Glossary: Klöckner & Co digital strategy
A Chinese company with a platform-based business model. The company operates one of the world’s dominant online platforms in the B2C sector and is increasingly active in B2B business.
An American company with a platform-based business model. The company operates one of the world’s dominant online platforms in the B2C sector and is increasingly active in B2B business.
Application Programming Interface (API)
Generic term for interfaces used to exchange digital information. Often also used to refer to Web services. See Web service.
Artificial Intelligence (AI)
Axoom is an Industry 4.0 project initiated by the Trumpf Group. Designed for companies that use Trumpf laser-cutting machines, the vertical platform offers functions such as enterprise resource planning, production planning and machine-to-machine communication. While steel can currently be ordered from Klöckner right at the machines, the platform is being developed to enable the machinery to order steel from Klöckner completely autonomously. Klöckner & Co is a project partner and has already integrated the German country organization’s contract portal into the customer solution’s software user interface.
General term describing business relationships between companies.
General term describing business relationships between companies and private consumers/customers.
With a cap derivative financial instrument floating rate interest payments on bond liabilities can be limited to a defined maximum rate. If the maximum amount is exceeded, compensating payments in the amount of the difference between the maximum interest rate and the actual interest rate are made to the holder of the instrument.
Cash Flow Hedge
A hedge of the exposure to the variability of cash flow that is attributable to a particular risk associated with a recognized asset or liability, such as all or some future interest payments on variable rate debt or a highly probable forecast transaction that could affect profit or loss. If the hedge is considered highly effective, income effects of such instruments can be directly recorded in equity bypassing the income statement.
Conduits are special-purpose entities of banks in ABS programs that refinance themselves on the money market based on the purchase of receivables.
An online platform that offers craft and industrial products for sale to craftsmen and individual customers. Klöckner & Co supplies small lots of plates, pipes, profiles and the like.
An agreement, normally in writing, between at least two parties. A contract generally comprises a number of clauses setting down the goods to be supplied, date and place of delivery as well as payment terms. It may also include a fixed quantity to be purchased at a fixed price in a specific period.
A digital tool developed by kloeckner.i to manage contracts. It features extensive search and filter functions as well as an option to access contract volumes.
Metric used to measure the success of an online marketing campaign. The figure depicts how many users (measured against the total number of visitors to a page = unique visitors) took a specific action on the page (e.g. made a purchase, registered, clicked on something).
Counterparty risk is the risk that a professional market participant defaults, i.e., is not paying its obligation when they become due. In addition to the regular credit risk it also includes in particular default risks of derivative financial instruments.
Cross Currency Swap
Foreign exchange agreement between two parties to exchange a principal amount and the respective periodic interest payment of one currency for another and, after a specified period of time, to transfer back the original amounts swapped.
The digitalization process at Klöckner & Co is associated with a radical change in culture. The aim is to prepare the workforce for the digital era and encourage them to develop and implement their own ideas. This includes fostering a culture of open discussion and failure, reducing perfectionism and adopting innovative working methods from the startup scene.
Culture of failure
To meet the challenges presented by digitalization and become more innovative, Klöckner & Co is adopting a modified form of the culture of failure. Employees are encouraged to try new things, which also means allowing them to make mistakes.
Derivative Financial Instrument
Contractual agreement based on an underlying value (e.g., reference interest rate, securities prices, foreign exchange rates) and a nominal amount. Little or no payment is necessary at the time the agreement is concluded.
An approach aimed at resolving problems and developing new ideas. The goal is to find solutions that work best from a user/ customer perspective. The development process is generally carried out in heterogeneous groups and includes the following phases: understanding, observation, synthesis, idea development, creating a prototype and testing.
The DigiBook helps Klöckner & Co employees to understand the company’s digitalization strategy. An explanatory reference work, it is published primarily in print.
Internal workshops aimed at guiding the digitalization process at Klöckner & Co. These events provide updates on digitalization projects and generate concrete ideas on how to embed digitalization in the corporate culture even better.
The Klöckner & Co Digital Academy offers the company’s employees online courses on digital topics. These professional-development modules are available via Yammer and staff have explicit permission to make use of them during working hours to whatever extent they choose.
A liaison officer responsible for handling all questions about digitalization, especially those relating to online sales, at our stockyards.
Sales generated via digital channels. The company aims to generate over 50% of sales digitally by 2019.
Describes the reduction in amount earned per share in an investment due to an increase in the total number of shares (e.g., due to convertible bonds). As the number of shares outstanding increases the proportional share embodied in each share decreases (i.e., dilutes).
Discounted Cash Flow Method (DCF)
Valuation technique used to estimate the value of individual assets or group of assets. Under the approach all future cash flows are discounted to their present value as of the valuation date. The interest rate is determined using the Capital Asset Pricing Model (CAPM), a widely known approach in the financial asset portfolio theory.
Innovation with the potential to replace existing technologies, products or services. Example of a disruptive technology: digital photography which almost completely replaced analog cameras.
Earnings before interest and taxes is a metric that is used to evaluate profitability.
Earnings before interest, taxes, depreciation and amortization (EBITDA) is a metric that is used to evaluate profitability.
Electronic commerce, in most cases using the Internet.
Electronic data interchange: paperless, in part automated, electronic exchange of data between companies or units within a company. Data is structured and formatted for electronic transfer to uniform international standards. The data consists of detailed product and process-related information. The benefit and aim of EDI is the rapid, reliable flow of information, making it possible to accelerate business processes, cut logistics costs and improve service levels.
Electronic Data Interchange (EDI)
The traditional interchange format for ERP-to-ERP communications. The EDI format has been used in industry for decades now.
Enterprise Resource Planning (ERP) module
A system designed to help an organization manage its resources. SAP is an example.
ERP to ERP
The exchange of data between two ERP systems. In this case between Klöckner SAP and an external ERP system.
The price at which assets, liabilities and derivative financial instruments are transferred from a willing seller to a willing buyer, each having access to all the relevant facts and acting freely.
Financial instrument between two parties under which compensating payments are made to the holder of the instrument if the value of the underlying financial instruments falls under a defined threshold.
Foreign Currency Swap
Financial instrument that combines a spot foreign exchange transaction and a forward foreign exchange transaction.
Sum of cash inflows/outflows from operating activities and cash inflow/outflows from investing activities. Measure to assess financial funds generated to repay financial debt or pay dividends to shareholders.
Goodwill represents the amount by which an acquirer of a business is willing to pay in excess of all tangible and intangible less identifiable liabilities taking into consideration further earning potential.
Created by Arago, the Hiro artificial-intelligence platform builds on the IT staff’s knowledge and experience. Through continuous learning and self-optimization, Hiro is capable of automating the Klöckner & Co IT infrastructure, which in turn advances the implementation of our strategic digitalization goals.
Additional depreciation or amortization for non-current assets with definite useful lives or only an acceptable method to reduce (“impair”) the value of assets with indefinite useful lives in case of other than temporary decline of value. See also “Impairment Test.”
Test to assess the recoverable value for long-lived assets including goodwill. IFRS requires periodic assessment as to whether there are indications for other than temporary declines in value of long-lived assets. An impairment test is to be performed if internal or external indications for impairment arise. Regardless of such indications goodwill must be tested annually. In an impairment test the carrying amount of an asset is compared with its recoverable amount. If the recoverable amount is below the asset’s carrying amount an impairment is recognized for the amount of the difference.
All aspects of supply chain management relating to transportation, stockholding and delivery of goods entering the business.
Stands for the complete digitalization and integration of the industrial value chain. The integration of information and communication technology with automation technology to form the Internet of Things and Services enables ever greater degrees of networking within and between manufacturing facilities, from suppliers through to customers.
Combination of floor and cap. Derivative financial instrument that provides compensating payments based on an underlying notional amount to the holder of the instrument when either the market interest rate falls under or exceeds the defined threshold.
Interest Rate Swap
An interest rate swap is a derivative in which one party exchanges a stream of interest payments (fixed or variable) for another party’s stream of cash flows.
International Financial Reporting Standards (IFRS)
Under regulations No. 1606/2002 passed by the European Parliament and the European Council as of July 19, 2002, capital-market- oriented companies in the EU such as Klöckner & Co must apply IFRS for compiling their financial statements. Those standards encompass the statements issued by the International Accounting Standards Board (IASB), the International Accounting Standards (IAS) of the International Accounting Standards Committee (IASC) and the respective interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as well as the interpretations of the former Standing Interpretations Committee (SIC).
Internet of Things (IoT)
Refers to the process of linking objects (e.g. production machinery) with the Internet so that they can communicate independently online and perform certain tasks for the owner.
An IoT platform links various IoT devices and services together, forming a homogenous system. The IoT platform serves as the basis for further data collection and processing.
Just-in-time production is a logistics-driven, decentralized organization
and management approach in which material is produced solely in the quantities and at the time actually needed to meet customer orders. This objective is met using a range of different production and distribution methods.
Kloeckner Connect is the service portal into which all the digital tools developed by kloeckner.i, such as the online shop, contract portal and overview of orders, are integrated. The portal gives our customers and partners a central access point to all data and digital tools, enabling them to work more efficiently.
Developed by kloeckner.i for Kloeckner Metals Corporation, the American country organization, this digital tool allows customers to see stock levels at the nearest Klöckner stockyard.
Laser cutting is a technology used to cut materials such as steel with the help of a laser. It is usually employed in industrial production processes.
Employees connected to Yammer, the company’s internal social media network, can indicate their approval of someone else’s post by “liking” it.
Minimum viable product (MVP)
A minimum viable product (MVP) is one limited to features absolutely necessary to it. Such a product is typically first used by a small group of early adopters. Attempts are then made to determine user satisfaction through usability tests and by observing customers as they use the product. The resulting data and analyses conducted are subsequently used in the product’s further development.
Monte Carlo Simulation
Approach to calculate option values (e.g., virtual stock options). The price of the underlying share is calculated as statistical movement based on a large number of simulations. The individual simulations provide an expected payout to the plan participants based on the individual option agreement. The fair value of a virtual stock option is equal to the present value of the expected payout (average amount).
Multi-currency Revolving Credit Facility
Line of credit that has been issued by a number of participating banks by way of syndication with an initial term of three years allowing Klöckner & Co to draw funds in various amounts, currencies and maturities. This line of credit is primarily used for general-purpose financing.
Eccentric individual whose level of expertise in a certain specialized area earns them social recognition within their own sphere. Considered a sincere compliment in the computing world.
Describes how the benefits of a platform increase exponentially as the number of users grows. This effect is especially prevalent among Internet platforms. As the number of participants rises, each new user adds proportionally greater value to the platform – for instance, by increasing everyone’s likelihood of concluding a transaction on the network.
As part of the Klöckner & Co digitalization strategy, we want as many employees as possible to participate in generating ideas and developing digital solutions. Unfiltered communication among all employees plays a key role in achieving this. Yammer, our Group’s internal social network, is the primary tool that makes this non-hierarchical exchange of ideas and information across divisions and countries possible.
Developed by kloeckner.i, this digital tool allows customers to use a Web browser to directly order goods and services over the Internet. The Klöckner online shop is being further optimized and rolled out in more and more country organizations.
Open industry platform
A platform that digitally networks all industry stakeholders, including producers, distributors and processors, with the goal of facilitating transactions.
The right to buy or sell an underlying asset (e.g., securities) on a specific day or during a specified period of time at a predetermined price from or to a counterparty or seller.
Developed by kloeckner.i, this digital tool gives Klöckner customers an overview of all the specifics relating to current and past orders. This tool provides functions such as placing repeat orders without having to re-enter all the data.
Order Transparency Tool
A Klöckner tool that lets the customer review orders, the order details (quantity, price, etc.) as well as the order status. Customers can track and archive their orders.
All aspects of supply chain management relating to transportation, stockholding and delivery of goods leaving the business.
The American version of the contract portal, which customers use to manage their orders, check stock levels and place new orders.
Physical Vapor Deposition (PVD)
Innovative process capable of improving the surface characteristics of various materials.
The process of publishing a contribution on Yammer, the company’s internal social media network, is known as posting. The contribution itself is the post.
Steel that Klöckner & Co not only warehouses but also processes in some way before selling it to customers. At Klöckner & Co, we aim specifically to increase the share of sales generated from higher value-added processed steel because the margins are greater than with standard products.
Machining of steel and metal products, such as sawing, plasma and flame cutting, 3D laser cutting, sandblasting, priming and bending.
This is a technical process in which a profiling machine shapes metal with a specific profile from sheet.
"Test model"; redesign of a product or service.
3rd party platform
An external platform which is connected to the Klöckner & Co network and provides scope for its expansion.
A quick response (QR) code is a way of coding information sothat it can be very quickly found and read by a machine. The method is in widespread use in view of its robustness thanks to built-in error correction.
Method that provides companies with a simple way to design “test models” (prototypes) before the planning phase is finished – making it possible to identify and correct errors or deficiencies at an early stage.
A regular-way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.
Sale and Leaseback
Special form of leasing in which usually real estate is sold to a leasing company, which then is leased back by the seller.
See Kloeckner Connect.
Non-specialized, basic products.Surface treatment
Procedure to improve steel products’ surface properties.
A young business with two special characteristics: It has an innovative business idea and is launched with the aim of rapid growth.
Training for refugees
As part of its corporate social responsibility, Klöckner sponsors the Berlin-based ReDI School of Digital Integration. The school teaches programming to refugees who are interested in IT and gives them access to a broad network of potential employers. Through its subsidiary kloeckner.i, Klöckner & Co works closely with the school.
Temporary capital investments in young, innovative, non-listed companies with above-average growth potential.
Virtual Stock Program
Stock-based compensation program for Management Board members and certain other executives, which is settled in cash. The exercise gain equals the difference between the average share price of Klöckner & Co SE over the last 30 trading days prior to exercise and the strike price.
Web services (a kind of API) facilitate machine-to-machine communication based on HTTP or HTTPS over computer networks such as the Internet. By and large, they are well documented and simple to use. Typical Web service protocols include XML, SOAP, REST and JSON.
kloeckner.i has already created open SOAP-based Web services and uses them to quickly and easily integrate other companies and tools into the platform. The SAGE 100 enterprise resource planning system, for instance, is connected through Web services.
Klöckner & Co defines working capital as the sum of inventories and trade receivables less trade payables.
The company’s internal social network allows staff to communicate and share information across corporate divisions and country borders.