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Author:Hämäläinen, Erkki 
Title:Evolving Logistic Roles of Steel Distributors
Series:Acta Universitatis oeconomicae Helsingiensis. A, ISSN 1237-556X; 224
Series no:A-224
Year:2003  Thesis defence date: 2003-10-31
Discipline:Logistics
Electronic dissertation: » dissertation in pdf-format   [1866 KB]
Index terms:Logistics; Logistiikka; Metal industry; Metalliteollisuus
Language:eng
Bibid:297341  |  Availability info (Aalto-Finna)
ISBN:951-791-807-0
Abstract (eng):There are several intermediaries in an industrial supply channel from the mill to the product producer (original equipment manufacturer, OEM) that may hold title or process the material, or both. Traditionally, wholesalers and importers hold inventories of different items while OEMs, component suppliers or contract manufacturers do the processing. Steel service centers (SSCs) are relative newcomers that combine the stockholding and processing activities. The tremendous growth of the international SSC industry during the late nineteen hundreds has coincided with several structural changes in most steel-using industries.

The research problem of this thesis is the transformation of the logistic roles of the operators excluding, however, some service providers such as transport companies, carriers, forwarders and consultants, as they do not own, stock or process the products. Empirical analysis is guided by the choice of a theoretical framework consisting of three models. The first is the Distribution Service model of Shapiro and Heskett that relates the extent of stockholding to the speed of delivery. The second model of Production Capabilities is by Hayes and Wheelwright, and it provides normative advice on the matching of the desired product-mix with the required automation in processing facilities. The third model considers the physical characteristics of products as potential determinants of the appropriate type of intermediation. In the case of bulky products such as steel and paper, one would expect the logistics capabilities of operators to affect the choice operational units and intermediary roles of companies despite the different forms of financing, customer relationships or vertical integration. To that end, a framework for classifying the intermediate products in terms of size, weight and design complexity was developed here to trace the footsteps of logistic operations.

The objective is to analyze the logistic capabilities in terms of distribution services and manufacturing processes of the operators in any industry, and to determine the evolution of the logistic roles of the operators in steel distribution with special focus on the Finnish market. For comparison, some general trends are proposed from literature for finding the direction of evolution. These trends point towards higher levels of service, investment in automated processing, and more complicated designs of products. A historical review of the steel markets in several countries is then used to elaborate the logistics roles that the different operators have taken on during the transformation of markets and distribution channels.

The evidence for these trends is sought in steel distribution in the US and Europe. The findings indicate that transformation from ordinary stockholding to value-added processing and specialization in local and international steel distribution has taken place. The differentiation of the logistics roles has created a competitive market of regional, multi-location SSCs with a full-line availability and versatile processing service and stockists each specialized on a narrow range of product lines.

Finally, the evolution of Finnish steel distribution is described from a historical perspective with three periods determined by the business environment of imports, domestic production, and open markets. The steel industry in Finland has followed, by and large, the international trends with the exception of lesser role of independent steel service centers and considerable time lag. The key roles for coordination have changed from entrepreneurial importer or trading house to producers closely associated with the steel mills, balanced by consolidation of stockists and steel service centers. Eventually vertical integration and international trade have dominated the operations especially in Scandinavia. The applicability of the framework was explored also in the cases of paper and sawn goods industries resulting in satisfactory results concerning the identification and separation of the roles of operators in heavy logistics.

To conclude, the framework used in the thesis proves applicable for the analysis of logistic operations and corporate roles in distribution. The diffusion of the roles of intermediary companies from the early days of industry seems to reflect the type of integrative strategy fashionable at that time rather than too low a resolution of the matrices. Especially the new model of Product Characteristics succeeds in separating the roles of most operators in any industry whereas the models of Distribution Services and Processing Capabilities run into difficulties in proper estimation of channels dealing with assembled goods and pure stocking operations, respectively. The recent development in steel industry does indicate that suppliers and service centers are differentiating and expanding their logistic roles further, thereby narrowing down the domain of mills and OEMs within the distribution channel. Hence, it remains an intriguing question for the managers and scholars alike whether the results that synthesize the history of heavy logistics also illustrate the basic principles of networking for modern supply chain management.
Thesis defence announcement:
Raskas logistiikka murroksessa

KTM Erkki Hämäläisen logistiikan alaan kuuluva väitöskirja ”Evolving Logistic Roles of Steel Distributors” tarkastetaan Helsingin Kauppakorkeakoulussa perjantaina 31.10.2003. Väitöstilaisuus alkaa klo 12 HKKK:n Chydenian STORA ENSO -salissa (Runeberginkatu 22-24). Vastaväittäjänä toimii professori Olav Solem (Norwegian University of Science and Technology) ja kustoksena professori Aimo Inkiläinen (HKKK).

Hämäläisen väitöskirja tutkii raskaan logistiikan välikäsien roolimuutoksia Suomessa ja ulkomailla. Terästeollisuudessa perinteiseen maahantuontiin ja varastonpitoon perustuva jakelu on kokenut merkittävän murroksen. Nykyään tyypillinen kysyntäohjautuva logistiikka on järkeistänyt palvelut ja niiden tarjoajat uusiin rooleihin, joissa ratkaisevaa on koko ketjun kilpailukyky. Väitteitä perustellaan kolmella mallilla, jotka erottelevat varastointi- ja jakelupalvelut, tuotantomenetelmät ja käsiteltävien tuotteiden ominaisuudet eri toimijoiden ja roolien välillä. Väitöskirja tarkastelee yleisiä kansainvälisiä trendejä, joista ensimmäinen koskee palvelujen erikoistumista ja parantumista valikoimien laajentuessa ja toimitusnopeuksien kasvaessa, toinen valmistuksen automaatioasteen nousua ja kolmas tuoterakenteiden kehittymistä ja koon muutoksia. Teräsjakelussa etenkin palvelukeskukset ovat lisänneet rooliaan paljolti perinteisten varastonpitäjien ja valmistajien kustannuksella. Jakeluteiden eriytyessä ja erikoistuessa komponenttien alihankkijat, sopimusvalmistajat, e-kauppa ja logistiikkaintegraattorit ovat kehittyneet osaksi logistista järjestelmää.

Kansainvälistä roolien muutosta verrataan alan historiaan Suomessa. Hämäläinen nimittää ensimmäistä 1970-luvulle kestänyttä jaksoa tuontivetoiseksi, toista kotimaan tuotantoon perustuvaksi ja kolmatta – 1990-luvulla alkanutta jaksoa – avoimien markkinoiden mahdollistamaksi vaiheeksi. Esikäsittelyn siirtyminen taaksepäin jakeluketjussa ja varastoinnin keskittyminen on tapahtunut Suomessa myöhemmin kuin Ruotsissa, Länsi-Euroopassa tai USA:ssa. Teräksen jakelu on keskittynyt täällä ja muuallakin Euroopassa harvoille suurille toimijoille. Kanavan koordinaattorin rooli on nyt siirtynyt paljolti teräspalvelukeskuksille, vaikkakin niiden osuus Suomessa on vähäisempi kuin esim. USA:ssa.

Tutkimuksen viitekehys, jossa tuotteen ominaisuuksiin perustuva malli on yksi tutkimuksen tuloksista, paljastaa erityisesti kilpailun ja erikoistumisen tuloksena syntyvät luonnolliset jakeluroolit ja niiden ajoittaiset päällekkäisyydet eri maissa. Väitöskirjan mukaan vastaava jakelurakenteen evoluutio voidaan jäljittää myös muilla raskaan logistiikan toimialoilla kuten paperin ja sahatun puutavaran jakelussa. Jatkotutkimuksen aiheeksi jää kehitetyn viitekehyksen soveltaminen ja jakelukanavien muutoksen vertailu myös muilla toimialoilla.
Opponents:Solem, Olav
professor
Norwegian University of Science and Technology, Norway

Chairperson:Inkiläinen, Aimo
professor
Aaltodoc:https://aaltodoc.aalto.fi/handle/123456789/11208