Digital marketplaces have been growing for years in the consumer sector. According to Statista, more than 2.14 billion people globally will buy products and services online this year compared with 1.66 billion five years ago. Although businesses are following suit with 87 percent of B2B buyers making online purchases, the trend has yet to penetrate the steel industry with any sort of depth.

Why is that the case? Many of the reasons that consumers and other industries are rapidly shifting to online marketplaces apply to the steel industry as well. Steel suppliers, service centers and manufacturing companies will continue to feel competitive pressures that demand greater value at lower cost.

As the end consumer demands more customized products and services at lightning speed, all parties throughout the supply chain will be pushed to be faster and more efficient. Moving management of steel purchases to an online marketplace is one significant way to meet those growing market challenges.

1. Grow Transparent Relationships

One of the key factors of success for any business is strong relationships. Steel companies that have trusted relationships with suppliers, vendors, partners, and customers are poised to rise above the competition.

By joining a true online marketplace, buyers, sellers and service centers can easily expand those relationships to become more transparent than ever. Steel companies have conventionally dealt with the same organizations for years.

By participating on an online marketplace, steel organizations can enhance their existing relationships by connecting digitally, and leverage the marketplace network to find additional supply partners. It's imperative that the marketplace provide transparency to its members ensuring insight into who you are transacting with. This is critical to building future relationships.

Being able to access product and pricing information directly from a multitude of steel suppliers can help purchasers truly identify the best prices, find alternative supplies for hard-to-source materials,and shorten the time it takes to fulfill orders.

In addition, the synergy and transparency created by having industry colleagues just a message away can mean creative solutions to problems, win-win material deals and discounts, and a renewed sense of industry camaraderie. Tapping into the resources and expertise found in online marketplaces can help steel companies become more agile and, ultimately, more competitive.

2. Access Real-Time Pricing and Availability Data

Traditionally, steel purchasing processes involve outdated printed materials, spreadsheets, emails, and one-on-one conversations. This time- and labor-intensive process can be extremely inefficient, especially as multiple exchanges may need to occur to pinpoint actual steel prices and availability in the midst of multiple negotiations.

One of the biggest reasons to manage steel purchases on a marketplace is access to real-time data. As soon as suppliers post available materials, they are visible to all potential buyers. When an order is committed, that material listing immediately reflects new quantities and availability. Decisions and negotiations can be made more quickly, and the buying and selling process is streamlined, saving time and reducing costs for all parties involved in the transaction.

3. Facilitate Sustainability

A great deal of waste in the steel industry results from an inability to match ready supply with ready demand. By moving purchasing to an online marketplace, steel producers and distributors can turn inventory more rapidly, find buyers for excess materials, and reduce waste. For those purchasing steel, that can mean access to great prices as well as the ability to source alternative materials that may be able to meet or exceed manufacturing specifications while being more environmentally responsible.

In addition, the elimination of manual, paper-heavy processes reduces the number of printed catalogs, price sheets, faxes, and quickly outdated pricing and availability reports, which also impacts a company’s sustainability efforts.

For the industry as a whole, moving purchasing to an online marketplace means a better use of resources, a reduction of the industry’s carbon footprint, and a significant contribution to overall sustainability and environmental responsibility.

4. Build Side-By-Side Comparisons and Analysis

Since multiple steel producers can be accessed simultaneously, an online marketplace facilitates single-page analysis and side-by-side comparisons of product availability, quantity options, and pricing offers.

This eliminates the time- and labor-intensive shuffling through multiple pricing guides, catalogs and spreadsheets to ensure that comparable materials or quantities are being compared. For those making purchasing decisions, the process becomes clearer, easier and more efficient. In many cases, using an online marketplace means access to a greater number of options as well.

Member organizations can easily have real-time discussions and negotiations through an online platform, making decision-making faster, more accurate, and less stressful.

Finally, online marketplaces can provide a purchasing history in one location so that organizations can analyze the paper trail and better control spending when necessary. Spending thresholds and preferred vendors can be more easily tracked and managed.

5. Track and Manage Logistics Digitally

Logistics play a large role in how quickly steel can be shipped from producers to service centers or manufacturers. Online marketplaces have integrated systems that allow those using the platform to track and manage all shipments from one system, making it easy to see when items have shipped, whether there are delays, and how quickly materials can be expected.

This reduces or eliminates the age-old guessing game of how to schedule production and manufacturing as well as the many phone calls often required to check on order status. Having access to a transportation network can mean faster and less expensive shipping options.

6. Get Ahead of the Competition

Since the majority of the players in the steel industry have yet to make the move to online marketplaces, those who take the initial step will be significantly ahead of the competition. Although marketplaces will become more and more valuable as additional members join, there are enough front-runners for current participants to realize many of the benefits already.

More importantly, getting purchasing processes and workflows updated to accommodate online marketplaces early will mean that those companies will be well-positioned to take advantage of every new member who joins down the road. For those purchasing steel, joining early means that every new supplier can potentially provide materials at a better price or offer hard-to-source items that can boost production. For those selling steel, early participation means ready access to a rapidly growing and attentive audience of new potential customers.

7. Experience Easy, Low-Cost Entry

Joining an online marketplace is a relatively easy and low-cost investment for those in the steel industry. Existing platforms are built and maintained by those running the marketplace so moving purchasing operations is usually a matter of signing up for an account.

Standard user interfaces are easy to navigate, allowing buyers to quickly sort and search available materials, prices and suppliers. For those selling steel, uploading product and pricing information can be relatively easy when compared with the time it takes to create and distribute printed catalogs. More importantly, all this information can be updated continually, providing real-time details to prospective customers at every moment.

Marketplaces are often able to integrate into a company’s back-end systems, streamlining operational processes even further.

These top reasons for managing steel purchases on a digital marketplace should make it clear that organizations need to take the first step. The benefits and advantages are clearly worth the small investment, opening up access to potential customers, suppliers and partners who can help companies grow in agility, responsiveness and competitiveness. To learn more, visit felux.com or contact Scott Begin at sbegin@felux.com to learn more.