(PRWEB) July 30, 2008
Electrolux has evolved from humble beginnings in an inner Sydney machining shop in 1912 into the Australasian subsidiary of Sweden's Electrolux Group - employing 2000 Australians and New Zealanders and generating annual whitegoods sales of close to $1 billion. Director of Purchasing Asia Pacific Food Preparation and Steel Commodity Manager Asia Pacific, Paul Randello, has given an exclusive interview to Bean Media Group, publishers of 'Australia's Best' Magazines to discuss supply chain management at the company.
Electrolux Australia designs and develops, manufactures, exports and imports a range of electrical appliances such as refrigerators, washing machines, clothes dryers, cooking appliances, dishwashers, air conditioners and more. These products are sold under its Electrolux, Westinghouse, Simpson, Chef and Dishlex brands. The company's combined market share outstrips that of all competitors - including those from offshore - with most homes owning at least one appliance carrying an Electrolux brand. Electrolux Home Products is also the holding company for Electrolux Floor Care and Small Appliances which has sold the famous Electrolux vacuum cleaners throughout Australia since the 1920s.
The corporation has, in recent years focused on developing and manufacturing innovative, premium kitchen appliances which has led to it increasingly being the brand of choice for professional chefs and restaurateurs, as well as discerning customers.
With increased growth has come a reliance on effective support systems to ensure products are manufactured and delivered to the market as efficiently as possible. In this regard, Electrolux is aware of the importance of a simplified supply chain management system and has invested significantly, both locally and internationally, in ensuring the appropriate systems are in place.
Director of Purchasing Asia Pacific Food Preparation and Steel Commodity Manager Asia Pacific, Paul Randello, believes that proficient supply chain management is an integral element of the Electrolux business, and that ongoing refinements of procedures have led to significant improvements and efficiencies in logistics.
"Supply chain costs are obviously a big factor in manufacturing because it is from this base that we ultimately determine the end cost of products to consumers," explains Mr Randello. "For this reason, price negotiation has to occur at all stages of the supply chain process and includes everything from material costs to delivery conditions and packaging configuration, to ensure the lowest possible price of each component."
As part of effective supply chain management system, demand flow planning and scheduling have also a strong link to the sales organization in order to define market demand and assure transparency in each stage of a new product launch. Delivery dates must be agreed upon and supply constraints negotiated to ensure product delivery.
As Director of Purchasing, Mr Randello's role is made up of two main components. Firstly he is broadly responsible for managing the Direct Material (Purchased) Costs of Electrolux's Food Preparation factories in Australia (Adelaide) and China (Hangzhou). It is his team which manages the supply contracts with all material suppliers and considers factors such as price, market conditions and quality and, as Steel Commodity Manager for Asia Pacific, Mr Randello manages the Steel and Stainless steel contracts for Electrolux across the AP region. This includes ensuring consistent supply of material directly to Electrolux factories as well as to manufacturing partners.
To support this effort, Electrolux has a dedicated logistics team which includes a Purchasing Department at each site comprising a Purchasing Manager and a team of three-to-four buyers. Similarly, each site has a Logistics Department which endeavors to create a seamless flow for the entire supply chain operation.
Electrolux Vendor Managed Inventory (VMI) is a good example of how supply chain management works well for the company. This third party warehouse acts as an intermediary between suppliers - whom are often overseas - to ensure bulk deliveries are on time and costs are reduced. This system is supported by on-line tracking and late delivery alerting tools to maintain a balance between on time delivery and low inventory.
Before establishing a supply agreement with the company, Electrolux expects suppliers to use prescribed tools such as VMI, which helps ensure the effectiveness of the Electrolux supply chain management system is not compromised. Once the terms and conditions of each agreement are formalized, vendor training is provided, where appropriate.
Mr Randello strongly believes that suppliers play a crucial role in helping Electrolux achieve its supply chain goals. "Many of these arrangements are win-win because both parties benefit from the degree of detail required before the project starts," he states.
"Electrolux seeks suppliers with a similar strategic outlook so solid partnerships can be formed. The Electrolux global brand and buying power has enabled us to attract regional and international relationships that would have otherwise not been possible."
Globally, Electrolux recognizes the automotive industry's supply chain management excellence and has sought to apply the same supply chain principles as those at Mitsubishi Motors and Mercedes Benz in order to reduce costs and optimise delivery results.
"We've come a long way in recent years but that doesn't mean we're resting on our laurels. We are constantly looking at improving our supplier relationships and for new opportunities to source material from new markets," says Mr. Randello.