Guiding the Development of Suppliers

Fair and Just Procurement Platform

Sunshine Procurement

Baosteel has compiled and implemented the manual of guidelines for categorized procurement strategies to enable transparent internal management operations. The Materials & Spare Parts Procurement Department of Baosteel Co., Ltd. commenced the compilation of the categorized procurement strategy manual in 2009 and realized generally effective management and control in the selection of procurement strategies for a procuring organization with over 300,000 procurement varieties, nearly one thousand eligible suppliers and over 100 purchasers. The Manual of Guidelines for Categorized Procurement Strategies compiled in 2012 optimized the pricing strategies by dividing them into competitive strategies and non-competitive strategies; and added the guiding strategies for supplier cooperation and resource development plan. The general guiding principle is to minimize the ratio of non-competitive pricing strategies, promote resource allocation in accordance with the market mechanisms and control procurement costs.

Industrial Products Supermarket Platform.

In 2012, the Materials & Spare Parts Procurement Department of Baosteel Co., Ltd. established the industrial products supermarket platform for standard and generic goods in small quantities. The industrial products supermarket platform discloses demand information to suppliers and enables price bidding throughout the procurement process so as to find competitive suppliers in a more extensive and efficient manner and discover the market prices. The platform enables the customers to place orders based on their needs and therefore realizes the reasonable balance of different customers between quality and price.

Green Procurement

Procurement Status of Green

As at the end of 2012, Baosteel has conduct Green Attribute identification for over 150,000 varieties of materials and spare parts (over 100,000 as at the end of 2011), accounting for approximately 46% of all such varieties procured by Baosteel Co., Ltd. headquarters. Statistics of green products (identified) over the past three years are illustrated in the following figure.

As at the end of 2012, the percentage of suppliers of Baosteel Co., Ltd. Raw Material Procurement Center passing ISO14001 certification had reached 13%. The figure was 10% for 2011 and 7% for 2010.

Percentage of Suppliers Passing Environment Management System Certification

Over the past three years, the percentage of the material and spare part suppliers of Baosteel Co., Ltd. HQ passing the environment management system certification is illustrated in the following figure: