Pavel Vasev, Head of Procurement at Magnitogorsk Iron and Steel Works (MMK), became the winner of the “Best Procurement Director” award for 2019. Large-scale changes in procurement activities carried out at MMK have significantly improved the efficiency of the company’s supply chain.
This is the second year in a row that the rating of procurement directors has been compiled, organized by the “Association of Procurement Directors” and the rating agency RAEX (RAEX-Analytics). The list includes the heads of procurement departments of companies with annual revenues in 2016 – 2018 exceeding 5 billion rubles. This year, Pavel Vasev entered the Top 30 Best Directors.
This is not the first time that MMK’s procurement activities have been highly rated by experts. On several occasions in the past, the company has won the annual all-Russian competition for “Leader of Competitive Purchases”. In particular, last year the company was awarded this prize for the best project for modernization of business processes in procurement. Under the project, the supply system at MMK underwent fundamental organizational and structural changes and a new categorical approach to the supplier selection process was successfully introduced.
One of the innovations introduced this year was categorical strategies for the so-called “small purchases”: this includes procurement of hardware, tools, pipe fittings, construction materials, electrical equipment, stationery, household goods, household appliances through catalogues of major manufacturers or online stores of integrated suppliers. The aim of the new approach is for contracts with selected suppliers to be concluded in advance. The shop chooses products directly from their existing vendor, and then, immediately submit an application for supply. This scheme eliminates the need for additional approvals, significantly reducing the transaction load and speeding up the procurement process. Thanks to the categorical approach, the total number of tenders for electrical equipment, IT equipment and instrumentation decreased from 1,437 in 2017 to 1,308 last year. The forecast for 2019 is for no more than 450 tenders, which will give a three-fold decline over three years.
This approach not only saves time, but also financial resources, because suppliers are also more comfortable working with pre-approved product items and are willing to provide discounts. (MMK/Ukrainian metal)