MMK Continues to Implement Customer Focus Initiative
Magnitogorsk Iron and Steel Works PJSC (MMK) has been consistently implementing its “Focus on Customers” strategic initiative. As part of this effort, the Company has increased sales through its own trading company, developed digital sales channels and improved its logistics system.
The initiative is an important component of MMK’s updated development strategy to 2025. It calls for a greater focus on end consumers, including by increasing the percentage of on-time sales and developing integrated planning.
In 2022, the Company opened divisions of its trading company, MMK Trading House, in Astrakhan, Kurgan and Orenburg as part of the ongoing development of the trading house and its service centres. New divisions are set to open in Kirov and Izhevsk, and in the context of increased consumption of rolled steel for construction, the Company is considering various options for launching additional warehouses in the southern regions of Russia and creating new sales channels to countries in Central Asia.
The establishment of digital marketing channels is of particular importance to MMK’s management. In April 2021, the Company launched a corporate marketplace that has enabled it to close the gap to the end consumer by providing quick and efficient online service for orders across a wide range of products. According to MMK CEO Pavel Shilyaev, “this is in line with MMK’s strategic goal of being recognised as a top supplier by 2025. Our focus is on our customers, constantly improving our service and developing sales through digital channels. The opening of a user-friendly, state-of-the-art service centre for online trading is another important step in improving our customer focus.”
While the Company sold 16.9 thousand tonnes of metal products through its marketplace from April to December 2021, that figure reached 25.6 thousand tonnes in the first nine months of 2022, and 1,345 customers have used the marketplace this year, placing nearly four thousand orders. As part of the second stage of marketplace development, MMK plans to further refine its offering and promote it among new audiences. In addition, the Company launched sales on the Ozon marketplace, where customers can now purchase self-tapping screws and nails produced by OJSC MMK-METIZ (part of MMK Group).
The Company is also developing its retail sales. MMK Trading House opened its first retail warehouse in May 2021 in Magnitogorsk, while additional sites in Ufa and Sibai launched operations this year. In the future, the trading company plans to expand into the markets of Beloretsk, Astrakhan and Irkutsk and open another retail warehouse in Ufa.
In July 2022, MMK’s production and logistics centre (PLC) in the Togliatti Special Economic Zone began operations; the centre is capable of simultaneously storing and processing 150,000 tonnes of metal products. Deliveries to the PLC are carried out by container transport, which ensures that all of the metal’s consumer properties are preserved, and road transport is used to deliver products to the end customer. In this way, door-to-door delivery is available even for those consumers who do not have their own rail access lines.
The launch of the PLC ensures that the Company is able to operate in line with its “just-in-time” logistics concept by delivering products to customers within just one to two days. In December this year, the PLC plans to launch a service for cutting metals lengthwise; and in February 2023, a service for cross-cutting. In addition, the PLC can provide services for storage, unpacking and repacking, as well as steel testing in accordance with certification requirements.
Efforts to ensure on-time sales enabled MMK to achieve an OTIF (On-Time-in-Full) delivery score of 85% in September of this year. Thus, the probability that any particular order would reach the consumer within plus or minus three days of the delivery window greatly exceeded the target of 70%.