Learnings from the SAP Conference for Metals, Mining, Building Materials and Forest Products – Part 2: Customer Channel Transformation
Severstal’s Sergey Dunaev highlighted 3 major ongoing initiatives in their journey to becoming an intelligent steel company:
- E-Commerce and the transformation of the sales channel
- Digital supply chain and smart factory
- and the application of predictive and AI across the enterprise.
Severstal were by far not the only company putting an emphasize on their sales strategy. In mulitple facets, also Cemex, Wienerberger and DormaKaba shared their vision & journey.
Why bother? There is a lot of conversation about blurring industry boundaries, and how companies break out of their box to gain more market share, capture more profit, or even transform their business model. In most cases, this happens in the sales channel.
B2B going B2C
I still somewhat struggle with is. Count me in for omnichannel sales, digital ecommerce for standard products and configurables. B2C is a different story. I see this appear increasingly on strategy slides, and I believe this means different things.
From contract buyers to spot sales, from B2bigB to B2jobshop
Specifically large steel manufacturers like a thyssenkrupp, ArcelorMittal or a Severstal sell a lot of steel to large industrial companies e.g. into the automotive industry, oil and gas, or engineering industry. This business is defined by long-term contracts and tight supply chain collaboration.
When I read B2C in metals this often means a secondary segment of smaller businesses although not really targeting end-consumers but smaller job shops with a fast paced business that does not allow for long term contracts. In the old days, such customers would have been serviced through metal traders and pure service centers. Today, the large manufacturers strive to integrate this business into their digital channel – to capture more margin and market.
Like in any channel expansion, this raises some interesting questions on channel conflict and competing with one’s own clients. (A good read on how SAPPI has addressed this can be found here.)
After hours of inside sales reps
During a design thinking session outside this conference we explored the day in a life of such job shop owner, and how (and when) they would like to order material for their next job. From all that I have heard and seen, I expect this business to move completely online. Customers do no longer want to talk to sales people. They want to order after hours and get an immediate response. A consumer-like buying experience will be expected for this channel, and if a steel company can provide this directly, why still talk to the middle-man?
The journey to B2B2C in building materials
I listened to CEMEX’s presentation on their distribution network. I had to read through my notes and the slides twice. While B2B2C is not a new concept in the building materials industry, the sophisticated CEMEX approach deserves a closer look and goes even far beyond what was presented.
No more phone calls
They covered CEMEX Go, an impressive achievement by itself, the first end-to-end ecommerce platform for cement, ready-mix and aggregates covering the full customer journey, tightly coupled with the backend execution. This is a noteworthy shift from previous phone based interactions to a 24-7 access via mobile commerce for medium and large customers.
But I would rather focus on Construrama and its evolving role in the CEMEX retail and distribution network. Construrama has been founded in 2001, and has now over 1800 point of sales. It targets builders and the professional segment.
Only around 10% of Construrama sites are wholely owned by CEMEX. The larger part operate either as independent partner-driven resellers (that can sell products beyond the CEMEX portfolio), or in a tighter controlled franchise model.
Competitive Edge for the Network
Construrama Supply is an additional pillar of the network. It supplies the Construrama sites and gives them a competitive edge by providing scale and price advantages. And Construrama and CEMEX collaborate also on the fulfillment side: CEMEX can supply directly on behalf if a Construrama alone cannot fulfill.
Evolving to B2C
Initially Construrama was launched as a closed B2B distribution network to the professional segment, a “closed B2B” set-up as the presenters have put it, with the focus to improve the last mile delivery capability.
Today, CEMEX is expanding Construrama – on the same SAP Commerce platform – into an open B2C model, targeting final consumers. They emphasized how dramatically the expectations and requirements are different in the end-consumer play. You are measured against an Amazon, Starbucks – very personalized experiences.
Re-thinking value – Patrimonio Hoy
Patrimonio Hoy is a lighthouse initiative in the building materials industry, and it is tightly connected to the Construrama distribution network. Patrimonio Hoy targets the low-income population and the so-called self-construction segment. It both helps the poor to reducde cost, risk and time to build, and generates good will for CEMEX. Find more information in the linked Harvard Business Review article or the linked website in the paragraph header.
This was not presented at the conference. But it highlights nicely what it means to understand the needs of a new customer segment. And on a personal note, it is an excellent example of improving people’s live and company purpose.
Another highlight of the conference was in my view Wienerberger’s Mathias Deleu. Again, this is about empathy and business, about understanding customers better, their customer journey, and their needs along this journey.
Putting a beautiful ecommerce site on the web will not help you. As Mathias Deleu put it, it’s about understanding the friction points along the customers’ journey, and then defining interactions – with the propoer timing, channel and content – all in a consistent way.
Typically those friction points happen after the sales process, and may be related to how to apply a product, how to re-order, adjust or return product, or related to logistics. These points nicely closed the loop with discussions I had with a number of steel companies. The interaction does not end with sales, the differentiation starts here – adding logistics services, providing supply chain visibility options, insights into certifications, abillity to adjust quantities or configurations, and many more.
This very much reminds of a youtube interview with voestalpine’s Robert Schweiger. Their major objective was to provide all customer related data-points to their sales reps out in the field, including all customer-related information, transactions, interactions in the back-end systems. In other words, understanding the entire customer journey.
Along these lines, Wienerberger decided for a best of suite, rather than a best of breed approach and works with a combination of Adobe Experience and SAP C/4HANA solutions.