ANNUAL REPORT - KORADO, as

20
PRODUCTION
MATERIAL PROCUREMENT
The procurement of input material is a very important part
of KORADO’s production process. Maximum emphasis is
placed on quality, sales and delivery terms and, above all,
input material prices.
Give the dramatic developments in prices and demand that
occurred in 2010, solid cooperation and partnerships with
suppliers of priority materials became very important due to
their contribution to KORADO’s good market position and
reputation.
A key element of planning and implementing material procurement
is having sufficient in-house and external information.
Use of the acquired information makes it easier to ensure
high-quality and optimally priced input materials through the
procurement management and decision-making process.
The Supplier Rating Committee has become a key part of
companywide procurement and has favourably impacted all
KORADO’s production and non-production units. Electronic
auctions create substantial additional savings and have become
an important new procurement tool.
Sheet metal prices
In 2010, we continued to see sharp growth in the price of
our most important input material – cold-rolled sheet metal,
a trend that started in Q3 and accelerated in Q4 2009. Excess
demand that exacerbated the ongoing lack of metallurgical
Sheet metal price development index
%
240
220
200
180
160
140
120
100
0
material producers’capacities and negative developments in
steel production raw material prices (e.g. iron ore and coke)
created a strain on KORADO operations.
It is clear from the current dramatic situation that further
abrupt changes in supply and demand can be anticipated
in future.
Suppliers, stabilization and finding new resources
In 2010, the Company continued to work in a systematic manner
with its suppliers while subjecting them to rigorous evaluation.
At the same time, the standard process of sourcing
new supplies continued while maintaining quality, logistics
and service parameters and minimizing procurement risks.
We further optimized the supplier evaluation system, employing
solutions which take into account experience gained
from working with different suppliers across the entire Company.The
evaluation results are analyzed in detail and used
in future negotiations.
Days inventory
In 2010, the Company achieved stable days inventory of materials
thanks to the efforts of individual procurement staff,
the attention devoted to the planning process, communication
among KORADO departments and cooperation with
suppliers of priority and raw materials.
2002 2003 2004 2005 2006 2007 2008 2009 2010
Change in sheet metal price compared to opening balance as of 1 January 2001 (in percent).
Annual Report 2010