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Technology points the way to future growth and profits

Keywords: Tags  technology, service centers, Bob Weidner, Metals Service Center Institute, MSCI, Bill Hickey, Lapham-Hickey Steel, TW Metals Brian D. Robbins

Most distributor executives say the technology contemplated and often implemented at service centers these days is geared toward one common denominator: a more-efficient business.

“That is how service centers can be more efficient, more productive and more communicative, and how companies can operate their businesses better and achieve greater shareholder value,” Bob Weidner, president and chief executive officer of the Metals Service Center Institute (MSCI), said. “One of the things that has made the service center industry a great industry for over 100 years is that as the world changes, as business models change and as industry dynamics change, service centers, being phenomenal entrepreneurs, have adapted accordingly.”

Technological innovation is more of an ongoing process than a series of sudden breakthroughs, many distributor executives said, and therefore they are constantly looking inward to determine which of their equipment, processes or procedures need to be overhauled.

“It is a continuing evolution, with certain service centers being very innovative and looking to make the process more efficient throughout the system,” said Bill Hickey, president of Chicago-based Lapham-Hickey Steel Corp.

But the goals are the same as with any business innovation: improve efficiency, become safer, make a better product and increase profits. New tools and equipment are regularly coming to market that allow this, and new software is available to help run the shop floor as well as the administrative side of a service center. All of which ultimately help customers, distributor executives said.

“When you can do more for your customer, it brings the two of you closer together and hopefully strengthens your relationship,” said David H. Hannah, chairman and chief executive officer of Los Angeles-based Reliance Steel & Aluminum Co.

Some service centers take the use of the latest breakthroughs almost as a promotional mantra. “As new technologies continue to evolve TW Metals (Inc.) will take a leadership role in aligning product availability with emergent technologies,” a spokesman for the Exton, Pa.-based distributor said.

While several technological areas are often under review, changes in how the shop floor runs tend to deliver the best results, industry experts said. Advances in lasers and plasma cutters, for example, have revolutionized the speed and accuracy of fabricating products for customers.

Technology also has improved ways in which warehouses can be managed and used. Mobile technology such as smartphones and tablets allow everyone on the floor immediate access to computing power, which increases the speed and accuracy in which data is transferred between multiple departments and allows for more accurate shipments of the company’s products. 

But technology is a two-sided coin; with gains come a concern about balancing what is potentially being lost. 

“Day-to-day transactions are overshadowed by technology sometimes,” said Brian D. Robbins, president of the Association of Steel Distributors (ASD) and chief executive officer of Perry, Ohio-based Midwest Materials Inc. Robbins said he is looking to promote the relevance of a close-knit trade group in an increasingly technology-oriented world.

An active member of the ASD board of directors since 2004, Robbins took the helm during the organization’s annual convention in March, succeeding Lisa Goldenberg, president of Fort Washington, Pa.-based Delaware Steel Co., who was the third generation of her family to serve in the role.

“I am honored to be chosen to lead an organization with such a rich history,” Robbins said, adding that ASD members “easily transact thousands of tons daily” and are knowledgeable about steel products, vendors and customers and serve as valued resources through the supply chain.

Robbins said that as ASD president he will focus on drawing in new members by touting the advantages of networking and promoting the steel industry. “It’s an amazing network that fosters transactions that affect the bottom line and offers guidance in a nonthreatening, noncompetitive way.”

This is important when people can send one e-mail that reaches dozens of people who are looking for coil. Robbins said that his grandfather used to drive from Cleveland to Pittsburgh every month to look at a mill’s stock list, then call his salesman to discuss the list and place orders in the rolling schedule. “So one of my guiding principles is to redefine how to continue the relevance we provide,” Robbins said. “Relationships go beyond just a transaction. We want to make connections, find commonality and revive the spark of passion for the industry.”

Technology also has changed the map of the business world outside of the shop. “(Technology) has increased competition because everybody in the world can now sell in your territories,” technology consultant Scott Klososky said at an MSCI conference earlier this year.

Technological innovation is making business conditions more competitive and metal companies must adapt in order to thrive, Klososky said. Technology may improve business operations, but it also allows customers to “instantly find alternatives. If you make somebody mad, they are 30 seconds away from finding somebody else.”

In addition to remaining competitive, keeping up with technological advancements such as digital marketing and processing also will be necessary for companies to attract top talent. “Do you think young people these days want the Flintstones? C’mon. They want the Jetsons,” Klososky said.

The increasing flow of information also will necessitate companies becoming more transparent, he said. “(Young people) want to understand how environmentally friendly you are; what you are doing with your profits.”

Getting left behind on the technology front could make it tough to survive in a fast-changing world. “If you can see better into the future today, you’ll be able to make better investments. If you don’t, you’ll have four or five other companies in front of you gaining market share before you figure it out,” Klososky said.

Others agree—but only to a point. Technologies such as 3-D printing are not being developed enough to threaten service center manufacturing models and products in the near term, some said. 

“3-D printing is going to be fun to watch,” Hannah said. “For smaller, non-structural applications, it probably has a future in the metal side. ... But on the larger, structural applications, it’s going to be harder.”

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