THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE

PRESIDENT EUROMETAL
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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

ADAM SMITH IS ALIVE: THE RATIONALE OF INTERNATIONAL TRADE Without International Trade
Small national markets. Limited economies of scale. High prices and near monopoly. Limited product diversity. Different standards.
Country 2

With International Trade

Increased competition. Economies of scale. Specialization. Lower prices. Interdependencies.

Country 1

Country 4

Country 3

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

MARITIME LOGISTICS

ARE A CORNER STONE IN INTERNATIONAL TRADE

Gibraltar

Bosporus Suez Hormuz

Panam a

Bab el-Mandab M alacca

Good Hope M agellan

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

DISCONNECTING PRODUCTION AND DISTRIBUTION

IS THE KEY DRIVER OF INTERNATIONAL STEEL TRADE

R&D

Core BaseMarketing / Retail Logistics Manufacturing Base

Distribution

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

CHANGES IN GLOBAL STEEL TRADE:

Before 1970
Developed Countries

INCREASING INTERDEPENDENCE OF WORLD ECONOMIC REGIONS

After 1970
Developed Countries

Emerging Countries Industrial Pole

Emerging Countries Flows of raw materials

Flows of rolled steels

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

INTERNATIONAL STEEL TRADE

Stage Until the 1970s Nature

GLOBAL ENVIRONMENT IS CHANGING Function Cope with scarcity

Immobile factors of production

Late 20th century

Mobility of factors of production

Promote economic efficiency

Early 21st century

Global production networks

Added value within commodity chains

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

THE GLOBAL TRADE ENVIRONMENT IS CHANGING:

Before 1111 s Im m ob ileFactors of P rod uction Co un t ry A
1 1 1 1 s onward Commodity Market

FROM BULK POINT-POINT-TO-POINT TOWARDS COMMODITY CHAINS

Co un t ry B

Bu lkp o in t -t o-p oin t

1 1 1 1 s 1111 s M o bility o f Fa ctor s of Pro duction Co nt a in e r ship pin g

Glo ba l Pro ductionN et w ork s

Co m m o d it y cha in Global Market

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

ECONOMIC INTEGRATION IS A STRONG ENABLER

FOR FREE TRADE OPERATED COMMODITY CHAINS

Po litical Un ion

Sh a rin gcom m onle g a l, fisca l a n d fin a n cia l fra m e w ork Com m on cu rre n cy, h a rm on ize dta x ra t e s, com m on m on e ta ry a n dfisca l p olicy: EU( p a rtia l) Fa ctor s of p rod u ction m ove fre e ly b e tw e e nm e m b e rs Com m on e xt e rn a lt a riffs

ion ra t t e g l of in Le ve

Econo m ic Un ion Co m m on M arke t Cu stom s Un ion Fre e Tr ade

Fre etra d eb e t w e e nm e m b e rs: N AFTA, M e rcosu r, ASEAN(p a rtia l) Com p le xit y

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

SUPPLY CHAINS IN INTERNATIONAL STEEL TRADE:

OPTIMIZING THE FOUR TEES

Transaction costs Tariff and non-tariff costs Transport costs Time costs

THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

FREIGHT COSTS ARE A TOP ISSUE IN TOTAL IMPORT COSTS

FREIGHT COSTS FOR IMPORTS IN WORLD TRADE (% OF TOTAL COSTS)

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

SINCE 1980, CONTAINERS HAVE GAINED TOP MARKET SHARE

SHARE OF CONTAINERIZED CARGO IN GLOBAL TRADE, 1980-2000

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1111 1 1 1 1 1 1 1 1 1 1 1 1
Containerized Cargo Other General Cargo

s t n o l i M

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

INTERNATIONAL STEEL TRADE

TRIGGERS INTERNATIONAL STEEL TRANSPORT CHAINS

International Steel Trade

A
Origin
Trade barrier

B
Destination

Producer

Steel Transport Chain

Rail Maritime Transshipment Customs Road

Processor

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

FORWARD AND REVERSE STEEL INTERMEDIATION TO COME ?

Recyclers

Collectors

Forward Channel Reverse Channel

Consumers

Producers

Distributors

Suppliers

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

STEEL DISTRIBUTION BUSINESS MODELS

ARE IMPACTED BY THE LAST MILE IN PHYSICAL DISTRIBUTION

Massification

Atomization
Frequency Capacity

GLOBAL

HINTERLAND

REGIONAL LOCAL

Shipping Network

Corridor

Segment Inland Terminal

Customer Last Mile

Gateway

Distribution Center

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

DISTRIBUTION IS THE INTELLIGENT MATCHMAKER

STEELMAKER STEELMAKER MODEL MODEL
HIGH VOLUMES LONG RUNS

BETWEEN STEEL PRODUCERS AND STEEL CONSUMING INDUSTRIES

ECONOMIES OF SCALE

DISTRIBUTION, SERVICE AND SUPPLY CHAINS

SMALLER ORDERS

ADDITIONAL PROCESSING

INCREASING COMPLEXITY RAPID RESPONSE

SHORTER LEADTIMES DELIVERY REQ

SERVICE AND VALUE FLEXIBILITY

MARKET MARKET MODEL MODEL

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

MARKET FUNCTIONALITIES AFFECT BUSINESS MODELS

CONSEQUENTLY DIFFERENT BUSINESS MODELS WILL ALSO ASK FOR A DIFFERENTIATION REGARDING THE DEFINITION OF

STRATEGIC STRATEGIC MARKET MARKET POSITIONING POSITIONING OPERATIVE OPERATIVE BUSINESS BUSINESS PROCESSES PROCESSES FINANCIAL FINANCIAL INVESTMENTS INVESTMENTS IN ASSETS AND KNOW HOW

PROXIMITY BUSINESS

FOCUSED ON SERVING REGIONAL / LOCAL MARKETS

SUPPLY CHAIN BUSINESS

FOCUSED ON INTEGRATING INTO VALUE ADDED NETWORKS

MARKET SUPPLY BUSINESS

FOCUSED ON MATERIAL SOURCING AND HANDLING

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

ALTERNATIVE BUSINESS MODELS

A Specialised Central Stocks feeding Proximity Stocks
P1 P2 P3

REQUIRE ALTERNATIVE LOGISTIC MODELS . . . .

B Full Range Central Stocks linked to Dispatching Points
P1 P2 P3

INTERNAL INBOUND

P1

C Specialised Central Stocks linked to Dispatching Points

P2

P3

CST1

CST2

CST1

CST2

CST1

CST2

OUTBOUND

PST1

PST2

PST3 PST4

DP1 .. DP2

DP8 ..DP20

DP1 .. DP2

DP8

DP20

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

. . . . LEADING TO ALTERNATIVE FREIGHTING STRATEGIES

Shuttle Freight Consolidate Freight

Liner Freight

Milk-Run-Freight

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

OPTIMISATION OF THE FREIGHTING NET

Legend Production Harbour Producer A Producer B Producer A+B Producer C Legend Production Harbour Hub

IS A KEY ISSUE IN STEEL DISTRIBUTION

ISSUES AT STAKE Reduce logistics costs Improve customer service Synergies by clustering freight volumes Reduce idle return freights Think in larger economic spaces

As is-Situation

Optimising freights

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

OPTIMISED FREIGHTS LEADS TO NEW CUSTOMER BOUNDARIES

Legend Production Harbour Hub

AND TO NEW CHALLENGES IN THE SALES ORGANISATION

Optimising freights

Optimising Customer Boundaries

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

THE ULTIMATE LOGISTIC & FINANCIAL CHALLENGE

ADDED VALUE POTENTIALS ALL ALONG THE SUPPLY CHAIN

ADDED VALUE = OPTIMISATION OF STOCKS AND THEIR TURNOVER THROUGH A SINGLE LOGISTIC NETWORK OF ALL STAKEHOLDERS

LOGISTICS

PRODUCTION

DISTRIBUTION

CONSUMPTION

CAPITAL

EMPLOYED

CAPITAL BECOMES BECOMES MORE MORE IMPORTANT THAN STEEL

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

FINALLY AN OUTLOOK . . . .

. . . . NEW CHALLENGES EVEN FOR OLD HEROES

IN SEARCH OF A NEW GLOBAL STEEL + METALS DISTRIBUTION PARADIGMA, INNOVATIVE DISTRIBUTORS ARE DEVELOPPING ADVANCED VALUE NETWORKING BUSINESS MODELS AND WILL CLEARLY CHALLENGE REGIONAL HEROES
ACTUAL VALUE CHAIN
GET-THE-PRODUCT-OUT ORIENTED ONE WAY BUSINESS DEVELOPMENT MISSING OPPORTUNITIES OF RESOURCES SHARING

FUTURE VALUE NETWORKING

MARKET AND SEGMENT BASED VALUE NETWORK ORIENTATION CAPITALISING ON LINKING ALL RELATED VALUE CHAINS OF CUSTOMERS, DISTRIBUTORS, PROCESSORS AND PRODUCERS FOR EFFICIENT LOGISTICS OPTIMISE CUSTOMER PROCESSES PRESENCE IN ALL WORLD MARKETS TO SUPPORT THE WORLD FACTORY AND DELOCALISING INDUSTRIES

UNUSED SYNERGY POTENTIALS MISSING BUSINESS OPPORTUNITIES

Metal One promises to become the customer's most capable partner

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THE ROLE OF STEEL TRADE & STEEL LOGISTICS IN BUSINESS MODELS FOR STEEL DISTRIBUTION GEORGES KIRPS, VICE PRESIDENT EUROMETAL

TO OPTIMISE CUSTOMER PROCESSES - A STRATEGIC OPTION!

HIGH VALUE ADDED PRODUCTS COST SAVING LEADS TO BETTER PRODUCTIVITY IMPROVE MARKETING&SALES DEVELOP NEW CUSTOMER BUSINESS MODELS

WORLD-WIDE

CUSTOMER BASE

VALU E UNIQUE Metal One promises to become the customer's SERVICE most capablePROPOSAL partner SUPPLY CHAIN MGT TECHNICAL SUPPORT FINANCING & IT NETWORK LOGISTICS - FREIGHTING STOCKING - PROCESSING TRANSFORMATION SOURCING - TRADING

STEEL AND METALS INTERMEDIATING VALUE NETWORK 23