Sandvik has high expectations on its collaboration with SSG. The picture shows a bell furnace for tempering strip steel at STM’s production plant in Sandviken.
The SSG Product Database is also gaining an increasingly firm foothold in the steel industry. Outokumpu in Avesta has been a diligent user for some time and now Sandvik AB has reached an agreement with SSG.
Initially it is primarily the company’s business area Sandvik Materials Technology (SMT), in Sandviken, Sweden, that will implement and employ SSG Product Database. SMT is the Sandvik Group’s largest production centre as well as Sweden’s second largest industrial complex, topped only by Volvo’s Torslanda facility.
The purpose of this cooperation with SSG is to create uniform identities for supplies, inside Sandvik as well as with suppliers.
“We’re hoping this will provide us with better information about exactly how much we have purchased from our suppliers, what price we’ve paid and who has bought the material. All this information facilitates the purchasing process and increases our ability to steer our purchasing based on the agreements we have in place. Having better information also means we should be able to reach even better agreements and achieve higher contract loyalty,” says Rikard Salander, project manager, Process CIO.
Great expectations
The expectations for this collaboration are also great in financial terms.
“We want more reliable stock control that allows us to reduce tied-up capital as well as avoiding duplicate purchasing and ordering the wrong goods by minimizing the risk for misunderstanding. We also hope to be able to cut transaction costs by simplifying the purchasing process itself,” says Rikard Salander before continuing:
“Requiring that suppliers also classify their products according to SSG Product Database will become an integral part of our purchasing process. This is the beginning of a very large and comprehensive process on the part of Sandvik and SMT.”
Initially about 40,000 items in SMT’s stock are to be classified using the correct SKC numbers and the task has been divided into several phases.
“In Phase 1, which has been concluded, we classified the most frequently needed spare parts in our warehouse. We recently started Phases 2 and 3 and we don’t know right now how long this work is going to take. These phases include training all users as well as sorting through all of the material which, for one reason or another, is no longer needed,” says Rikard Salander.
Roughly ten people are directly involved in the classification work and thousands at Sandvik are indirectly affected.
Collaboration with SSG constitutes an important part of the more sweeping process of change that SMT is currently undertaking. The aim is to increase the business area’s profitability and the changes are not restricted to purchasing and storekeeping but also involve production and sales.
“This is a major undertaking for us and in the new processes we will benefit from SSG’s involvement in the project. The Product Database will be an important component and a necessity for making the required streamlining and improvements,” says Rikard Salander.
Much in common with the forest industry
Rikard Salander takes a positive view of the increased cooperation with SSG’s other customers:
“We have many of the same suppliers as Outokumpu in Avesta and the forest industry. We will also contribute new items and the strength lies in the number of us who share responsibility for the development of the SSG Product Database.”