A Cost-Saving Model for Steel Plants

30.11.2018

A Cost-Saving Model for Steel Plants

Purchasers at China's steel plants work to an iron rule: the lowest offer wins the order. Yet the Sales & Technology Teams from FUCHS LUBRICANTS (CHINA) were able to convince those responsible at Fengnan Iron & Steel Co., Ltd. of the benefits of their one-stop solution.

Eliminating capacity surpluses and debts in their economy is something that sits right at the top of the agenda for the Chinese administration. Fengnan Iron & Steel Co., Ltd., one of China's largest private steel groups, is also focusing on these same objectives. The regional activities have therefore been summarized and a megaproject launched. This revolves around a new high-tech steel plant at the Lingang Industry Park in the Fengnan Economic Development Zone of Tangshan in the Hebei Province. The new facility can produce up to 8 million tons of steel per year. The total investment was 38 billion Renminbi (€4.8 billion).

The "shopping list", which is managed by the parent company Sino Giant Group, includes a wide range of lubricants. The costs for the initial filling alone reached the breathtaking sum of 40 to 50 million Renminbi (€5 to 6 million). The purchasing model that has been in use for years was very simple here, as the lowest offer always wins the order. However, there are a lot of issues with this procedure. Procurement management for various oils and lubricants takes a lot of time and ties up capacities, while large quantities are wasted if the use of the lubricants is not monitored correctly. This leads to a situation in which the distributors, which are generally used here, are ultimately not able to guarantee professional or efficient aftersales support. As such, the group was keen to adopt a new strategy here. 

The Sales & Technology Teams from FUCHS in China seized this opportunity. Their trump card was the unique one-stop solution that FUCHS offers specifically for the steel industry – and they were able to present a success story. "Our concept worked fantastically at our customer Rizhao Steel," commented Chai Le, Industrial Regional Sales Manager. The arguments presented by the FUCHS Teams, with which they impressed the responsible manager at Fengnan Iron & Steel, carried even more weight. "We can make a complete pallet of products available that was developed specifically for the steel industry. This helps reduce both procurement and management costs – while at the same time avoiding intermediaries. The customer also benefits from the technical support of the FUCHS specialists.“ The use of recyclable packaging and circulating tanks also impressed the customer during the meetings. "This is a win-win situation, as both costs and environmental damage are reduced with this approach," commented Chai Le.

In the end, it just worked. The one-stop solution and the business philosophy of FUCHS were aligned perfectly with the new strategic approaches at Fengnan Iron & Steel. FUCHS received the go-ahead for the initial filling project at the company's new steel plant with an order value of 20 million Renminbi (€2.5 million) and also won a second strategic partner for its one-stop model following on from Rizhao Steel.

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