Prof. Balakrishnan Unny

SUBMITTED BY: Group B10
Shahu Miskin (211133)
Gaurav Desai (211100)
Priyank Agarwal (211122)
Khushi Singh (211110)
SECTION: B
 ACKNOWLEDGEMENT
We would like to extend our gratitude and gratefulness to the Institute of
Management, Nirma University for giving us this opportunity to learn the
subject ‘Management Information Systems’ as a part of our course. This
subject has helped us in upgrading our domain knowledge.
Heartfelt thanks to Prof. Balakrishnan Unny, our facilitator of this course,
for his persistent help, guidance and encouragement. His valuable comments
and insights have greatly benefitted us and helped us to complete the
assignment successfully.

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 1

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................................ 3

SITUATIONAL ANALYSIS .......................................................................................................................... 4

ISSUES FACES BY KLOCKNER AND CO. .................................................................................................... 7

SOLUTIONS FOR KLOCKNER AND CO. ..................................................................................................... 8

REFERENCES ............................................................................................................................................ 9

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 2

EXECUTIVE SUMMARY
Peter Klockner established Klockner & Co in 1906. Intense rivalry, large swings in steel
pricing, overcapacity, and fragmented markets all generated ripples in the traditional steel
trade. Because of the shifting business environment, the steel sector went through a challenging
period. Digital technology were always changing. As a result, for steel businesses to retain their
company growth, effective digital strategies and business models have become critical.
Innovations in supply chain management and manufacturing process automation were
required.

As a result, Klockner, Europe's largest steel distributor, began digitising its operations in order
to develop an online marketplace for its customers and suppliers. The purpose of Ruhl's digital
transformation strategy was disruption, which was critical for the company's survival and
future growth on both the corporate and industry levels. Digitization caused the actual and
virtual worlds to merge, resulting in a digitally linked industry. Klockner has successfully
grown his company by offering value-added products and processing services. China's steel
production capacity had expanded significantly, but this had destabilised various geographic
markets, influenced steel prices globally, and decreased demand.

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SITUATIONAL ANALYSIS
The presented case describes Klockner & Co, a renowned German metal and steel distribution
company, as well as its push toward digital transformation and the hurdles it faces. Klockner
& Co's CEO, Gisbert Ruhl, took over in 2009, when the business had to make difficult decisions
like lowering expenses, deferring acquisitions, and paying down debt. However, Klockner &
Co. purchased Becker Stahl-Service, a renowned European steel distributor, towards the start
of Ruhl's term. Klockner & Co became a top-three distributor in the United States and Europe
as a result of various acquisitions. However, in the 2010s, Ruhl believed that managing a
cyclical firm was tough. Furthermore, there is a likelihood that the company's competitors may
enter B2B markets. Finally, in addition to overcapacity, there was worldwide uncertainty in the
trade environment around that time, indicating that Klockner was headed for a down cycle in
2015.

As part of the company's digital transformation, Ruhl established two organisations. Initially,
by digitising the company's supply chain, which then expanded to include other clients. Later,
he founded XOM Materials, an independent digital platform that allows customers to connect
suppliers, buy and sell items. Both of these programmes aimed to restructure the steel,
aluminium, copper, and plastic sectors' service chains in order to modernise their markets.
Ruhl established KCI, a new team charged with leading the company's digital transition. The
first move was to open a 24-hour online shop where customers could order Klockner products.
The team's managing director, Tim Milde, stated that their experience taught them about the
major issue of customers, which was dealing with webshops while shopping for products. This
prompted them to create XOM, an open platform separate from Klockner & Co. that allows
industry vendors to buy and sell their wares. However, the German Federal Antitrust Office –
Bundeskartellant – was concerned that Klockner & Co. would have access to competitor data.
The company's board of directors was also unsure about this move. While the members saw
the importance of an open platform, they couldn't wrap their heads around the thought of
competitors using it.

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Regardless, Ruhl opted to keep investing in the production of XOM, which was unveiled in
2018. He believed that removing XOM physically from Klockner & Co. and allowing it to be
handled independently would allow it to function like a startup with separate growth objectives.
XOM began with the steel sector, but as it progressed, it expanded to incorporate all material
supply chain transactions. Steel was the starting point because, despite its worldwide presence
and importance to countries, the steel industry remained fragmented, with customers only
having access to local suppliers. The product's prices were fluctuating, and the industry's
logistics were convoluted. Larger products could only be supplied by local distributors, and
shifting products to locations outside of specified postal codes was difficult.
XOM intended to integrate all of the region's distributors and simplify the interaction between
buyers and suppliers, which had previously been done by hand and had taken decades to
develop. Ruhl also stated that the current supply chain was prone to making frequent mistakes
and wasting resources. He believed the sector required a digital procedure that would allow
customers to browse providers from a wider geographic area and purchasers to receive
estimates directly.
XOM's platform value might be created through facilitating better matching between customers
and suppliers, improving pricing transparency, and reducing labour costs. Members who have
registered on XOM can even have detailed information on their clients, allowing them to
automate their supply chain in the long term. After searching for a product, the platform would
provide registered customers with a standard pricing and a list of potential suppliers. After that,
the customer might choose a supplier and place an order straight through the site. In terms of
information confidentiality, sensitive information such as pricing and availability would only
be available after both parties had established a connection. Depending on the material, XOM
charged a transaction fee, and some suppliers also had to pay set-up and licence fees. The idea
behind the latter was to encourage people to use the site.
Small sellers were expected to be the most interested in using the XOM platform since it
provided them with access to a bigger pool of potential customers and the possibility to expand
their market, but the platform proved difficult to sell due to the owners' lack of knowledge with
the technology. There were also concerns about the clear separation between XOM and
Klockner & Co. in terms of sensitive data being available to the latter. Instead of bringing their
existing clients to the platform, several of the suppliers used the XOM platform to start an e-
shop in the hopes of attracting new consumers. The XOM team was inspired to create new e-
shops as a result of this connection between one seller and several buyers. The XOM team was

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also working on a feature that would allow a buyer to receive bids from numerous sellers at the
same time, giving him the freedom to choose.
Following the platform's inception in March 2018, the number of sellers and buyers who use it
has progressively increased, reaching 50 merchants and 600 clients in December 2019 spanning
Europe and the United States. However, after connecting with registered sellers through the
network, some purchasers placed orders with them offline. Such transactions, according to the
XOM team, could be useful for the platform as well. XOM platform also aimed to get outside
investment into the platform and expand its geographic reach.
Because of the availability of possible clients, materials, digital space, and future staff, XOM
moved to the United States in 2019 by creating a subsidiary in Atlanta, Georgia. However,
there were barriers to this expansion due to differences in business culture, as well as
difficulties in brand building and navigating the country's regulatory environment.
At the start of 2020, Marek Sacha, CEO of XOM, along with Milde and Ruhr, were confident
in the XOM platform's competitive edge due to its attributes and the industry in which it works.
Entry barriers to digitalization in the steel sector exist since it necessitates top-level
management commitment as well as technical understanding and market competence. The
platform also stayed ahead of the competition by creating data dashboards that displayed
information about buyers and sellers in order to optimise procurement procedures and boost
online sales.
Despite this, the shift from supply-driven to platform-driven growth would be determined by
competitive pressures, the economy, and market adoption of digitalization.

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 6

ISSUES FACES BY KLOCKNER AND CO.
Klockner & Co. made the first move in digitalizing the steel industry's service and supply
chain, as well as launching an independent open platform for commodity trading. However,
the road to introducing the XOM platform was not without bumps, and selling the platform to
the industry was tough due to the following issues:
• The Klockner & Co. board was sceptical of the XOM platform since it would allow
the company's competitors to use it. The German Federal Antitrust Office was also
concerned that the platform would provide Klockner & Co. with access to sensitive
data from other corporations, giving them an unfair advantage. XOM was required to
keep the data completely secret to its parent business, Klockner & Co. XOM was also
required to refrain from interacting with suppliers on price setting. Ruhl concluded
that XOM needed to be operated autonomously, and that while the parent firm would
be an investor, data exchange would go beyond the financial disclosures required by
the investor. XOM was also housed apart from the main firm, giving it its own
identity.
• The XOM team anticipated that the platform would be quickly adopted because it
would benefit smaller vendors wishing to expand their market while also simplifying
their company. However, the platform was more difficult to sell because some of the
vendors were confident in their market position. Another crucial factor was that the
majority of the enterprises were headed by men in their fifties who were hesitant to
embrace such a change in the way they did business.
• There were also concerns regarding the level of separation between XOM and
Klockner & Co., as well as the platform's overall quality. They were concerned that
the parent business would have access to sensitive information. XOM gradually
dispelled such suspicions by emphasising that the platform is a separate entity from
Klockner & Co. XOM also concentrated on attracting larger companies in order to
attract both larger participants and smaller vendors. To do this, they developed a
specific eProcurement solution for buyers with bigger volume purchases, which aids
in the maintenance of direct supply relationships with suppliers.
• Another issue was the integration of the XOM platform with the client system, which,
despite being integrated, was not ready to use right away. This was due to the client

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 7

 sales teams' lack of familiarity with online sales. The XOM was required to assist
vendors in orienting themselves to the platform.
• Instead of bringing their offline clients online, several of the vendors were interested
in building a branded e-shop on the platform. It would be easier for merchants to
connect with new clients as a result of this. This e-shop was beneficial since it made it
easier for merchants to become accustomed to selling online.
• While establishing a subsidiary in the United States, the XOM platform also
encountered geographical expansion challenges. Although digital adoption was easier
in the United States, brand building proved difficult. Another challenge was the US
regulatory framework, which was complicated by different state taxes and regulations
in the internet economy.

SOLUTIONS FOR KLOCKNER AND CO.

• Bringing on a large local client in the US would be an excellent approach to create a

brand and get new local customers as well as investors for the XOM platform in the
US. Obtaining local people with experience in the US business environment would also
make it easier for XOM to expand in the country.
• Opening more e-shops would aid in obtaining new clients who would subsequently use
the platform to its maximum potential.
• Regarding the issue of Klockner & Co.'s separation from XOM, complete transparency
and allowing the German Federal Antitrust Office to investigate would make it easier
for the XOM platform to gain the trust of not only the Bundeskartellant but also
potential customers in the German and European markets.
• Focusing on bringing a large company to use the XOM platform would be the best way
to attract other small and large vendors.
• Because the XOM platform is new to this industry, demonstrating platform
functionality and benefits to potential customers and new buyers would reduce the
incidence of onboarding delays and anxiety about the platform's robustness.

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 8

REFERENCES
1. https://reports.weforum.org/digital-transformation/klockner/
2. All the mentioned case data, facts and information was taken from ‘Klockner & co:
Steeling for a digital world’ by, Scott Duke Kominers and Carin-Isabel Knoop from
Harvard Business Review (February 2020)

MANAGEMENT INFORMATION SYSTEMS | GROUP ASSIGNMENT 9