Suppliers are key to the business. In 2020, Suzano expanded its dialogue with this audience, seeking to strengthen the partnership in a win-win relationship. In addition, in order to be closer to them, the company invested in innovation and technology.
Currently, we have 30,015 active suppliers in our base and do business with 11,358 suppliers. They are critical stakeholders for our operations. For this reason, the impacts of COVID-19 on the supply chain were analyzed with great care and depth.
One of the initial measures established by the Procurement team was to expand the dialogue with this audience in order to reinforce the partnership bond. The main concern was to avoid any risk of disruption in supply, which would affect forestry, industrial, and/or logistics activities, causing unpredictable ramifications throughout our supply chain. We also conducted Covid-19 health and safety training for our suppliers and extended all prevention protocols to Suzano’s professionals as well.
- IN 2020, WE TRANSFERRED APPROXIMATELY R$15 MILLION SO THAT MICRO AND SMALL SUPPLIERS COULD MAKE IT THROUGH THE MOST CRITICAL PHASE OF THE PANDEMIC
Technology in Procurement
Waves of transformation will change the procurement management model within Suzano. The idea is to provide technology in order to allow much more intelligence and strategy for all activities in the area. In 2020, we implemented an artificial intelligence robot for purchases and renewed the portal to interact with our partners. For 2021, we are looking for systems that support our complete procurement operation and the optimization of inventories and warehouses.
Attention to micro- and small-sized enterprises
In this case, the approach was to provide support in a moment of crisis. Based on the analysis of the supply chain management, Suzano defined that it would support micro and small enterprises (with annual revenues of up to R$5 million), as per the definition of size established by Serasa, and largely dependent on revenue from agreements with the company. Approximately 700 suppliers were identified in the states of Bahia, Mato Grosso do Sul, Espírito Santo, and Maranhão. To help these suppliers, the company decided to advance payments of invoices due up to 90 days.
Another important measure was to increase our inventories of inputs in order to keep our operation stable. We advanced up to 20% of the balance in outstanding purchase orders, i.e., contracted, but not delivered. As a result, the company transferred approximately R$15 million to these partners after April. These were some of the ways found for micro and small suppliers to maintain their working capital and thus survive the most critical phase of the pandemic. In return, we asked them to avoid termination of employees as much as possible.
As part of the initiative, the company also put together a Consultancy Plan to provide training and contribute to the development of suppliers that have more than 50% of their business dependent on contracts with Suzano. Approximately 70 suppliers joined the program and can be trained to make their businesses even more prosperous.
In addition to the challenge faced because of the impacts caused by Covid-19, we needed to guarantee the continuity of our operations while also reducing the cost in Suzano’s supply chain. To this end, we began to renegotiate with the main suppliers, with the support of the technical areas. The result of this joint effort was a reduction of nearly R$230 million spent during the year, which was invested to improve operational efficiency.
Partnership with suppliers to make a difference in society
Actions with larger suppliers were developed in order to find solutions that would help them better navigate the crisis without harming their neighboring communities. We further decided to guarantee, for a period of 90 days, a transfer of 100% of the payroll costs of their employees, whose activities were suspended due to the pandemic.
With large suppliers, Suzano established partnerships that impacted society as a whole. One of the most important involved Magnamed, the largest manufacturer of ventilators in Brazil, which delivered 6,500 units in four months to the Ministry of Health. In order to deliver this volume of ventilators, Magnamed had to change its manufacturing process. Suzano assisted the project in engineering matters and in the search to find global suppliers of inputs, in addition to providing working capital for the acquisition of components. Magnamed was also supported by other companies, such as Positivo Tecnologia, Klabin, Flex e Embraer, Fiat Chrysler Automóveis, and White Martins.
NEW SUPPLIER PORTAL
In November 2020, Suzano launched the Supplier Relations Portal, a platform with relevant information for those who are already partners of Suzano and for those who aspire to be. The tool contains the principles, rules, and processes to hire this critical stakeholder in the business, including our legal, social, and environmental commitments, with which this audience needs to be in agreement for the hiring to take place. In addition to registering and showing their ESG credentials, suppliers have the opportunity to leave comments, questions, and suggestions for the company regarding the procurement process.
This new tool represents a significant advance in the company’s way of hiring, with more comprehensive and controlled requirements and clauses. Soon, Suzano expects to see a major change in mentality in its Procurement area. In 2020, the company approved the Responsible Supplier Management (RSM) Program, which will be 100% implemented within up to four years. The expectation is that the social, environmental, and governance topic will be considered a decisive aspect in the supplier assessment and selection matrix. This means that in the case of suppliers on equal terms, the one who is best positioned in terms of social, environmental, health, safety, and governance aspects will have the preference of the organization.
CHALLENGES FOR 2021
In 2021, in addition to the challenge of expanding the social, environmental, and governance approach to procurement, we will be committed to the organic growth of the company with the construction of a unit in Ribas do Rio Pardo (Mato Grosso do Sul state). To this end, the development of suppliers will be crucial to the progress of the expansion, which will add 2.3 million tons of pulp per year to the company’s current total capacity.
Semear is a training project for Suzano’s micro and small suppliers. Through this project, we select companies from various segments, which receive guidance on how to ensure structured growth through best management practices, methods, innovation, and principles of legal, social, and environmental responsibility.
In 2020, we formed the first group in Mucuri (Bahia state), with about 60 micro-companies in the transportation industry in the region. The program is also being carried out in the states of Mato Grosso do Sul, Espírito Santo, and Maranhão, for companies in the fields of transport and forest maintenance.