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September 27, 1999

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As competition increases, companies play catch-up with IT

By Eileen Colkin

ntense competition has shaken up most markets in the United States, but nowhere is that more apparent than in the traditional American industries of metals and natural resources, which continue to be hammered from fast-moving usurpers. "Our industry is still being deluged with imports," says Gene Trudell, general manager of computer services at U.S. Steel Group. "It's a competitive time."

Not only that, but these industries are also being challenged by a whole a new wave of competition, one based on the commodity focus of E-commerce. "We've realized that our competitors going forward aren't our traditional competitors," says Chuck Williams, CIO of Georgia-Pacific Corp.

The solution for many: a head-first plunge into leading-edge IT, especially the Internet. "We're trying to use technologies that will keep us in the position as supplier of choice," says Trudell.

The particular IT challenges of the metals and natural-resources industries aren't so different from many brick-and-mortar markets: migrating electronic data interchange processes to the Internet, increasing supply-chain efficiencies, reaching out to the end customer in a channel-oriented business model. But the challenges of E-commerce, including disintermediation and commoditization, have proved particularly vexing for these traditionally hidebound industries. "We can't ignore this," says Williams.

That's why many metals and natural-resource companies are looking to IT to enhance their key competitive weapons. For example, U.S. Steel has traditionally used service as a differentiator to attract and keep customers, Trudell says. "We have to continue to look for ways to reduce our costs while retaining and enhancing our level of service to our customers." Now U.S. Steel is looking to the Web to support that strategy.

In April, U.S. Steel put in place an extensive extranet that connects customers to the company, so they can track the progress of their orders from placement to delivery. Complicating that task is the fact that many customers place substantial orders with requests for staggered delivery, and in amounts that are frequently changed. To address that, U.S. Steel developed an application that lets the customer use the extranet to control material releases.

The extranet has helped the company service its smaller customers, though it hasn't been as useful to larger buyers, who have historically processed orders using EDI. EDI is expensive for smaller customers, however, and U.S. Steel is focused on migrating as much of that process to the Internet as possible to make data available to this significant portion of its business. The company has implemented a sophisticated supply-chain system based on technology from i2 Technologies Inc., so that U.S. Steel can be ready when its EDI-loyal customers embrace supply-chain processes. "We've got the tools in place to meet the supply-chain needs, but the customers aren't necessarily there," Trudell says.

Migrating EDI to the Internet is a noticeable trend among companies in the metals and natural-resources industries, as they look to expand how they do business with distributors. "We continue to look for opportunities to build relationships with distribution customers through collaborative activities," says Terry Assink, VP of management information systems at paper products manufacturer Kimberly-Clark Corp. That includes using the Internet as an enabler for EDI capabilities and for supply-chain management.

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