Formed in 2012, following its purchase by H.I.G Capital Europe to Rio Tinto, Alteo is the world’s largest specialty alumina company, with 4 facilities in Europe of which 3 in France. In relation with many suppliers, mostly recurring, anxious to drive their performance and having to deal with the ISO 9001 requirements, Alteo has adopted the web-based solution named eSRM to evaluate its suppliers.
Patrick Schneider, Alteo Group’s Procurement Director, testifies of the benefits provided by this solution.
After many years as part of Pechiney, then Alcan and most recently Rio Tinto, Specialty Alumina activity became Alteo in 2012, and is today the world’s largest specialty alumina integrated producer. The products are manufactured in 4 facilities and are intended for many markets: ceramics, refractories, abrasives, glass and flame retardants. Alteo employs 700 people including 400 on the site of Gardanne (Bouches du Rhône), the largest production site which is also the headquarters of the group.
A solution to easily and instantly prove your compliance with ISO9001 requirements
Whilst eSRM covers several functions (supplier profile management, non-conformances management, supplier performance management), the initial need of Alteo was mainly focused on supplier performance continuous tracking as required by ISO 9001 norm.
As part of reviews of contracts related to recurring suppliers, the ERP (SAP) provides some tools for evaluation but does not enable formalization; moreover it is extremely cumbersome to provide evidence of conformity to the norm’s requirements. « We clearly had a deficiency related to supplier evaluation, and the eSRM solution bridged that deficiency. eSRM ensures continuity and periodicity in the evaluation, it provides a complete history for audits and therefore it is complementary to SAP« , says Patrick Schneider.
Annual evaluation of suppliers’ performance
Alteo uses eSRM to assess 20 to 30 suppliers per year (the most important ones) on about 800 suppliers that are potentially assessable (recurring purchases). Moreover, all suppliers of commodities (for example, suppliers of packaging) are also assessed more broadly during annual meetings.
Once a year, the buyers and the operational stakeholders agree together on which suppliers will be assessed; the main criteria to select the right ones being: the HSE risk level (i.e Health, Safety, Environment), the quality risk level and the delivery risk level on the production.
Once the suppliers to be assessed are selected, the assessment campaign is launched. Each buyer in charge of a given supplier validates the list of people who will respond to a questionnaire according to a set of criteria predefined at company level. Typically, 4 to 10 Alteo’s employees are involved in the assessment process. The administration of the survey is very simple; each employee gets an email that invites them to answer the online questionnaire. The assessors score the supplier performance in a few clics. eSRM provides a mechanism that automatically track the answers as well as the reminders to the employees who would be late to answer.
A structured and collaborative performance assessment process
The solution provides a complete framework to assess and improve supplier performance and gathers all the entered information. The Alteo employees are invited, not only to score supplier performance according to the criteria, but also to submit their factual comments.
« Basically, it’s not so much the score that counts, but the approach« , says Patrick Schneider. « You need to be able to step back; for example, a poor score induced by an epiphenomenon should not prevail. One advantage of the solution is to allow everyone to give his opinion, first by answering the questionnaire, then during the evaluation meetings. And it is a big change versus the former process where everyone spoke the same time and where the one who spoke the loudest imposed his opinion to the others! « .
Another advantage of eSRM is to enable supplier self-assessment; concretely, the supplier is invited to answer the online questionnaire. It may indeed be instructive to point out the differences in perception between the supplier and the Alteo employees. It is then very easy to submit to the supplier the corrective or improvement actions suggested by the Alteo assessment team.
« eSRM allows a more comprehensive and objective evaluation, while facilitating the formalization of actions to be implemented, even if the action plans are driven out of the system as part of contract reviews », says Patrick Schneider. « The system allows once a year to take a picture of the situation of each supplier. We rarely detected scoops but the solution helps to formalize the relationship and to make a point once a year with all those involved. »».
A simple standalone tool
eSRM has been compared to other Procurement Information Systems, including online bidding tools primarily dedicated to the management of tenders. All were judged less convenient and much more cumbersome to use and to administer than eSRM for supplier assessment. And Patrick Schneider welcomed the ease of use of eSRM within its specific functional area. « We have tools to manage tenders and to monitor incidents and we definitely want to outlaw any useless burdens which would for example be generated by interfaces between applications whilst they are not needed. That is the reason why we adopted eSRM which is a simple tool, sufficient in itself and that perfectly meets our need of periodic supplier evaluation« , he concluded.
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