Required: Design a Balanced Scorecard for TripleS-C. Be sure to articulate the linkages among the metrics in thedifferent categories.
Here is the case it pertains to:
Traditionally, steel purchasers fall into one of two groups.Very large customers such as automobile and appliance manufacturersfall into the first category. These customers purchase steel frommills and have it delivered to processors for cutting tospecification. They might also buy direct from one or more of theapproximately 3,500 steel processors or from wholesalers (normallycalled service centers). In all three instances, the cut steel isdelivered to the customer, often on a just-in-time basis. Thesecond group comprises smaller-volume firms such as metal stampersand fabricators. Firms that make equipment, agricultural tools, andheating and air conditioning units also fall into the second group.These small to midsized companies, which purchase steel as bothcontract customers and spot buyers, but in relatively smallquantities, also tend to have extensive needs for special alloysteels and odd sizes. For the past decade, the variety of the steeldemanded has steadily trended up, while the average lot size hastrended down. These trends, which partly reflect increasedcustomization and the growth of the just-in-time philosophy, areexpected to continue, if not accelerate.
Triple S-Câs founder, Remus Illies, worked at a major steelmanufacturer (and was considered a rising star until he quit).Remus realized that the bulk of the distribution industry revolvedaround coordinating action. Managing information flow is key. Remustherefore set up Triple S-C, which does not own any warehouses orprocessing facilities. Instead, Triple S-C is a coordinator thatbuys the steel, has it processed, and has it delivered to thecustomer. In the process, Triple S-C might deal with as many as sixseparate entities. Triple S-C maintains an extensive list of firmsin the steel supply chain. It has also negotiated prices and termswith many long-standing partners.
Because of its virtual nature and ability to put a deal togetheron the spot, Triple S-C has convinced its customers about the easeof ordering, processing, and delivery. While Triple S-C acceptsorders by phone or fax, it encourages customers to order viaelectronic data interchange (EDI) or through the Web. Slowly butsurely, Triple S-C has convinced its customers about the ease ofordering via the Web and the security of the transaction. Oncelogged in, customers can configure products on-line and immediatelyreceive multiple quotes with different volume and serviceparameters. Order status is continually updated and accessible tocustomers on-line. Upon execution, Triple S-C automatically debitsthe customerâs bank account per agreed terms.
Triple S-Câs advantage comes from leveraging technology tocombine the orders of multiple customers to generate the volumesneeded for discounts. The technology also allows Triple S-C tocoordinate more effectively with processors to reduce scrap andwaste. The firm also seeks to continually expand its list ofprocessors to increase the flexibility it offers end customers. Inthis fashion, Triple S-C tries to build its ability to combineorders from two different customers into one processing order,which reduces the time and waste involved in loading a multi-tonnecoil. The firm also uses its extensive database to identify trends,which enables it to lock in both supplies of alloy and steel andprocessing time at favorable rates. Remusâs long-term goals are todeal in value-added products such as alloy steels rather thancommoditized products such as carbon steel.
Currently, Triple S-C operates out of a single office in Pragueand employs just under 40 people. Its primary market area isCentral Europe, although Remus is already thinking of westwardexpansion. Not surprisingly, Triple S-Câs primary target marketcomprises small to medium-sized firms that lack the volume neededto deal with the steel mills directly and that need specializedprocessing.
