Case 1 the LKAB extranet from the sellers perspective

The LKAB extranet was first entered and then experienced through a demonstration by VP, providing a broader overview of LKAB's extranet within the entire I-E-I framework used within the organization. This was followed by a separate demonstration by SM, who provided a more specific and advanced understanding of what a customer actually experiences, which was important before actually talking to those in the buying side case studies. LKAB is primarily in the business of mining and selling iron ore in the form of pellets. Each order of pellets is unique in terms of its intended use, size, makeup, and quality. According to SM, who oversees much of this part of the organization's online efforts, the LKAB extranet is all about giving their four primary customers the information (and interaction opportunities) they need, when they need it, and how they want it. The extranet was developed exclusively with these primary customers in mind. These customers were used early on in the extranet creation process as a sounding board and testing ground for online collaboration and the development of this level of LKAB's I-E-I framework. The LKAB extranet efforts for its Nordic customers is not about "placing orders", as iron ore cannot be bought, sold or shipped over the internet. Instead, other value-added efforts are being made and coordinated, both online and offline, to enhance the industrial seller-buyer relationship. As SM explained, "We are 98 per cent product flow, 2 per cent information flow". He added, however, that the information is a vital part of the seller-buyer relationship and it is seen as a true value-added service. The key is being able to coordinate these onlineoffline efforts as a means for truly serving the customer. Everything that LKAB does for its customers online is based on what the customer has asked for. From their offline discussions with their customers, LKAB's extranet was developed around three primary areas: Physical needs, IT

Tim Foster applications, and customer data. SM feels that what they make work within these Nordic relationships can be a means for possibly attracting new customers in the future, providing LKAB with a dual offline (the quality of their iron ore) and online (the value-added information services) competitive advantage.

For their physical needs, LKAB has developed an offline form of value: "The Experimental Blast Furnace". To process the pellets that LKAB sells, blast furnaces at steel plants are used to melt and develop the steel to be sold further sold to industries dependent on it. Shutting down a blast furnace to "test" something or even for routine maintenance is a costly and risky venture. A "miniature" version of an actual blast furnace was developed by LKAB to be able to run tests which relate to improving the effectiveness and efficiency of forging steel. Although LKAB sees the blast furnace as a "magnet" for both potential customers as well as a means for taking care of their existing customer relationships offline, their web site (online) is seen as a "magnet" for getting this part of the value chain involved in their extranet. They do this by (briefly) discussing the furnace and its potential to offer rich, customer-specific information at the public (internet) level of their main web site, lkab.com. According to VP, the problem with this being launched and used today revolves around online security issues: Each "test" of the blast furnace produces customer-specific data, and this information needs to be shared with that customer only. Although SM also sees incredible value being created by sharing information online via an extranet application, the security risks that both LKAB and its customers feel is always present prohibits this information from going online at the present time.

Regarding IT applications, SM logged on and showed the depths of their extranet application as if he were a customer (an actual recent iron ore order was used as the example while we were online). It was explained that, from the customer's perspective, the extranet is basically an order-tracking IT application, with certain features that are used to create value in the relationship for both sides throughout the respective selling and buying processes. After logging on, each customer will come to their own personalized "extranet" site. Once there, the customer can then click on "Delivery info", "Contact info", and "CRM". SM explained that the speed and access to this information is of key importance to customers, and what they feel is lacking now is "one-click" access to the information they want. Once they click on any of these three areas, the customer is then able to go deeper into that area to interact, obtain information, and even supply information back to the LKAB. This includes several main categories from which to choose, including "subscribing" only to those value-added services they are interested in. This menu of choices includes "Delivery information", which includes information on where the shipment is in the delivery process or the ability to change vessels to speed up the process; "Document services", which offers risk analysis, protocols, PowerPoint presentations, and process overviews; "Remarks", which is an area where the customer can leave complaints and other postings. SM feels that this is the most important part of the extranet, as it allows for a true, interactive service that provides information to and from LKAB and its customers. Finally, there is "Special info", which allows for more group-oriented - i.e. multiple customers - to receive information of interest to all of them.

Regarding customer information, this is what SM feels will truly make a difference in allowing LKAB to use the extranet to provide customer-specific information to create true value. Here SM would like to allow LKAB to obtain real-time access to each customer's data online in order to not only avoid problems, but take advantage of opportunities as they develop. This, according to SM is more of a future objective online rather than a current reality. Included in this future goal would be the ability to create online value in the form of data that originates from offline value being created through the use of a true competitive advantage for LKAB, such as the experimental blast furnace discussed earlier. Again, the sensitivity to such data and the security needed to keep it safe keeps LKAB from allowing such customer-specific information to be placed online at this time.

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