While Felux CEO Dallas Hogensen was talking with a new customer, the customer remarked that he could order a chicken sandwich online and have it delivered to his door but couldn’t purchase steel online — even though steel is a $3 trillion market and the backbone of industry.
After signing up with Felux, an online B2B marketplace and supply chain platform for steel and other metals, that customer listed material for the first time, got several quotes within minutes and had a truckload delivered to him within an hour.
“What we’ve seen is kind of this ‘aha moment’ where they’re like, ‘Oh, wow! This exists, this is actually easy — we didn’t know!’” Hogensen told PYMNTS in an interview.
Digitizing the Supply Chain
Felux has been getting good reviews from investors too. The company announced June 2 it had raised $19 million in Series A funding to digitize commerce for this supply chain.
Read more: B2B Metal Marketplace Felux Raises $19M
The steel supply chain is one of the largest markets in the world where data is still confined to silos, Hogensen said. It’s opaque, offline and drowning in paperwork.
But it started shifting away from business as usual when the pandemic forced the industry to jump to a remote-first environment and companies found themselves struggling to access information and understand their buying and selling needs.
“We are the first company to really digitize all the elements of it [and] surface that information so we can have better distribution or better sourcing or procurement on the buy side,” Hogensen said.
Alleviating Guesswork and Uncertainty
Another change that the steel industry has seen over the last couple of years has to do with volatility and lead times. For years, those were consistent, but over the last two years, they’ve seen all-time highs and lows ranging from 11-week lead times to two-week lead times — and they’ve gone back and forth.
Because the industry isn’t fully digitized yet, the market indices people use for pricing lags by about two or three weeks, and people are working with imperfect information. Because of that, companies buy at the wrong times.
Felux is aiming to change that by helping companies look at the historic information they have and compare it to current real-time information.
“What we’re trying to alleviate is the guesswork right now, the uncertainty,” Hogensen said. “Really, from the macro side, it’s more relevant than maybe ever today.”
Digital Storefronts — and Perfect Information?
Beyond that, Felux enables companies to source, procure, ship and finance. The platform doesn’t have a checkout in which companies can pay, but it plans to add that in the future. Today, it does that through purchase orders and other means offline.
Manufacturers pay Felux a subscription fee for the business, while buyers can transact for free.
“What we are really working on is to give every supplier their own digital storefront and every buyer perfect information because we have every piece of inventory online to create those modes and mechanisms,” Hogensen said.
Aligning Buyers, Suppliers
In the current macroeconomic environment, Hogensen said he is seeing manufacturers be more cautious, move to just-in-time inventory and look for more spot market solutions to fulfill orders.
“What we’ve really helped them do is take a look at their current requirements based on inventory and help them align to new suppliers that maybe could be more appropriate for the needs and timing of that,” Hogensen said.
With the new funding, Felux will focus on product development, investing in the next level of the procurement platform it’s building.
“Our path to acquisition of customers has been very successful, and we’ve done a lot in the last two years,” Hogensen said. “The next three to five years for us really looks around, ‘How do we actually make digitization a reality for every end of the metal supply chain?’”