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How digitization can contribute to increasing value creation in the steel industry

In times of crisis, it is more important than ever for steel companies not to bury their heads in the sand, but to recognize opportunities and act. Especially now, digitization initiatives should be pursued in order to emerge from the crisis stronger. This does not necessarily mean developing their own solutions, as there are solutions on the market that can be adapted to their own system landscape.

The competitiveness of the steel industry is currently being tested in a dynamic environment – pressure on companies is being exerted, for example, by the costs of capital commitment, overproduction (Grebe 2017, p. 30) and the threat of an economic crisis due to the corona pandemic (Sachverständigenrat 2020), which poses a threat to growth in the industry. The lack of a global level playing field increases the pressure on the industry to act (WV Stahl 2018/2019, p. 9). It is necessary to identify possible solutions and to answer the question of whether these can be implemented cost-effectively and effectively.

Even if structural problems have to be solved in the political arena, companies can now take measures to improve their competitiveness. In the following, a vision of integrated digitization in the area of supply chain management will show a possible solution for steel manufacturers. To this end, capital commitment and customer loyalty for growth are considered as fields of action.

An acceleration of decision processes as well as the optimization of the capital commitment in the company can be achieved through data-based forecasting.
The worldwide overproduction of steel (WV Stahl 2018/2019, p. 9) represents a structural problem for the industry and results in a high capital commitment as well as a negative influence on the cash flow in the companies concerned.
Reliable forecasting can be used, for example, to optimize production and inventory levels and, consequently, capital commitment. The basis for such a forecast is data from the supply chain and its structured analysis. Real-time data from activities and inventories of players in the supply chain can be evaluated via Big Data analyses using Artificial Intelligence.

With regard to customer loyalty, its strengthening can be used for growth, which can therefore represent a competitive advantage (Grebe 2017, p. 30). Closer networking with customers, e.g. through a positive user experience, can have a positive effect on competitiveness.
High quality and good service alone are no longer sufficient to retain customers, as the efforts of some manufacturers have shown. Examples of this are webshop solutions (Fraunhofer 2019, p. 13) or the comprehensive networking of operational systems with customer integration via omnichannel approaches (Thyssenkrupp 2018). The trend tends towards a stronger service orientation and easier order processing. The digitalization of processes should make order processing more convenient for all users. If, for example, a product is sold to the final processor via a wholesaler, or possibly a middleman, associated inspection documents, for example, can be conveniently and automatically made available to the respective actors for each transaction. Quality and manufacturer service are digitally and conveniently available in addition to information on product processing. Furthermore, authenticity can be verified at any time and confidence in the product can be further strengthened.

Digitization measures in the supply chain of steel manufacturers, which were discussed above, create transparency, collect previously inaccessible data and make it analyzable. This has advantages for manufacturers and their customers. Manufacturers learn more about their products as well as their processing and can realize optimizations in the supply chain, e.g. inventory levels, delivery times, forecasts, R&D and especially sales. Customers are more closely bound to the manufacturers, their product confidence is strengthened and it is easier for them to manage inspection documents or data on purchased products. Since the programming of IT solutions with these functions at steel manufacturers can only be achieved by qualified employees (PWC 2014, p. 37) and in-house development can therefore be very costly, it is advisable to compare external solutions.

A solution of this kind is offered by the innovative and highly specialized ETIV-System GmbH from Cologne. As an end-to-end real-time verification system, the online platform offers manufacturers a solution tailored to their needs and requires no additional IT effort.

For the first time, the system brings transparency to the supply chain, from production to the end user. Inspection documents, e.g. from the manufacturer, are stored in the system and are automatically imported (e.g. weight, dimensions, product properties). This information is transferred to a new, unforgeable digital certificate generated by ETIV-System, while the original inspection documents remain unchanged like an e-mail attachment. When a product is purchased, these certificates are individually reissued based on current transaction data (e.g. current cut history). One version of these certificates contains the existing remaining quantity for the seller and another contains the purchased quantity for the buyer. The certificate which was valid until the transaction becomes invalid. The certificates are managed by the users in a block chain-based cloud and serve as virtual sensors that collect data in real time along the supply chain. The collected data volumes are evaluated with the help of an artificial intelligence developed by ETIV-System and provide a data basis for decision makers with an additional visualization. This enables manufacturers to make forecasts as well as the basis for optimizing, for example, inventories, delivery times, forecasts and sales. Because the certificates are forgery-proof, customers have a guarantee of quality and service, they can easily manage the data on their products and are thus more closely linked to the manufacturers. The solution from ETIV-System is also cost-effective and easy to implement as an external service provider. If desired, a connection to own systems can be established to further increase the effectiveness of the solution.

• Fraunhofer Institut für Produktionstechnik und Automatisierung – IPA, 2019: Digitalisierung im Branchenfokus, Stahl- und Metallhandel, Aktueller Stand und künftige Bedarfe an Digitalisierungslösungen für die Anarbeitung in Stahl- und Metallhandelsbetrieben und Service-Centern, Stuttgart
• Grebe, Prof. Dr. Lothar, 2017: Digitalisierung im Stahlgeschäft – ein Überblick, in: Stahlmarkt, Ausgabe 8, 2017
• Pricewaterhousecoopers, 2014: Industrie 4.0, Chancen und Herausforderungen der vierten industriellen Revolution
• Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, 2020: Die Gesamtwirtschaftliche Lage angesichts der Corona-Pandemie, Sondergutachten, 22. März 2020, Wiesbaden
• Thyssenkrupp, 2018: Pressemitteilung: thyssenkrupp Materials Services wird ‚omni-fit‘, 18.04.2018
• Wirtschaftsvereinigung Stahl, 2019: Engagement für Stahl – Jahresbericht 2018/2019, Düsseldorf

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