“It will revolutionize the entire industry”

A steel trader goes digital: Gisbert Rühl brings Klöckner into the gigabit society. At the Digitising Europe Summit the CEO of the Duisburg Group discussed the hurdles and obstacles involved.

Gisbert Rühl bei Digitising Europe in Düsseldorf

Gisbert Rühl at the “Digitising Europe” in Düsseldorf (Photo: Vodafone Institute)

How can and will digitisation stir up the steel trade, Mr Rühl?

Gisbert Rühl: Our industry operates in a very traditional way; little has changed in the last 50 years. Orders are still often placed by telephone or fax. That will be drastically changed by digitisation, by which I mean mainly networking. We are aiming for complete digital networking with customers, suppliers, and even competitors and want to handle all processes via a digital industry platform in the coming year. This will revolutionise the entire industry.

Why is that necessary?

Rühl: With a more efficient supply chain, initially we will reduce costs. Take predictive sales, for example: the more accurately we can predict sales, the less resources we need to keep in stock. The same will apply to our suppliers, once they have the same knowledge. Therefore, we believe it is useful to create a common industry platform. Distributors can also use it to enhance our existing product portfolio, as well as companies operating in regions that we do not cover.

Together instead of against each other – are your competitors also ready for this about-face?

Rühl: Their openness increases as they realise that otherwise players from outside the industry could break into the steel trade – that would undermine our whole business. With a common strong platform we can resist this competition.

What advantage does this offer to customers?

Rühl: By bundling offers from numerous manufacturers and wholesalers, we will set new industry standards in terms of choice and price transparency. It is also conceivable that not only steel, but also other materials will become available on the platform, which will further increase the benefits to our customers.

Where did Klöckner find employees to spearhead this digital transformation?

Rühl: In the steel industry, as in other more traditional sectors, people often work very well from an operational perspective, but there are not necessarily many creative thinkers. Admittedly, this was hardly required or desired in the past. We have therefore set up our own start-up in Berlin, far from our headquarters in Duisburg: kloeckner.i. There we have two dozen employees who tick differently and are working fairly autonomously. The Group’s thinking is: if I want to change something, I have to plan well in advance and have a big budget. At kloeckner.i the approach is completely reversed: we quickly bring new digital solutions to the market, initially covering only the most basic functions. We make improvements and developments in close cooperation with our customers in the course of on-going operations. However, we need to continue working to fully incorporate this approach.

Will the Klöckner management view these activities sceptically or offer unconditional support?

Rühl: We are in a process of transformation and are therefore intentionally placing people in management positions who actively drive change. That someone merely works well operationally is no longer sufficient.

Klöckner embarked on the path to digitisation two years ago. How far have you come?

Rühl: The progress we have made so far is very gratifying: preliminary solutions such as our contract portal and our new web shop are in service. Customers in Germany can now centrally access our digital offering at www.kloeckner.de. Overall, we already generate approximately 9 per cent of sales via digital channels, and that number is rising. The industrial platform is planned for next year with the integration of competitors. Until then, we have to overcome some challenges. What we have found along the way is that digitisation brings us to a lot of ideas on how we can approach our business in new and different ways. But we also need to acquire the skills to make those ideas a reality.

In other words, it is more difficult than you thought to bring a traditional steel trader into the gigabit society.

Rühl: Not difficult, but very challenging. You have to keep up to date on all the new possibilities to avoid getting left behind. So I would advise all SMEs who are considering digitisation: start now! Just try something out! It doesn’t have to cost a lot. Small projects to start getting involved are still better than doing nothing. Digital changes come so quickly and are so revolutionary – no one should waste time

Klöckner & Co, within the industry referred to as KlöCo, was founded in 1906 in Duisburg and has a turnover of 6.4 billion euros (2015) and 9200 employees. It is one of the world’s largest producer-independent steel and metal distributors. Klöckner operates 200 locations in 14 countries serving 140,000 customers. The former management consultant Gisbert Rühl became Klöckner CFO in 2005, and has been CEO of the SDAX-listed company since 2009.