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Profitability improvement

In this section you can find information on Valmet's actions for improving profitability, quality costs and procurement savings.

Continued focus on improving profitability

Valmet continues to focus on improving profitability through various actions, in e.g. sales process management, project management and project execution, in procurement and quality, as well as in technology and R&D. Also, the modernization of the ERP platform will, once finalized, contribute to profitability improvement.

To improve sales process management, Valmet is focusing on key account management and analyzing the customers’ share of wallet. Valmet is targeting market share improvement at key customers and adding focus on sales training. Valmet has also launched ‘Valmet Way to Serve’ – a shift towards more unified and customer oriented services.

Valmet is continuously improving its project management and project execution by training personnel and implementing a Valmet-wide project execution model. By focusing on improving project management and execution, Valmet is targeting to continuously improve gross profit.

Valmet has set a new long-term savings target for procurement. In order to decrease procurement costs, Valmet is increasingly focusing on design-to-cost and adding supplier involvement through supplier relationship management. Valmet has also set a new target for quality cost savings and is adding focus on root cause analysis of quality deviations. Valmet is continuing to adopt the Lean principles and methodology.

Valmet is constantly focusing on new technologies and R&D in order to improve product cost competitiveness and performance. Additionally, Valmet is currently modernizing its ERP system, which will, once implemented, increase efficiency. 

Quarterly development of Comparable EBITA margin

Net sales and Comparable EBITA Q4/2016


Source: Valmet's Financial Statements Review 2016 and presentation, published February 8, 2017.

 

Quality costs

 

Quality costs (EUR million and % of net sales)

In order to reduce quality costs and lead times Valmet is implementing Lean. Implementing Lean is expected to improve efficiency and reduce waste. A common quality development approach, together with different quality tools and processes help reduce quality costs and lead times. In order to affect quality costs and lead times, it is also important to highlight the importance of quality initiatives and accountability. In 2015, Valmet has conducted active Lean trainings on all levels, and there were over 100 Lean projects, of which majority ongoing. Results in reducing quality costs have been in line with the targets in 2015.


Procurement

 

Implemented procurement savings of annual direct spend

Valmet has an extensive supply chain including around 8,500 active suppliers in over 50 countries. However, over half of our purchases come from Finland and Sweden when measured by supplier spend. Our purchases mainly comprise metals-based products and electronic components and services from suppliers in the pulp, paper and energy industries.

To improve profitability, Valmet also focuses on procurement savings. These can be achieved by increased sourcing from cost-competitive countries, with an increased use of sub-contracting and by consolidating the shipment and warehouse network

 

Purchases top10 countries 2016

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Updated; Mar 3, 2017