ries Vertical Mill ox
Mill
OR
Danieli China: How procurement agility provides a competitive edge
MHB series Standard Industrial Gearbox
Belt conveyor of blast furnace
r equipment and solution supplier prouding North America, Europe and Asia
PROJECT PARTNERS
RELIED UPON BY
Danieli China: How procurement agility provides a competitive edge Francois-David Martino, CEO of Danieli China, tells us how breaking down competitiveness can be achieved through a redefined procurement approach... WRI T T EN BY PRODUCED BY
2
D al e Bent o n Gr eg Chur c h ill
3
W
hen we think of the traditional
business forward. Over the last decade
career journey, getting to
or so, the path to the top has changed
the very top and becoming a
and so too have the expectations of
c-level executive takes years of cutting
the c-level executive. Despite its c-level
your teeth within different levels of a
status, more often than not, the executive
business in order to truly understand the
level of the CPO is mere window dress-
business and how, when the time comes,
ing. This however, has begun to change.
to make the right decisions for taking that 4
“It is true that procurement doesn’t fare
the P & L, particularly in the industrial
well in the top function careers that lead
business. I’ve always had a key idea that
you to more CEO positions,” explains
leadership by knowledge and by compe-
Francois-David Martino, CEO of Danieli
tence is extremely important.”
China. “But I spent most of my career
With a career spanning over 20 years,
in procurement and supply chain and I
working around the world for tech-
was always passionate about purchasing
nology providers such as Siemens,
because I knew that it could influence
Thyssenkrup and now with Danieli China, 5
Main Driving Gearbox for Plate Rolling Mill
Main Driving Gearbox for Bar and Wire Rolling
ML series Vertical Mill Gearbox
MHB series Standard Industrial Gearbox
Hot Plate Rolling
Bar and Wire Rolling
Slag Mill
Belt conveyor of blast furnace
GEARED FOR SUCCESS WE PROVIDE GEARBOX SOLUTIONS FOR
Metallurgigal Machinery About Us Established in 1969, NGC Group is the world’s leading gear equipment and solution supplier providing products and services in more than 60 countries including North America, Europe and Asia Pacific region with a high recognition by global customers.
Tel: +86 400 1861110 Email: IGsales@NGCtransmission.com www.NGCtrasmission.com No.8 TianCe Road, JiangNing District, NanJing, 211103, PR China 6
CONTENTS
Martino honed his craft in purchasing and procurement and established himself
procurement is key. Procurement has evolved and so too
as a leading procurement talent. He
has the perception of it. Everybody
reached a point in his career though,
knows what the sales, accounting and
where he felt he had hit a wall. “At some
finance teams do, but the traditional
point in time when you’re at the top of a
perception is that nobody really knows
function, nobody can really tell you how
what procurement does. This is changing
to do your job because you’re an expert
of course, but it varies from company to
in your company about that, something
company as it depends entirely on the
is missing and it’s this progression,” he
maturity of the organization. “Once upon
says. “I was told by my colleagues that,
a time procurement was a depreciation
thanks to my experience in procure-
function where all the people who were
ment, I had a true understanding of what
failing in other functions ended up,” says
the other functions are in how to run a
Martino. “If you look now at a procure-
business and that gave me a lot of confi-
ment function, these are the tough guys
dence that I could definitely be a CEO.
who are extremely powerful and have a
Look at it this way, a large portion of the
lot of responsibility within the company.
CEOs of OEMs in Automotive have been
What makes it key is the compliance
heads of procurement at some point in
and that they sign contracts and there-
their time. This is simply because of the
fore, they take risk or mitigate risk every
constant demands and the knowing that
day for the company. It’s not just about
cost is so valuable. These are key points
the price, it’s about what happens if the
in any CEO position.”
suppliers close and go bankrupt or what
Over the following years, Martino
happens if there’s a quality problem etc.
became a senior manager and a CEO at
The responsibilities you have towards
Siemens and Thyssenkrupp before he
the business are huge.”
became CEO at Danieli China. Equipped
As a technology provider within the
with vast international experience,
steel industry, Danieli Group provides
Francois was given the opportunity to
technologies to manufacturers to
take Danieli China forward with a new
produce steel. The company’s motto
and innovative operating model, and
is Innov-Action; to be a step ahead in
7
capex and opex and promises to achieve an even higher level of quality and standards in every aspect of its work from planning, designing and manufacturing to erection, commissioning and service. With specific technology assets equal to millions of dollars in value, a delay in production could see customers lose millions. Danieli Group has to be extremely reliable in its supply chain to be able to deliver and to be reliable. While Danieli may be recognised as a market leader, the metals market is incredibly saturated and so competitiveness is key. Competitiveness comes from that reliability in its supply chain. Martino believes that not everybody is talking about the same thing and very often competitiveness is reduced cost. To him, competitiveness can be distinguished by five aspects; the functionality and the technology you are bringing to the company, how you are materializing these functions in a simple, smart and cost-effective way, how good your suppliers, your costs and the conditions and business model you are offering to your customers are and the fixed spot and structure of who is hosting the service of the products you are selling. “In effect, the size of your company and your structure has to fit the market. The 8
9
Dadi Equipment are proud to sponsor Danieli China
We mainly produce two types of products • Rolling line series: ordinary bar, high-speed bar production line and auxiliary equipment for section steel rolling line • Scraper reclaimer series: semi-portal, portal, bridge type scraper reclaimer, etc.
Jiangyin Dadi Equipment Co., Ltd. (Dadi Equipment), founded in September 2001, is a private enterprise with main businesses of high-end metallurgical equipment and material yard reclaimer machine. The company is located in Jiangyin, an international hygienic city at south of Yangtze river, has a registered capital of 103.69 million RMB, covers an area of more than 150 acres and has more than 70,000 m2 of standardized workshop. Now there are around 400 employees in Dadi, including more than 100 engineers and management staff.
T 0510-86997185/+86-13901522793 10
CONTENTS
No.290 Chuangxin Road, Chengjiang Town, Jiangyin City, Jiangsu Province
one aspect that decides what kind of size
have to adapt to the size of your compet-
you should be, is your competitor. If you
itor. Otherwise, you will not be relevant
are fighting with small competitors who
anymore.”
have half your fixed costs, you should
Danieli China has embarked on an
look smaller. Maybe, like Danieli China,
ambitious strategy to create a ‘new’
you could make a specialist separate
company entirely and drive the business
business to fight against these smaller
up to one billion Euros in the Chinese
companies.”
market, which means that its current busi-
This is a shift that Francois is seeing
ness revenue needs to be multiplied four
around the world, with large market
times over within six years. For Martino,
players like Siemens, GE and ABB tradi-
the only way to do that is to observe the
tionally relying on volume their leading
right governance and make changes in
status to be competitive now transform-
the right way. “I cannot multiply the quan-
ing their operating models because this
tity of the volume of the product that I am
is no longer the case “Most of them are
selling straight out of the bat because it
separating the business,” he says. “You
will need investment to become so good
11
in every product and I cannot reasonably
this was most certainly the case as he
build a competitive company doing that,”
was tasked with introducing this new
he says. “So I need to diversify and adapt
concept - spending a lot of time winning
my business model and be much more
the support from his team. The key for
flexible,”
him was clarity. “When you explain things
“Danieli had established itself as the
clearly, they can begin to understand and
leading company for certain products,
can start to see this is working. That’s
but we lost that market because our price
where they are able to support you,” he
was no longer competitive. We needed
says.
to change in order to beat the smaller
“Here in China, the support from head-
companies who have the design and the
quarters in Italy is non-existent, so one by
flexibility and who has reinvented how to
one I would speak with the top level to
do business.”
the lower level explaining the idea. I had
Incredibly, in just three months Danieli was able to reduce its intake by more than 20 million Euros. This level of success showed the adaptability of Danieli. Coming off the back of this success, Danieli China has a plan in place to build two or three more companies per year. “We will achieve over one billion,” beams Francois. “It has to be profitable and we have to adapt the business models one by one.”
The beginning of the journey: Communication and key supporters When looking to redefine a process or an operating model, or in this instance creating a ‘new’ company, a major challenge is trying to convince people that this is the right thing for the company. For Martino, 12
great support from our president on that, which made the process a lot easier.” Martino is keen to stress just how
“PROCUREMENT PEOPLE ARE ALWAYS IN THE CHANGE AND SO IT HELPS YOU EXPLAIN THE CHANGE AND TO MAKE PEOPLE ADAPT TO IT” — F R A N C O I S - DAV I D M A R T I N O , C E O O F DA N I E L I C H I N A
important it is to have key supporters. The task was simple, kickstart the idea into motion and within six months create the company, enter the market and begin selling and being successful. The speed of which Danieli China was able to achieve this was a surprise even to Martino, but he knew that the work was only just starting. “You never have to give up and what made the idea so fast implemented and successful is the fact I never doubted it, ‘’ he says. “When people were talking to me, they were seeing the passion and how clear I was about my idea and how convinced I was. Something which is key to me is clarity and communication, you need to be clear on what you want to do in order to succeed together.”
The CPO in the CEO The seamlessness of this transition for Danieli China owes a lot to the CPO experience that Martino possesses. He feels that his procurement background helps in winning that change in two key areas. Firstly, when procuring to a niche group and interacting with 13
RELIED UPON BY OUR CLIENTS TO DELIVER HIGH PRECISION GEARS QUICKLY AND EFFICIENTLY, TIME AND TIME AGAIN
WIND TURBINES • OFFSHORE OIL PLATFORMS • METALLURGICAL MINES • RAIL TRANSIT • AERONAUTICAL Changzhou Tianshan Heavy Industry Machinery Co., Ltd, specializes in the manufacturing of the highest precision
CNC machined gears. We apply a meticulous and scientific approach to provide a fast and efficient service to our clients across several industries.
Founded in 2002, we are located in Changzhou National High-Technology Industry Development Area.
14
CLICK TO DISCOVER MORE
CONTENTS
25 Shangde Road High-tech District Changzhou, China
T +86 0519-8511 6598 E mk@cztshi.cn www.cztshi.cn/en
has over the supplier.
all the functions, he understands what
“There is something a little wrong in
every function wants and what they don’t. Negotiation, often a cornerstone of
the automotive procurement relationship
procurement, means that he knows how
because you are adopting a very arro-
to sell the idea without making the wrong
gant position towards suppliers as they
compromises. Secondly, change. “You
completely depend on you,” he says.
also understand that you always need a
“Automotive suppliers plan for parts for
change,” says Martino. “In procurement
one model, if you stop the order then
you are regularly changing buyers and
that means hundreds of people fall
budgeting methods. Procurement people
behind. The power you have in your
are always in the change and so it helps
hands is extremely big and sometimes
you explain the change and to make
I feel, people are not really prepared to
people adapt to it.”
apply this power.” Recalling his experience with the rela-
Supplier relationships
tionship with suppliers, Martino found
When changing an operating model from
that he had completely changed his
a procurement perspective, one has to
mindset as he truly believes that suppli-
consider the impact this will have on the
ers are more than simply giving you
supply chain and the supplier network.
the costs you want. “The more I have
As a man who started out in automotive
this vision of equality with the supplier
procurement, Martino understands the
and see that it’s not about playing the
power that the procurement professional
big guy and imposing things, the more I
“SEEING THEM [SUPPLIERS] AS COMPANY CEOS AND MANAGERS AND TALKING AT THE SAME LEVEL, THEY SEE YOU AS SOMEONE WHO CAN BRING VALUE TO THEIR COMPANY AS WELL” — F R A N C O I S - DAV I D M A R T I N O , C E O O F DA N I E L I C H I N A
15
understand what kind of deal the suppliers would be interested in and then I can make the right proposal so that we create value together,� “Seeing them as company CEOs and managers and talking at the same level, they see you as someone who can bring value to their company as well.�
COVID-19 2020 has seen the world gripped by the COVID-19 pandemic, which has truly disrupted both life and the global economy. The world we have lived over the last five months has shown us that nothing is guaranteed and Martino feels that the global supply chain and how we understand it can no longer be safe and reliable. The sending and buying of products worldwide has become incredibly complicated through the virus and the closing of borders. For Danieli China, at the heart of the pandemic, and at the time where most of the people in the world needed masks and medical devices, Martino feels that the response of many global players has exposed a level of risk that has been neglected. He points out how he has discussed contracts with customers in China that had previously imported technology as a sign of good quality and now these same 16
DANIELI CHINA
F R A N C O I S - DAV I D M A R T I N O , C E O O F DA N I E L I C H I N A
17
DEDICATED
TO DEDICATED SHAPIN TO SHAPING STEEL
Dedicated to SHAPING STEEL
Established in 1995 and located at Xishi Dongan, Huangli Town, Wijin district, Changzhou City, Jiangsu province, Changzhou Changhong Mould for CCM Co.,Ltd. (known as CCM in short), is in the southern side of Huning high way and Yanjiang highway with very convenient transportation.
CHANGZHOU CHANGHONG MOULD TUBES • MOULD PLATES • ASSEMBLY MOULDS FOR CCMMATERIAL • MOULD & PLATE COATING MOULD Dong’an Huangli Town Wujin District Changzhou Jiangsu Province T (86)0519 83731208 F (86)0519 83731888 wch@ccmgroup.cn www.ccmgroup.cn
R&D / PRODUCTION AND SALES OF MINING MACHINERY / WEAR-RESISTANT STEEL CASTINGS Our products are tailored to customer requirements to provide superior wear life, strength, fatigue resistance, which are critical in most highly productive and demanding mineral processing operations. Our specialized products include: jaw crusher, cone crusher, impact crusher, high manganese steel crusher wear parts, mining undercarriage and etc…
T +86 579 8764 6028 E sales@wjmachine.com 18 CONTENTS
C LIC K TO DIS C OVER MO R E
“WE ARE DISCUSSING WITH A LOT OF COMPANIES, CUSTOMERS, SUPPLIERS AND PARTNERS ON HOW TO COLLABORATE TOGETHER AND IDENTIFYING JUST HOW STRONG WE WILL BE TOGETHER THAN WE WOULD BE OPERATING ALONE” — F R A N C O I S - DAV I D M A R T I N O , C E O O F DA N I E L I C H I N A
customers have completely different
a very sound protocol to allow people
requests. Some of its Chinese custom-
working with masks and we had temper-
ers are requesting that everything is
ature measurement devices,” he says.
localized because they don’t want the
“We made the investment but we had
risk of imported equipment which can
the support from the government and
put the brakes on any contract. “This is
this helped us to reopen very fast and it’s
a big change in demand,” he says. “I can
something that we were very proud of.”
sense that it is going to be something we see all over the world in all industries
“It has been seen as a leading example of how a company reacted to the crisis.”
and markets.” When the Government in China decided
The road ahead
to close the country and the factories,
At the time of writing, Danieli China has
Martino admits that he didn’t know what
created two new companies in 2019 and
the future would hold for Danieli China.
intends to build 12 new companies in
A positive, he notes, is that the company
China over the next five years. 2020 will
understood that it needed to be proac-
see this year the building of three new
tive. “We started to collaborate with the
ones. Needless to say, the future is most
local government on how we could put
certainly bright for Danieli China. “We have
in place a procedure to help our people
adapted a completely new approach on
go back to the factory at the same time
China markets because we have an open
as being safe. Together we had created
mindset and are in a position of strength,” 19
20
he says. “We are discussing with a lot of companies, customers, suppliers and partners on how to collaborate together and identifying just how stronger we will be together than what we would be by operating alone.” On a certain level, one could argue that the success of Danieli China would allow the company to take the foot off the gas a little. This isn’t an argument Martino believes in. “I believe that our work is to create opportunities but also to solve problems and in terms of solving problems, I always believe that if you can fix something, you can fix it. If you cannot fix it, you have to get rid of it,” he says. “If you want to build 12 companies that are going to reach one billion, you have to coordinate millions of actions that hundreds of people inside and outside the organization on a global scale work towards this strategy and keep remembering that. If you want to succeed in your professional life or personal life you have to make sure that those thousands of actions and decisions are one small step towards that goal.”
21
www.danieli.com