tkMX Corporate Ventures

The concept of digitising the steel industry is well established. Numerous earlier initiatives have demonstrated the slow pace of trade, with some even failing in their attempts to enhance the process. One such example is Mapudo: https://medium.com/swlh/why-mapudo-failed-5f3519f1b277

Terry Sargeant (CEO of SteelBuy Ltd. and former CEO of thyssenkrupp Materials UK) succeeded in generating interest in a B2B marketplace solution. Through the internal Shark-Tank-format of tkMX (thyssenkrupp Material Services), he secured development funding for a proof-of-concept.

A website for managing excess inventory was developed within the constraints of limited resources.

The offer underwent regular updates and was exclusively accessible to a curated group of interested parties. A substantial volume of products were swiftly sold, demonstrating the potential to streamline the traditionally sluggish process from inquiry to quotation to transaction, thereby enhancing efficiency.

The business concept was shown to be viable in principle. However, the next step was to determine the economic potential of the market, to define the product design required for sustainable market establishment and to strategise the scalability of the business model.

BCG X was entrusted with this task. In a feasibility study lasting several weeks, the vision for SteelBuy was developed and presented to the tkMX board.

Business – Go-to-Market – Product – Venture

Following the Series-A financing, the task at hand was to secure an experienced service provider for product development. Following constructive discussions with Terry Sargeant and Ilse Henne (Board Member of thyssenkrupp AG and former Chief Transformation Officer of thyssenkrupp Material Services), we successfully positioned ourselves as the service provider and commenced collaboration with BCG X, who had already been designated as development partners.

The project was divided into three working groups: Business & Go-to- Market, Product, and Venture. Our area of responsibility, Product, encompassed all aspects from strategy to discovery to delivery. An agreed-upon approach model at the outset ensured a highly open, transparent, and constructive collaboration. Affiliations with various companies were quickly set aside, and together we became the SteelBuy team.

In parallel with the product realisation, the venture was not only established as a legal entity, but also staffed to support the recruitment of people and roles to continue the work post-incubation.

Re-framing and identifying user requirements

At the beginning of the project we worked with an initial static prototype, which was used to visualise the vision of the project. The result was based on various interviews with different market participants. For the actual product realisation, it was essential to evaluate the collected results and compare them with the requirements of the primary user group and bulk purchasers of raw materials.

Business model transformation

Traditional steel trading is anything but digital. It's usually based on a contract between seller and buyer. Customers with a short-term demand for steel products, often reach out to multiple sellers to obtain various offers. The entire process, from the initial inquiry to completed transaction, can span several days. In addition to a broad network, excellent communication skills are crucial for achieving success in this context.

If a retailer offers products at unusual low prices, competitors become aware of their excess stock. Consequently, sellers face the challenge of offloading surplus inventory only with difficulty and under unfavorable conditions. Additionally, there is a risk that existing customers will demand to purchase products under the same terms.

Overall, the effort involved in managing overstock is disproportionately high compared to the returns.

SteelBuy addresses these and many other challenges with its product promise, offering an innovative solution to streamline and improve the efficiency of handling excess stock.

Product from definition to delivery

The product definition was the first milestone, encompassing the scope of the solution in three distinct phases with various intermediate stages: the Earliest Testable Product, Earliest Usable Product, and Earliest Releasable Product. These phases are part of the BCG X approach, designed to evaluate the business model at an early stage.

The product definition phase was constrained to a maximum duration of four weeks, within a total incubation period of seven months. By employing methods such as use cases, service blueprints, and business process diagrams, we identified the key functional features essential for fulfilling the business objectives.

By the end of the first phase, the product was ready for testing: the software architecture had been defined, the general operating concept and visual design had been evaluated, and the initial functional components were in place. While the design team integrated the business requirements into the product and tested its acceptance with potential users using prototypes, we consolidated the results in engineering and rapidly developed a complete product.

Matchmaking at Scale

One of the most critical factors for lasting success was the process of matchmaking. The primary question to address was how customers find products online and how sellers effectively advertise their products. We connected with domain experts to catalog the taxonomy of various steel products and record their respective properties within a defined set of rules.

Using evaluation criteria that are used for the ideal selection of suitable steel products, we developed an algorithm that not only finds the right product based on a search query, but also makes intelligent suggestions for similar alternative products.

The algorithm utilises the expert knowledge of steel industry professionals with over 20 years of professional experience to deliver results that are of great value to buyers and sellers alike.

Conclusion

From vision to delivery in just seven months, we managed to develop SteelBuy, a product that is revolutionising conventional steel trading. An innovative platform was created that makes trading metals more efficient and transparent in close co-operation between the partners SteelBuy, thyssenkrupp Material Services, BCG X and Chroma X.

The team was able to make ongoing optimisations and achieve a high level of acceptance among industry experts because of the iterative approach and continuous feedback.

SteelBuy continues to attract new users and expands its range of materials. It is supported by a product that is focused on business objectives, tailored to the specific needs of users and has changed little since its release in November 2022.

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