Anyone who regards private deals and control of local markets as key competitive strengths should feel threatened by scrap e-commerce. Everyone in the supply chain must determine what value he adds to his customer that the Internet can't replace. What ultimately matters, said Al Cozzi, CEO of Metal Management Inc., is not so much who consolidates or who uses the Internet but who serves the customer best. Despite Philip's nervousness, many in the scrap industry welcome the transparency e-commerce will bring. Many are tired of the games people play the first week of the month as they figure out which way the market is headed.
Many dealers welcome the opportunity to expand into markets presently controlled by brokers.
The consumers will drive the move to e-commerce, Padnos says. Other steelmakers are focusing more on the sell side. E-commerce by its very nature means a community of buyers and sellers standardizing how they do business. E-commerce will help the fragmented scrap industry standardize specs and business practices. Scrap and steel companies need to sort out the best way to do business on-line.