The executive director of the Sudbury Area Mining Supply and Service Association (SAMSSA) said Vale Inco is becoming much more rigid about how it purchases mining supplies from his members.
Dick DeStefano provided Northern Life with a copy of a July 28 letter from Jennifer Maki, executive vice-president and chief financial officer of Vale Inco.
The letter states that “procurement (purchasing) will require a stricter adherence to the existing policies and procedures in order to leverage the benefits of a new model for Vale Inco.”
In essence, Vale Inco has “a different corporate culture that Inco of the old,” said DeStefano. “They are much more diligent about accounts payable and receivable.”
He said he is not concerned about this policy, as none of his members seem to be. “It's been an ongoing process that they're just putting the details into now,” he said.
“Procurement is one of the very significant activities and cost streams that we have in our business. All we're trying to do is organize our procurement business in a manner that is the most efficient for our company,” Vale Inco spokesperson Cory McPhee told Northern Life, when asked about the letter.
The company will set up a town hall meeting for suppliers to speak about the new rules, he said.
The letter outlines the division of “procurement activities” into three categories — strategic procurement, capital projects procurement and shared services procurement.
DeStefano said strategic procurement refers to items that can be purchased for all of Vale's mines centrally to save money.
The letter said this category of procurement will “capture synergies from a business volume perspective by consolidating strategic purchases on a national and global basis.”
DeStefano said this policy could become a concern for his members if they start losing contracts if Vale Inco decides to make more purchases out of Sudbury to save money.
McPhee said Sudbury mining suppliers won't necessarily lose out because of the policy. “In the mine supply and service sector, I don't think Sudbury takes a back seat to too many locations...Certainly Sudbury-based suppliers will be give every opportunity to participate in the business going forward.”
The other two categories of procurement are capital projects procurement, which refers to items such as major project studies and construction, and shared services procurement, which refers to all purchases not made under strategic procurement or capital services procurement.
The letter outlines several other rules for suppliers, including the need to have a purchase order or contract before delivery of goods and services.
It says that if there are unauthorized shipments of goods or if services are executed without prior approval, it may “jeopardize your provision of goods and services to Vale Inco in the future, and will certainly result in payment delays.”
“All we're saying is that the processes are being set up for a reason, and we have to follow them. We can't go outside the borders of the process. It's not intended to be threatening in any way,” said McPhee.
