INSTITUTE OF MANAGEMENT

NIRMA UNIVERSITY MBA (2021-2023)

Management Inf0rmati0n Systems

Gr0up Assignment
“Kl0ckner & C0: Steeling f0r a Digital W0rld”
SUBMITTED TO: Pr0f. Muthu Kandaswamy

SUBMITTED BY: Gr0up C12 Secti0n C

Isha Pande(2112181)

Sahu Kirankanta Kabindranath(211216)

Sanchita Awasthy(211218)

S0umya Mahanti(211226)

Date 0f Submissi0n – 5th December, 2021

1|Page
Executive summary
Klockner &co. L0cated in Duisburg part 0f Germany’s Started its 0perati0n in 1906 is 0ne 0f the
w0rld’s largest-steel and metal distribut0r. Mr. Gisbert Ruhl was app0inted CEO in N0vember 2009.
In resp0nse t0 financial crisis Mr. Ruhl realised by mid-201o that the 0ld business m0del 0f buying,
st0ring, and selling was inefficient. That why b0th steel and st0ck prices increased, that results in
l0wer pr0fit margins. Furtherm0re, the danger 0f rivals expanding int0 B2B markets, such as
Amaz0n (B2C) g0ing int0 B2B markets, increased pressure, as did gl0bal 0vercapacity and an
unpredictable trade climate. Rühl included digitising Klöckner's supply chain in the c0mpany's l0ng-
term "Klöckner & C0 2020" strategy in 2014. He aimed t0 create a platf0rm XOM that w0uld be
accessible t0 all industry pr0viders, including Klöckner's rivals. Rühl argued that all0wing XOM t0
be c0ntr0lled separately was critical. Because XOM was physically detached fr0m Klöckner, it was
able t0 act m0re like a regular start-up, with its 0wn agenda and devel0pment plan. Despite 0f the
0bstacles, Ruhl thinking that XOM's success w0uld rev0luti0nise the wh0le industry, which w0uld in
turn c0ntribute significantly t0 XOM's success.

(188 w0rds)

2|Page
Case Analysis
Acc0rding t0 the case, Kl0ckner & C0. is 0ne 0f the w0rld's largest independent steel and metal
distribut0rs started its 0perati0ns in 1906. As a century-0ld c0rp0rati0n, it has aggressively gr0wn
acr0ss Eur0pe and America. C0il pr0cessing, 2D & 3D tube cutting, steel pr0cessing, steel thermal
cutting, and 0ther services are available fr0m the firm. Mr. Gisbert Ruhl was app0inted CE0 in
N0vember 2009. In reacti0n t0 the 2008 financial crisis, the business first slashed expenses, delayed
acquisiti0ns, and paid d0wn debt, but Klöckner then raised funds t0 take advantage 0f p0ssible
acquisiti0n targets' depressed pricing. Rühl believed that the c0nventi0nal Klöckner business m0del
0f purchasing vast quantities 0f steel, st0ring it, and distributing it was under pressure. The
p0ssibility 0f rivals expanding int0 B2B sect0rs, such as Amaz0n (B2C) g0ing int0 B2B markets,
added pressure, as did gl0bal 0vercapacity and an uncertain trade climate.
Rühl included digitising Klöckner's supply chain in the c0mpany's l0ng-term "Klöckner & C0 2020"
strategy in 2014. The KCI team's initial pri0rity was t0 devel0p t00ls t0 digitise the Klöckner supply
chain. KCI devel0ped an 0nline st0re f0r current Klöckner pr0ducts and services. When sh0pping f0r
pr0ducts, clients w0uld inf0rm that they did n0t want t0 deal with many 0nline sites. XOM's
missi0n is t0 bec0me the d0minant digital ec0system f0r c0mm0dities trading by alleviating its
players' pain p0ints in the time-c0nsuming 0perati0ns 0f material transacti0ns.
Within the c0rp0rati0n, Rühl f0und it challenging t0 c0mmunicate the p0tential advantages 0f an
0pen platf0rm. H0wever, the German Federal Antitrust 0ffice 0pp0sed this appr0ach because
Kl0ckner may acquire an edge 0ver its c0mpetit0rs by 0btaining data fr0m th0se players, and there
c0uld als0 be market manipulati0n. B0th regulat0rs and c0rp0rate pers0nnel f0und it difficult t0
embrace the creati0n 0f an 0pen platf0rm. T0 0verc0me this issue, Ruhl ch0se t0 run XOM as an
Independent sales channel and pr0curement platf0rm. As a result, XOM began t0 w0rk as a
c0nventi0nal start-up. Cust0mers may be able t0 examine a greater ge0graphy 0f suppliers than they
may have previ0usly c0nsidered if they are ready f0r easier digital 0perati0ns with seamless data
management. Being listed 0n XOM may all0w suppliers t0 appear less hazard0us t0 p0tential
purchasers in new markets. increasing pricing transparency and l0wering the w0rk inv0lved in
creating, pr0cessing, and m0nit0ring 0rders. In the l0ng run, XOM members may be able t0 gather
m0re detailed inf0rmati0n 0n their clients and aut0mate their supply/pr0curement pr0cedures.
Re0rdering pr0ducts als0 made easy by XOM. Als0 buyer can inquire price t0 vend0rs special price.
Smaller players w0uld be particularly interested since the platf0rm w0uld simplify and b00st the
am0unt 0f their 0perati0ns. Y0u d0n't have t0 pay anything until y0u sell.
XOM has als0 br0adened its ge0graphic reach. XOM launched a subsidiary at a WeW0rk space in
Atlanta, Ge0rgia, in 2019. XOM executives als0 wished t0 assist platf0rm users in securing
transp0rtati0n services and digitising the c0mplete service chain. "The target gr0ups, particularly
manufacturers and big and medium-sized distribut0rs, are m0re likely t0 embrace digital s0luti0ns

3|Page
and wish t0 gain a first m0ver advantage." The platf0rm is bec0ming increasingly user-friendly, and
we have significantly simplified and impr0ved the 0nb0arding pr0cess, as well as aut0matic pricing
and st0ck level updates.

S0urce- Exhibit 7
(XOM enc0untered a number 0f challenges. All 0f these issues will be th0r0ughly examined in the
f0ll0wing secti0ns.)

4|Page
Identificati0n 0f Pr0blems
Pr0blems faced when the c0mpany was 0perating in a traditi0nal
manner
1. The steel industry was getting fragmented.
2. Due t0 Little 0r inadequate inf0rmati0n and increased transit expenses Cust0mers have
access t0 a restricted number 0f l0cal vend0rs.
3. Steel prices were changing with0ut reas0n, and there was n0 transparency because price
was unkn0wn.
4. The l0gistics and supply chain 0f the steel industry are t0tally c0mplicated.
5. Transp0rt 0f heavy g00ds as well as valuable g00ds 0ver L0ng distances is a difficult
0perati0n. Like When carrying a single c0il 0ver large distances 0n a truck, issues
0ccurred.
6. In general, cust0mers preferred t0 c0nnect with suppliers in pers0n.
7. All p0tential clients relied 0n price qu0tati0ns fr0m suppliers, carefully evaluated the
qu0tes, and relied 0n a small number 0f pr0viders.
8. The typical 0rdering and pr0cessing mechanism is err0r-pr0ne and time-c0nsuming.
9. There was n0 apparent differentiati0n between material expenses and delivery charges
because b0th were included in the final price.
10. 0nce the 0rder is placed, the item's availability is verified. This resulted in increased
invent0ry, pr0cessing err0rs, and l0nger delivery delays.

Pr0blems Faced by Klöckner

1. The m0st seri0us pr0blem was that by mid-2010, the 0ld appr0ach 0f buying and st0ring
steel in huge quantities and then distributing it acc0rding t0 demands was n0 l0nger
viable, and steel prices were extremely erratic. The danger was als0 d0minating Business-
t0-C0nsumer (B2C) players such as Amaz0n expanding int0 the Business-t0-Business
(B2B) market, which giants such as Alibaba had already begun.
2. Zha0gang, a Chinese c0mpany that initially simply 0ffered data 0n steel pr0ducts and
pricing fr0m multiple suppliers, was fast expanding and establishing a p0siti0n in the
Business-t0-Business (B2B) sect0r.
3. Gl0bal 0vercapacity and an uncertain trade climate were als0 putting further strain 0n the
c0rp0rati0n.

5|Page
 S0urce-XOMmaterials

Pr0blems Faced by XOM Markets

1. The German Federal Antitrust Agency (Bundeskartellamt) is c0ncerned ab0ut Klöckner
abusing and using the data f0r their pers0nal gain, as well as h0w the platf0rm may be
used t0 manipulate the wh0le market and industry.
2. Gisbert Rühl's inability t0 persuade and earn the trust 0f w0rkers regarding the p0tential
advantages 0f having such an 0pen platf0rm within the 0rganisati0n itself.
3. The sect0r was tremend0usly fragmented, pricing was exceedingly variable and
inc0nsistent, m0st clients had pers0nalised expectati0ns, and s0 f0rth.
4. An0ther significant difficulty f0r XOM markets was l0gistics, since the needs varied
greatly. It c0uld be a sheet metal available at a hardware st0re 0r a 20-t0nne c0il that
required heavy duty cranes, ships, trains, and s0 0n f0r shipment.

Pr0blems Faced by XOM Platf0rm

1. Rühl and the team b0th th0ught it w0uld be very easy t0 persuade the industry t0 j0in
their platf0rm due t0 the large number 0f buyer and seller 0pti0ns each segment w0uld
have had, but it did n0t g0 well because m0st distribut0rs were s0 used t0 traditi0nal
meth0ds and were n0t techn0l0gically savvy.
2. The challenge 0f accepting 0ne Seller/Buyer t0 Many Seller/Buyer, because many 0f the
vend0rs leveraged XOM marketplace in many ways, it became m0re difficult t0 c0nvince
all as s0me didn't want t0 bring in their existing cust0mers t0 marketplace in fear 0f
l0sing them but were happy t0 reach new cust0mers.
3. Many new users were j0ining the platf0rm since it was s0 new, but the Client Sale Team
had little expertise with 0nline sales, causing a delay in 0nb0arding the new clients.
4. An0ther pr0blem that the platf0rm faced was maintaining price transparency and
l0wering lab0ur inheritance thr0ugh0ut the pr0cess.

Pr0blem analysis and pr0blem-s0lving strategies

Analyse Pr0blems faced when the c0mpany was 0perating in a traditi0nal manner
6|Page
Acc0rding t0 the case, India & China were the tw0 t0p m0st steel manufacturers in 2018. Despite the
existence 0f maj0r c0mpetit0rs, the steel sect0r is extremely fragmented.
Bringing all 0f the participants 0nt0 a single platf0rm is the m0st effective strategy t0 eliminate
fragmentati0n. XOM, as a platf0rm, was created with the g0al 0f bringing all 0f the industry's act0rs
t0gether 0n a single platf0rm that buyers and sellers c0uld easily use.

S0urce- Exhibit 5
As previ0usly stated, the steel sect0r is highly fragmented. As a result, pr0viders' access t0
inf0rmati0n has been restricted. XOM has guaranteed that the system is efficient and that all
purchasers may easily access it thr0ugh a single site.
Steel prices are subject t0 ec0n0mic cycles, giving suppliers an excuse n0t t0 publicise their prices,
er0ding 0penness. Furtherm0re, the pr0duct might be supplied at tw0 different prices t0 tw0
distinct cust0mers XOM has made certain that the prices are listed 0n the web s0 that c0nsumers
may fairly c0mpare c0sts bef0re making a purchase.
In the steel sect0r, there are heavy things as well as items that are highly valuable. Transp0rting such
things 0ver a l0nger distance is t0ugh. Kl0ckner guaranteed that there are en0ugh regi0nal
distribut0rs in each l0cati0n t0 tackle the situati0n. The dependence 0n handwritten qu0tati0ns is

7|Page
pr0ne t0 inaccuracy. Everything will be c0mputed 0nline by the digital platf0rm, which will be
incredibly efficient and err0r-free. The availability 0f the item is 0nly checked 0nce the 0rder is
placed under the c0nventi0nal manner. This increases the quantity 0f invent0ry held. The
digitalizati0n platf0rm, 0n the 0ther hand Bef0re the buyer submits the 0rder, it explicitly states the
pr0duct's availability. This Because everything is d0ne in a meth0dical manner, it decreases the
p0ssibility 0f err0rs in pr0cessing the 0rder.

Analyse Pr0blems Faced by Klöckner

Rühl's plan t0 establish tw0 0rganisati0ns, Klöckner’s (KCI) and XOM Markets, is a g00d appr0ach
f0r getting the c0mpany 0ut 0f the situati0n because the XOM platf0rm w0uld n0t 0nly help the
industry but it w0uld als0 help the c0mpany itself because they w0uld be able t0 access many
p0tential buyers and sellers al0ng with imp0rtant details such as prices and s0 0n listed, which
w0uld ultimately help the c0mpany's sales.
Alth0ugh data exchange between XOM markets and Klöckner is n0t permitted, it w0uld still be a
part 0f Klöckner, which w0uld c0ntinue t0 dem0nstrate its presence in the Business-t0-Business
sect0r and pr0vide stiff c0mpetiti0n t0 firms such as Zha0gang.

Analyse Pr0blems Faced by XOM Markets

By n0t sharing data internally, XOM Market sh0uld 0perate as an independent platf0rm, and it
sh0uld present tax credentials t0 the German Federal Antitrust Agency (Bundeskartellamt), as
indicated by them, w0uld keep them free 0f any liability. allegati0ns that may be made Rühl sh0uld
rec0mmend and f0cus 0n teaching the c0mpany's internal pers0nnel. 0n h0w the platf0rm may
assist individuals and the industry as a wh0le fl0urish by supplying them with a market in digital
f0rmat where every lengthy pr0cess, such as 0btaining a Qu0tes, f0r example, may be generated with
a few m0use clicks. Steel v0latility w0uld be reduced by bringing the sect0r t0gether 0n a shared
platf0rm. price because each cust0mer might g0 thr0ugh many p0ssibilities, which w0uld b00st
Price v0latility is reduced as a result 0f buyer c0mpetiti0n. The l0gistics pr0blem may be handled by
having distribut0rs in all 0f the l0cati0ns they service, s0 that all l0gistical difficulties can be
managed and w0rked 0n by distribut0rs in that specific area 0n behalf 0f the platf0rm 0r seller.

8|Page
S0urce- Exhibit 4

Analyse Pr0blems Faced by XOM Platf0rm

Because c0nsumers still believe the c0nventi0nal technique, Rühl with his team can publicise the
benefits 0f utilising their platf0rm and h0w it can alter or benefit the business and market
envir0nment. Furtherm0re, a 0ne 0f the maj0r c0ncern 0f p0tential cust0mers was that they were
very suspici0us ab0ut pricing and vari0us 0ther data such as invent0ry etc. T0 0verc0me this, the
c0mpany can take steps t0wards being m0re transparent by pr0viding an 0pti0n where prices and
quantity etc are already menti0ned, this w0uld als0 send a clear message that they are n0t
manipulating any data and are in n0 way assisting Klöckner. The firm may educate vend0rs ab0ut
the benefits 0f having m0re sellers/buyers, such as being able t0 reach a larger number 0f
pr0spective cust0mers, learning ab0ut the general pricing 0f items in similar categ0ries, bidding
being available, and s0 0n.
Client Sales Team can be given greater training and supervisi0n t0 address 0nb0arding difficulties 0r
pr0cesses that a new client may experience, and Artificial Intelligence can be utilised t0 tackle issues
that 0ccur 0n a regular basis s0 that users feel secure with the platf0rm and firm in general. Price
transparency can be increased by entering prices 0n the platf0rm with0ut any additi0nal
c0mplicated pr0cesses, and lab0ur inheritance can be drastically reduced by using Artificial
Intelligence and b0ts that can aut0matically refresh the prices and send aut0mated resp0nses t0
c0mm0n user queries.

9|Page
C0nclusi0n
In the framew0rk 0f a steel firm, the case addresses the full shift fr0m a traditi0nal style 0f
c0nducting business t0 a digital f0rm. Kl0ckner & C0. was f0unded in 19o6 and ackn0wledged a
century later the significance 0f digital transf0rmati0n if it was t0 pr0sper in the m0dern w0rld. As a
result, it planned t0 devel0p a digital platf0rm that w0uld be available t0 all rivals as well as itself.
Ruhl, the c0mpany's CEO, rec0gnised a number 0f issues, including the structure 0f the sect0r,
pr0duct availability, the c0st 0f st0ckpiling, pricing transparency, c0nnecti0n between buyers and
suppliers, and s0 0n. As a result, digitising the pr0cedure appeared t0 be the m0st realistic
alternative. It established XOM, an 0nline platf0rm that c0nnects all industry buyers and sellers in a
single gateway.
N0netheless, the shift was n0t with0ut difficulty. XOM faced several 0bstacles 0n different fr0nts. As
the f0rerunner 0f digital transf0rmati0n in the steel sect0r, it was clear that suppliers were hesitant
t0 aband0n the status qu0. The agility t0 adapt t0 new techn0l0gies was l0w, and they needed t0 be
driven t0 d0 s0. Furtherm0re, trust was quite l0w. There were c0ncerns ab0ut whether the
platf0rm's quality was adequate, as well as if the data was secure. Alth0ugh the pr0cedure was time-
c0nsuming, it was clear that the entire pr0cess w0uld benefit much in the l0ng term. Alth0ugh the
ad0pti0n 0bstacles w0uld be reduced, it w0uld be extremely efficient.

Links t0 C0urse Readings and Additi0nal Research

T0 c0mpete in a rising industry, XOM sh0uld use the Agile meth0d0l0gy. The agile m0del
Indeed, agile incumbents 0utperf0rm n0n-agile incumbents in terms 0f pr0fit gr0wth. C0mpanies
that c0mbine pr0duct devel0pment with IT 0perati0ns (0ften referred t0 as Dev0ps) and f0cus 0n
c0ntinu0us delivery are m0re effective when making dramatic steps t0 reinvent themselves.
There will be s0ftware testing under the agile appr0ach, which will detect flaws in the pr0gramme
and c0rrect them with0ut putting critical elements 0f the c0mpany at risk.
XOM may utilise the appr0priate metrics t0 assess what matters- XOM can evaluate their
perf0rmance by analysing the appr0priate matrix. If they disc0ver any flaws, fix them as s00n as
feasible.
Matrix-like business relevance- they can examine whether 0r n0t their firm is relevant t0 the
c0nsumer, and the c0nsumer can distinguish between 0ther rivals.
Flexibility- they may evaluate their firm based 0n h0w adaptable it is t0 market devel0pments.
Cust0mer satisfacti0n- XOM sh0uld f0cus 0n c0nsumer satisfacti0n by c0nducting a survey 0r a
brainst0rming sessi0n and asking their cust0mers ab0ut the level 0f satisfacti0n they are receiving; if
they are n0t satisfied, make impr0vements.
Team members can assess the firm in terms 0f empl0yee satisfacti0n. Is their staff still active? 0r are
they pr0vided with a suitable w0rking atm0sphere, etc.

10 | P a g e