Purchasing focus saves US steel firm millions

17 May 2000
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18 May 2000 | David Arminas

Cross-functional training and an emphasis on strategic thinking has helped US firm Bethlehem Steel Corporation (BSC) to cut its annual procurement spend by £109 million.

The company achieved this by expanding purchasing's brief beyond cost reduction and using it to speed overall strategic change, Robert Rudzki, BSC's vice-president of purchasing and chief procurement officer, told delegates at the National Association of Purchasing Management's annual conference in New Orleans this month.

Rudzki realised in 1995 that long-term partnerships with suppliers would be increasingly important. "We were apparently partnered with thousands of companies around the world," he said. "I thought we should examine our suppliers to find out what we meant by a partnership."

After negotiations with several of the firm's major suppliers, five main principles for partnership were set out. Around 400 of BSC's supplier relationships now fit this definition, said Rudzki.

But to establish and maintain such partnerships, changes were needed in purchasing thinking, Rudzki added. In 1995, strategic activities made up only 20 per cent of procurement work at the company.

Work in cross-functional areas had also helped to improve this statistic, he explained. In 1994, staff who had only purchasing and logistics experience made up 70 per cent of the firm's purchasing department. In 1999, they made up 29 per cent.

The proportion of staff with technical and operations experience in the department also increased between 1994 and 1999, from 13 per cent to 35 per cent, said Rudzki.

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