STRATEGIC, SUSTAINABLE PROCUREMENT In Association With:
Inside Schnitzer Steel’s sustainable
supplier programme
Senior Director of Procurement Marcus Folino discusses how procurement plays an increasingly strategic function at Schnitzer Steel
T
hroughout the last five years, supply, including appliances, the mining and metals industry manufacturing scrap and other local has faced a number of sources of construction-related macroeconomic challenges and has recycling, for example. There’s a lot been focused on implementing new of growth coming from many areas.” technologies to provide significant By honing in on industry trends, cost control, cost management Schnitzer Steel has gained essential and enhanced optimisation. foresight in the re-evaluation of its One of the oldest companies operational platforms to deliver in the business, Schnitzer consistent positive outcomes. By Steel Industries, Inc., is investing in its procurement continuing to lead the capabilities, it has way, establishing sought to transform its an impressive procurement function Established in footprint, with from one which is approximately 100 somewhat tactical, Portland, Oregon in locations spanning into one which is the US, Canada more strategic. and Puerto Rico. With past senior roles “We purchased roughly across manufacturing, 400,000 end-of-life vehicles last logistics and strategic year, from which we harvest parts and sourcing operations, Folino’s role recycle through our platform. There’s as Director of Strategic Sourcing a lot of opportunity that is tied to our at logistics and transportation purchases of automobiles, the overall company Con-way (now part of XPO economy and the replacement rate of Logistics), fully opened his eyes automobiles,” explains Senior Director to the potential that procurement of Procurement Marcus Folino. can bring to organisations. “We also have a variety of other “At Con-way, I found myself programs and sources of metal rebuilding the strategic sourcing
1906
4
function that had already been created. Originally the focus was domestic, North American sourcing and later on, I worked with the international business and took the strategic sourcing function globally. It was a great opportunity and a good challenge, which led me to this role,” he says. Procurement transformation In order to transform the non-scrap procurement function into one which is increasingly strategic, Schnitzer Steel has placed significant emphasis on three main areas: its tools, its people and its processes to support the company’s ongoing strategy. Folino is nothing but complimentary about the team’s capabilities upon joining the organisation, but outlines where Schnitzer Steel had opportunities to enhance its existing approach “We had a solid and committed group of purchasing professionals at the business unit level. They possessed significant domain expertise in the mining and metals industry and substantial tenure within the Schnitzer business divisions.
“There’s a lot of growth coming from many areas” – MarcusFolino, Senior Director of Procurement
w w w. s c h n i t z e r s t e e l . c o m
5
COMPLETE RANGE OF PURPOSE-BUILT MACHINES TO SUIT VIRTUALLY ANY MATERIAL HANDLING APPLICATION.
SENNEBOGEN has been a leading name in the global material handling industry for 65 years. Established in America in the year 2000, SENNEBOGEN LLC has quickly become a leading provider of specialized equipment solutions for recycling and scrap metal yards, demolition, barge and port operations, log-handling, transfer stations and waste facilities from coast to coast. A growing network of distributors supports SENNEBOGEN LLC sales and service across the Americas, ensuring the highest standard of professional machine support and parts availability. DISCOVER MORE
1957 Sennebogen Trail, Stanley, NC 28164, USA Tel: +1 704-347-4910
www.sennebogen-na.com
FOLLOW US
They already were a group of people that had a strong work ethic, which is really representative of our company’s culture,” he says. Schnitzer’s people have remained a key pillar in the company’s procurement transformation, and throughout the past three years, the firm has introduced essential change management, incorporating lean concepts and process improvement, as well as standardised existing processes and invested in multiskilling its exceptional workforce. “We invested in further training for the purchasing group, and I brought in additional talent with specific strategic sourcing, project management and contract management expertise. From a timing perspective, we decided to recruit the sourcing expertise from the market alongside investing to develop it internally,” adds Folino. “One of the existing benefits to our organisational structure is that we maintained our purchasing staff co-located with the business. Consequently, there are many day-to-day working
relationships which we continue to maintain and further develop.” Supplier management Working closely with its supply base, Schnitzer Steel has leveraged its spend to effectively manage potential risks, as well as invest in new digital tools across its complex procurement processes. “We went through a very aggressive selection process with the focus on finding a platform supplier of procurement tools. From here, we implemented a contract management system and another module of this application to manage supplier data. While we were evaluating the supply base, we were running request for proposals (RFPs) and signing contracts,” Folino explains. “We went from an environment where the spend under contract was managed with limited procurement tools or systems, to one where we had a formalised policy, a procurement platform and a focus on contract management. Today, we have around half of our total spend under contract.” By implementing a supplier
w w w. s c h n i t z e r s t e e l . c o m
7
“We went through a very aggressive selection process with the focus on finding a platform supplier of procurement tools” – MarcusFolino, Senior Director of Procurement
We look good together.
TM
When you look good, customers take notice. Custom uniform programs and services by UniFirst enhance your brand image, motivate employees, and inspire customer confidence.
UniFirst.com
•
Customized workwear programs
•
Restroom and facility services
•
Best service and value available
•
300,000 business customers
800.225.3364
Schnitzer Steel has placed significant emphasis on three main areas: its tools, its people and its processes
management program within the first few months of its procurement transformation, Schnitzer Steel has also harnessed the capabilities of strategic suppliers to drive the consolidation of its supply base, reducing the number of suppliers by about half. “We segmented our supply base and those suppliers that we could develop by applying specific evaluation criteria. We also identified the suppliers that we could target
for consolidation. Through a rigorous process, we determined what our current supply base in each of our core areas of spend would be,” explains Folino. “We learned more about our suppliers, enhanced communication, and then managed their ability to execute,” he continues. “This whole process has been invaluable. Once we established the basic mechanics, we continued to integrate key internal stakeholders to help guide the direction of the
w w w. s c h n i t z e r s t e e l . c o m
9
CALL
(248) 650-9057 Toll Free: 888-586-9770
Paper d n a ting n i r P eral n e ,G s m or F s nes i s Bu Discover More <
PRODUCTS
Direct / Thermal Transfer Products • Multi-Part Unit Sets • Carbon & Carbonless Paper Custom Printed & Stock Labels • Envelopes • Promotional Items • Corporate Apparel Booked Forms • Commercial Printing • Presentation Folders & Binders Automotive Forms • Tax Forms • Laser Compatible Forms
SERVICES
Inventory Control Program • Computerized Forms Management Forms Design & Consultation Complete Composition • Warehouse & Storage Service 1902 Rochester Industrial Drive, Rochester Hills, MI 48309
|
www.geminiforms.com
THINK SAFETY. THINK GRAINGER.
®
Count on Grainger to help you keep your people and facilities safe.
INVENTORY MANAGEMENT
Choose from over 130,000 safety products plus the services and resources to help you reduce injuries, facilitate compliance, manage risk and increase productivity. Visit our online
SAFETY RESOURCES
Safety Solution Center for OSHA checklists, safety training options and more.
> Learn more at Grainger.com/safety ©2018 W.W. Grainger, Inc. W-ALS3500
G RA I N G E R . C O M ® | 1.8 0 0 .G RA IN G E R
ONLINE PURCHASING
Schnitzer Steel has approximately
100 locations services and goods that suppliers are providing.”
spanning the US, Canada and Puerto Rico
Expansion plans Aligned with its objective to grow the volume of materials processed through its platforms going forward, Schnitzer Steel is leveraging new technologies to deliver faster, more efficient, effective support across its procurement operations. “This year we have been seeing the benefits of the past few years of our purchasing and procurement transformation,” says Folino. “One area we are now looking into is supplier diversity programs. This has been rolled into part of our ‘Know
Our Supplier’ efforts. As we’ve implemented new technologies, we’re starting to capture better information on our supply base, which is now moving towards a supplier self-service model.” One of Schnitzer Steel’s goals is to drive increased volumes through its current footprint, whilst looking at ways to further its ambition to deliver sustainable working practices which benefit customers, suppliers, our people and the communities which we serve.
w w w. s c h n i t z e r s t e e l . c o m
11
Compliance Callie Pappas 299 SW Clay Street, Suite 350 Portland, OR 97201 503-224-9900
Investor Relations Stefano Gaggini 299 SW Clay Street, Suite 350 Portland, OR 97201 503-323-2811
www.schnitzersteel.com
Public Affairs Colin Kelly 299 SW Clay Street, Suite 350 Portland, OR 97201 781-873-1665