Industry-leading procurement principles
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Proactive supply chain management and procurement principles WRIT TEN BY
HARRY MENE AR PRODUCED BY
CHARLOT TE CL ARK E
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We talk to Manish Sharma, Director of Supply Chain, Asia Pacific, at Valmet, about ensuring sustainability principles are maintained across the company’s global supply chain
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panning more than 130,000 miles of impenetrable coniferous forest, rugged coastal fjords and over 160,000 lakes,
the country of Finland is among the most northerly nations in the world. The entire country lies within the boreal zone, characterised by its brief, warm, balmy summers and its dark, snow-blanketed winters. Its capital, Helsinki, is the second most northerly capital city on Earth, and 78% of its land is blanketed in forest. It is no surprise then that the nation’s economy is intrinsically linked with the production of lumber, pulp and paper. In the 1970s, pulp and paper production accounted for over half of Finland’s total exports. Although the industry’s share has decreased over the past 50 years, as the nation’s economy has diversified and highskill industrial, chemical and engineering jobs have gained prominence in the workforce, the manufacture of pulp and paper still accounts for over 22,000 jobs in the country, according to a Statista report.
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“We often receive very positive comments from suppliers, who say something we’ve put in place has improved their productivity and performance” — Manish Sharma, Director of Supply Chain, Asia, Valmet
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CLICK TO WATCH : ‘EXPLORE SUSTAINABILITY AT VALMET’ 09
With industrial roots reaching back
South East Asia, Korea, Japan,
as far as the 1750s, Valmet is synony-
Australia and New Zealand. We sat
mous with sectors like manufacturing,
down with Director of Supply Chain,
energy and the production of paper
Asia Pacific Area, Manish Sharma, to
and pulp. Its offerings include pulp
explore the expanse of supply chain
mills, tissue, board and paper produc-
operations and the ways in which
tion lines, as well as power plants for
these operations ensure high stand-
bioenergy production. In 2017, the
ards of sustainability in the area. . “We
company reported net sales of
are always looking at ways to design
US$3.5bn and employs over 12,000
our operations to be cost competitive,”
people across more than 30 countries
says Sharma, “as well as working to
and 150 locations. The company has a
improve our suppliers’ operational
significant presence across the Asia
excellence, while ensuring that health,
Pacific region, with operations in India,
safety, environment & quality occupy w w w.va l m et . com
“ Health, safety, environment and quality occupy the top spot of our agenda” — Manish Sharma, Director of Supply Chain, Asia, Valmet
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11 the top spot on our agenda.” Sharma
cuses, Sharma explains, is ensuring
has been in the procurement space
that, across all its operating regions,
for over 23 years, and has spent a
its products and methodology adhere
large portion of that time in the paper
to global standards. “Whatever we
production supply chain. He joined
do, we do it to the degree of quality
Valmet four years ago and works to
that Valmet is known for, which is ac-
ensure that Valmet’s Asia Pacific
cepted globally. We ensure that our
business interests operate in accord-
best practices are in-line with global
ance with the company’s industry-
quality standards and are followed in
leading practices. “My core responsib-
spirit,” he reiterates. For a global indus-
lity is to ensure the implementation of
trial firm, Valmet places great impor-
Valmet’s core principles and practices
tance on agility in an ever-changing
throughout the company’s value chain,”
marketplace. Sharma’s role is also
he explains.
focused around the goal of keep-
One of the company’s main fo-
ing Valmet’s Asia Pacific operations w w w.va l m et . com
proactive. “We are a very proactive organization and a lot of good work is being done from the view of strategic, operational and tactical procurement,” he says. Valmet’s forward-looking approach focuses on identifying upcoming changes in the market: “What are the mega-trends? What are the upcoming environmental regulations that will require us to make changes to the way we run production? That’s one of the reasons the company is investing so heavily in R&D.” Currently, Sharma notes, the trends Valmet is 12
working on, to address range from the increasing digitisation of media to the growth of e-commerce. “Printing is disappearing, but e-commerce companies, which use large amounts of boards for packaging, are on the rise,” Sharma says. “Also, in Asia there’s a lot of urbanization, so more people are going to college, which creates demand for things like textbooks. Furthermore, the growing population in the Asian sub-continent provides demographic dividends for such industries to thrive. Nonetheless, there are always prevailing market dynamics or needs that we must be privy to, to strategize our supply chain operations.
The need to adapt, while maintaining a global standard of product and sustainability practice is also “embedded in our supplier selection, evaluation and management process,” says Sharma. Over the course of his role at Valmet, Sharma has worked with “basically three types of supplier: suppliers who manufacture standard commercial items, suppliers who manufacture their own designs, and those that produce Valmet-designed products and technology. That’s the supplier segmentation that we’re looking at. However, the top spot goes to suppliers who manufacture according to our designs and work as per our practices,” he says, due to the fact Valmet’s products are manufactured to that global standard and can therefore be sourced globally. “When we select a supplier, we evaluate their social, economic and environmental strength. Where do they stand on social best practice? Do they have quality management systems? How about safe working environments that keep their workforce intact? Basically, do they adhere to their principals?” Sharma continues, noting that “there are mature countries, there w w w.va l m et . com
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are medium-risk countries and there are high risk countries”. A supplier from a mature country, like Finland or Sweden, Sharma says, can be evaluated for compliance via a self-assessment questionnaire. “It’s an exhaustive questionnaire that covers every aspect of our sustainability guidelines. As for a medium or high-risk country, we do a physical audit through a third party who inspects the supplier based on our sustainability guidelines. If we’re buying something from Thailand or Vietnam for example, we make sure that we do 14
a physical audit.” Potential suppliers who do not meet Valmet’s standards are provided with feedback to improve workplace practices, safety and efficiency. “We help our suppliers improve their operations, which they very much appreciate. We often receive very positive comments from suppliers,
“ You definitely have to have to respect one another and understand one another’s cultural role to be successful when working across borders” — Manish Sharma, Director of Supply Chain, Asia, Valmet
$3.1bn+ Approximate revenue
2013
Year founded
12,000
Approximate number of employees 15
who say something we’ve put in place
expectations and can’t be successful
has improved their productivity and
in that region if we’re not meeting their
performance,” Sharma says. “They
expectations. So, when we approach
realise that sustainability is not merely
things like delivery at Valmet, we need
an exercise in compliance.”
global acceptance.” He maintains that
The cultural diversity between the
the key to meeting these challenges is
different Asian regions presents a
having good communication within the
unique challenge for Valmet’s supply
Valmet team to ensure standardisation.
chain. Offering standardized global
He continues, “you definitely have to
services can become challenging
have to respect one another and
when dealing with a disparate roster of
understand one another’s cultural role
clients and suppliers. “You have Japan,
to be successful when working across
which is very conscious about on-time
borders”. Given the diversity across
delivery, and we need to match their
Asia Pacific markets, Sharma is w w w.va l m et . com
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confident that things have progressed very well. “Definitely with every supplier you’re going to find gaps, and the number of noncompliances is higher in Asia, but with fewer “serious” violations. Things are improving a lot and one of the reasons for that is that we are continuously educating and engaging in a dialogue with our suppliers.” Valmet’s procurement journey in the Asia Pacific region is one of constant adjustment and improvement. “We are always looking at the mega trends of the market,” says Sharma. “We constantly renew our products and technology, while putting emphasis on operational excellence and the people we work with and serve. Those pillars allow us to constantly improve.” On the future of his role and that of Valmet in the region, Sharma says: “I see a great future for Valmet. Since we are one of the leading companies in the world, we have a lot of responsibilities when it comes to maintaining a level of excellence. That’s why we have high standards and the need to constantly improve. That’s the key to success.”
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Valmet Oyj Keilasatama 5, 02150 Espoo Finland T +358 (0)10 672 0000 www.valmet.com