We have a solid procurement strategy

Case: Operational excellence through smart procurement

To reach the long-term savings target of 3%, Metso has created a solid procurement strategy.

We launched a Capital Efficiency Program in 2014, which is one of the means to reach our ROCE target. Our annual external purchasing spend is over EUR 2 billion, making procurement an important strategic development area that has a direct effect on our operational excellence, competitiveness and profitability.

Procurement was included in the Capital Efficiency Program as one of the key areas. The work to streamline our procurement was started at a strategic level in 2012, and the current program follows the developments already achieved. Aligned with our strategy to become a more integrated company, we now have a joint procurement organization.

To reach the long-term savings target of 3% of the annual total spend, we have created a solid procurement strategy, including e-procurement, design-to-cost and source-to-cost practices. Additionally, we entered into certain strategic longer term key supplier contracts and revised suppliers’ payment terms and methods to create significant cost savings and improved ROCE. A Supplier Financing Program has now been launched as well.

In 2014, the total expenditure on procurement was EUR 2.04 billion, which is a decrease of 4% compared with 2013.