Starting from June 2016, Kazatomprom NAC JSC is implementing category management. Category management is one of the important components of new procurement model of Samruk-Kazyna and implies that the key criteria when choosing a vendor is a sum total of all costs arising throughout the life cycle of a product, work or service from the moment of acquiring and until their full cancelation/utilization.
International experience has shown that application of such integrated approach to procurement allows for the significant operation cost reduction. Saving can be achieved both by optimizing the use of the goods in the company (planning and maintaining of stockpiles, as well as stockpiling) and by working with the external market through strategic partnerships with vendors and stimulating local suppliers by creating long-term demand for a certain product.
«We consider the whole process starting with how demand is created, ways in which procurement process takes place and what expenditures, e.g. on repair and maintenance, arise during operation and end-of-service phases of some type of goods, works and services. At the current time, such approach to procurement is being implemented in KMG, Kazatоmprom and Kazpost. International experience has shown that application of category management allows to save up to 15-20% of the overall expenditure», - Adamas Ilkevicius, Managing Director for Transformation and Special Projects of Samruk-Kazyna JSC, told.
According to Suindik Akhmetov, Procurement Manager of Kazatomprom NAC JSC, as part of the implementation of a pilot project, the structure of cost of electricity and fuel needed for company’s productive activities has been defined, procurement strategies have been developed and negotiations with potential vendors have been conducted. «Such approach to procurement is beneficial not only for the company, but also for the vendors», - S.Akhmetov continued. «Due to the synergy of volume and understanding of the tasks entrusted to him, a vendor can plan his development and get a higher number of orders. Fair competition between vendors is growing, which in turn is a powerful incentive for improvement of their products or services». New approach reinforces the role of the procurement function itself, which is changing from the supporting business function to the strategic one aimed at increasing company’s profit.
In Kazatomprom, it is noted that already at the beginning stage of strategy implementation, they managed to achieve savings of more than KZT 310 million and reduce procurement prices for electricity by 7%. Until the end of 2017, 10 category strategies for different types of goods, works and services will be developed. These strategies will allow companies to gain an advantage in the form of reduced cost of operational activity of more than KZT 1 billion. In general, economic effect of implementing category management in Kazatomprom NAC JSC is estimated to be more than KZT 31 billion until 2025.