voestalpine AG Corporate Responsibility Report 2018 - Transparency in the supply chain (optimized for printing)

SDG 06 – Clean water and sanitation (photo)

As a Group that operates worldwide, voestalpine also bears responsibility in its purchasing activities. Therefore, it is a matter of course for the Group to apply high standards throughout the supply chain in order to ensure a high level of transparency.

The purchasing terms and conditions and Code of Conduct apply to all suppliers and include numerous points creating standards for responsible procurement. voestalpine is applying its Sustainable Supply Chain Management (SSCM) project in order to analyze raw materials procurement–the most important area of purchasing–for its compliance with corporate responsibility, and to establish the appropriate operational criteria. The first phase was completed at the end of 2017.

The voestalpine Purchasing Board is the steering body for corporate procurement, and is supported by the Purchasing Committee as the implementation body. It bears responsibility for the corporate procurement strategy and has overall control of purchasing within the Group. The Purchasing Board meets once each quarter and develops the framework conditions for the purchasing structure, passes resolutions on strategy content, decides in the case of escalation procedures, and actively communicates its decisions and resolutions.

The Purchasing Committee meets monthly, carrying out the Purchasing Board’s instructions to implement strategy and control purchasing within the Group:

Monitoring and developing the purchasing structure, in particular the Lead Buyer structure
Making decisions with respect to escalations arising from the purchasing and Lead Buyer structure
Strategic prioritization of projects, requests, and topics
Group-wide harmonization of the commodity group structure
Coordination on procedures with cross-divisional suppliers
Regular status reports to the Purchasing Board

The Group Catalogue Purchasers are responsible for particular catalogues and suppliers across the Group, i.e., they establish uniform prices and conditions in the catalogues within the Group. This offers the benefits of pooling, reducing the pressure on resources in the individual companies.

Transparency in the supply chain (graphic)

voestalpine’s purchasing responsibilities and relevant purchasing principles are described in the Corporate Responsibility Strategy as follows:

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General procurement

SDG 4 – Quality Education SDG 16 – Peace, Justice and strong Institutions SDG 17 – Partnerships for the Goals

Supplier management

When selecting its suppliers, voestalpine ensures their adherence to ecological and social principles. We have integrated sustainable supplier management into our procurement processes in order to create long-term partnerships.

Training and continuing education

With information events such as the Purchasing Power Day, and the three-stage Purchasing Power Academy established by the Group, voestalpine ensures continuing professional development is available for employees working in purchasing.

Procurement processes

The procurement process is continuously optimized in order to ensure its compliance. The Code of Conduct forms the basis for social actions and decisions.

Raw materials procurement

SDG 12 – Responsible Consumption and Production SDG 16 – Peace, Justice and strong Institutions SDG 17 – Partnerships for the Goals

An integrated approach to lifecycle concepts

Applying a lifecycle approach (Closed Loop) together with our customers guarantees the highest levels of efficiency in the process of recycling our raw and reusable materials.

Suppliers

Together with our suppliers we have set ourselves the challenge of permanently optimizing our supply chains. Regular visits to the sources of raw materials and prematerials, especially mines and deposits, are a fixed element in this process. Together we develop methods for designing an efficient supply chain which meets the CR guidelines. New suppliers are assessed in terms of CR, quality, performance, and– depending on the outcome–included in the portfolio. The project SSCM (Sustainable Supply Chain Management) screens our raw material supply chains, examining the key factors which determine compliance with corporate responsibility. voestalpine ensures that all raw materials are subject to this process, thereby minimizing risk over the long term.

Conflict Minerals

We oblige all suppliers from whom we source materials and who are subject to the Dodd-Frank Act to operate in accordance with its provisions. A cfsi report ensures that all materials procured on behalf of the Group are „conflict free“.

Securing supplies

A key task of raw materials procurement management is to secure the long-term, competitive supply of raw materials and energy. A high degree of integration into upstream and downstream processes, scenario planning, and adaptive supply concepts serve to minimize potential risks.

The three most important cornerstones of the purchasing structure are lead buying, purchasing processes and systems, as well as training and continuing education:

The three most important cornerstones of the purchasing structure – Lead buying (graphic)

The three most important cornerstones of the purchasing structure – Purchasing processes and systems (graphic)

The three most important cornerstones of the purchasing structure – Purchasing Power Academy (graphic)

Lead buying is the process of pooling similar materials and raw materials from different companies into material groups which are then purchased by the Lead Buyer. The advantages of lead buying can be combined with those of a decentralized purchasing organization (regional purchasing competence remains at the production sites) in order to optimize purchasing power in negotiations with suppliers when determining quality and price. Lead buying is an important part of the corporate purchasing structure, and has established itself as a significant value creation factor within the company over the past years.