Page 2: The supply chain
To respond to the aluminium threat, British Steel initiated research which was designed to help understand the strategies and expectations of the key players in the supply chain. It was critically important for British Steel Tinplate to understand the key properties that can makers, fillers, retailers and consumers were looking for from steel cans. A clear understanding of these supply chain needs would therefore ensure correct solutions were selected and implemented.
Business theorists emphasise the importance of companies making an assessment between their relative market position and the competition. They refer to value activities as ‘the physically and technologically distinct activities that a firm performs’. When relative market positions have been evaluated, decisions can be made on how value can be added to these activities to achieve competitive advantage.
Examining the issues
A decision of a can maker to change from aluminium to steel has a major impact, as switching radically changes market share. A decision to switch however, will be made for strategic reasons and although there are a number of common operational functions for aluminium and steel lines, changing requires investment and to revert back is expensive and time consuming
The results of British Steel Tinplate’s research identified a number of factors that are critical to the success of steel in the beverage market:
- how well the steel can performs in terms of strength, formability, decoration and recyclability
- the cost of steel versus aluminium
- the development potential for steel cans over aluminium cans
- the effective promotion of the advantages of steel over aluminium to the supply chain.
The research identified the strengths and weaknesses of steel against aluminium as follows: However, as far as the environment was concerned the consumer had no clear understanding of the benefits of steel, giving a poor perception versus aluminium. They are misled by the fact that owing to their high energy usage, used aluminium cans are worth nearly 1p each, whereas energy efficient steel cans are not. Therefore due to this difference in monetary value, consumers have perceived aluminium as more environmentally friendly.
The Blue Peter scheme, which encouraged families and children to recycle aluminium cans, raising 1p per can for charity, succeeded in sustaining this perception. The trade perception was that lightweight cans would be seen as more environmentally friendly, since ‘lightness’ led to less energy and materials being used in manufacture.