Networking and digitalization of the supply chain is the key to success

marketSTEEL interview with Ms. Ilse Henne, Chief Transformation Officer, thyssenkrupp Materials Services

marketSTEEL: thyssenkrupp is undergoing a major change process. To what extent is thyssenkrupp Materials Services affected by this?

Ilse Henne: Materials Services is an important part of thyssenkrupp. We have a strong market position: As the biggest mill-independent materials distributor and service provider in the western world we are the number 1 in Germany and Europe and number 3 in North America. We have proven ourselves many times over and are very actively driving forward our transformation. The Executive Board of thyssenkrupp clearly believes in the capabilities and strategy of Materials Services. This was confirmed by our Executive Board CEO Martina Merz at the recent Annual General Meeting.

marketSTEEL: You're talking about a transformation of Materials Services. In which direction do you want the journey to go?

Ilse Henne: The basis for our success is the proven Materials and Services business model, our cross-industry customer base and our diversified portfolio. The distribution business is our foundation and remains part of our core business. But customer needs are changing and clearly moving towards services. We are therefore changing from Materials AND Services to Materials AS A Service. Service is our new material. We are successively expanding our offering, particularly in the area of intelligent supply chain management, and are positioning ourselves so that we can even act as a pure service provider. We want to become the key player for a smarter connection between people and material.

marketSTEEL: You say you want to expand the supply chain services business. What makes you confident that your services will be in demand by your customers?

Ilse Henne: With our 250,000 customers worldwide, we have our finger on the pulse of the market. And we regularly conduct surveys with our customers. We therefore know that they want to concentrate on their core business. Although the reliable supply of the necessary materials is critical to our customers' success, it is not how they earn their money. This is where we take over. Materials Services is a forward-looking network creator that addresses the need for global collaboration to work well, even in complex supply chains and challenging environments. Connecting and digitalizing our customers' supply chain is the key to success – and that's what we're working on.

marketSTEEL: During the pandemic, global supply chains proved fragile. Are we now experiencing an era of glocalization in supply chain management?

Ilse Henne: Without global networks, without multisourcing, it will not work in the future. The lessons learned from the corona pandemic – namely that you need to be able to act even more flexibly in supply chain management – can be used to draw new advantages from global supply chains. Those who access numerous different sources and use data and digitalization to maintain an overview are well placed to manage global or local, short-term changes. That is why we are already rethinking the structures of global supply chains. It's about combining flexibility, efficiency and security and managing complexity. We call this 'connecting smarter'.

marketSTEEL: Digitilization is therefore becoming increasingly important. Where does Materials Services stand?

Ilse Henne: Materials Services is already very digital. It goes without saying that we are automating and digitalizing our distribution business. Our customers have long been able to order from us via digital channels as part of our omnichannel strategy: in North America at Onlinemetals, in Germany via Schulte's B2B portal, and most recently in the UK via Steelbay Exchange. These are just three examples of the various online stores and customer portals that we use. But, it's not just a matter of routing distribution business through other channels. Our approach goes much deeper: we are increasingly translating what we have long been doing for ourselves into solutions and products for our customers. This includes, for example, our self-developed IIoT platform toii. toii enables us and our customers to improve the utilization of processing machines and thus automate processes across the entire supply chain and make them more efficient. Another example in terms of IT is our Supplier Network Tool. This platform enables us to network the capacities of external processors with our customers. So, with our Materials as a Service strategy we are expanding our IT-based service portfolio and developing new, scalable business models.

marketSTEEL: What role does the sustainability factor play in your business?

Ilse Henne: Sustainability is a central component of our agenda and firmly anchored in our corporate vision. For us, sustainability has economic, ecological and social components: We want to make the best possible use of the finite resources available – carefully and responsibly. This applies to materials, raw materials, financial resources and people. Here, too, we are proceeding very consistently and in many steps: because in a business as complex as ours, there are many levers to pull. Whether in production, processing, sales, warehousing and, of course, especially in logistics - there are opportunities everywhere to become more sustainable. Through logistics and route optimization, the use of renewable energies and the avoidance of waste. And this is where digital transformation plays an important role as well.