Distribution is a marketing tool used to organize accessible and convenient places and methods for selling a product for customers. This activity is process-oriented and is based on all management functions (planning, organizing, leading, and controlling). The foundation of the distribution process is distribution channels. In the steel sector, this refers to the specific organization of steel product sales. This organization consists of all business entities whose task is to offer products to buyers. Unlike in European Union countries, where the distribution of steel products is mostly carried out through specialized distribution companies (networks), in Poland, distribution is direct – handled by the producers (steel mills). This situation places an excessive burden of costs and risks on the producers. In the future, producers will seek specialized steel product distribution networks. On the other hand, major distributors (Konsorcjum Stali, Progres) will diversify their operational strategies, focusing not only on product distribution but also on the production of steel structures in their own plants and rebar shops. The article provides more details regarding the direction of changes in the steel product distribution market.
New directions in the distribution of steel products in foreign markets
The economy in European Union countries is adapting to global economic standards, where strong competition prevails due to limited sales opportunities for industrial products. Manufacturing companies are intensifying their production activities, preparing new product designs, and reorganizing distribution processes. Entities involved in the distribution of steel products are creating distribution networks and service centers based on modern technical and IT solutions. Market analysts state that innovation strategies for steel products, manufacturing engineering strategies (new production techniques), along with distribution and customer service systems, are the decisive factors for competition in the global steel market. It should also be emphasized that these three systems (production, distribution, and customer service) implement so-called simultaneous marketing (SM). Simultaneous marketing enables the achievement of an additional synergy effect, which is an increase in sales to end customers. Technical and IT progress in the distribution of steel products has initiated major changes in the steel product distribution market. The product delivery cycle has been shortened in both domestic and international transport. Commercial offers from companies are available on websites, and customers have the ability to communicate via the Internet and other specialized communication networks. The subject of distribution in the steel sector is a very wide range of assortments, and the effective use of IT helps customers make the right purchase. Steel product distributors are required to have order consistency, cost budgeting, detailed sales planning, and, above all, detailed tracking of individual transactions. Thanks to modern IT solutions, distributors manage product assortments in many dimensions and perspectives (type, category, quality parameters). IT systems allow for avoiding problems related to recording and analyzing products with different parameters (e.g., heat, cross-section, type of pipe or sheet, angle, bending radius, reductions, diameters, welds). It is possible to obtain any analytical sets and determine sales volumes in detail for the entire assortment. The information obtained on this basis is the foundation for preparing an attractive market offer. High values of individual orders mean that distributors cannot afford errors in their execution. Electronic document flow allows for reducing the risk of errors and accelerating order fulfillment. IT systems also provide data on customers. Access to this information allows for determining commercial terms for regular and special customers (quantity, prices, delivery terms, etc.). It should also be emphasized that the basis of a modern distribution process is operational controlling. The term controlling should be understood as the process of measuring and correcting performed tasks in terms of evaluating achieved goals. It is the collection, estimation, and analysis of information used to correct improper distribution processes, as well as identifying opportunities for improving their flow. Controlling allows distributors to rationalize delivery costs. It is implemented by specialized task forces, which include coordinators, planners, and controllers.
The article comes from the magazine “Logistyka” 6/2008.