TAKE A GIANT LEAP TO OVERHAUL STEEL DISTRIBUTION
The steel supply chain in China is
undergoing a major transformation. Currently, the steelmakers’ most popular
method of supplying material to the market is by selling through independent
trading companies to the users of the product. This is cumbersome and results in
minimal contact between supplier and user of the material. It, therefore,
stifles product development.
However, a new and quite radical system of steel distribution has taken hold. A
number of major steel companies have collaborated with e-commerce platforms to
set up a method of selling steel direct to customers.
It is reported that almost ten percent of all steel sold in China is now
generated through internet platforms. This is a remarkable transformation in the
method of procurement in a relatively short period of time. This new method is
proving very popular but does not solve all the distribution problems.
In recent years, the China Iron and Steel Association (CISA) has been pressing
for an overhaul of the existing method of steel distribution. Internet
purchasing may go part way to resolving some of the difficulties. It could bring
the steel mills and steel users closer together. This has to be a good thing if
this develops an understanding of their respective needs.
One of the biggest problems with the traditional system is that it creates an
extra layer of inventories throughout the supply chain than is absolutely
necessary in many cases. Documentation is duplicated and material handling can
be excessive. This may change little but the mills would be more in control of
the stock levels and not the distributors.
China Steel Review - July Edition
Also See: www.worldsteelnews.com
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