POSCO’s international purchasing strategy

IPPRMS10 – Martin Hemmert
17/04/2010

Table of Content
Steel Inside!! 4 The Korean Steel industry and POSCO 4 Posco’s main competitors 5
The steel market & POSCO 5 The new Pricing System 5 5-Forces-Analysis & Supply Strategy of POSCO 6
POSCO’s International Sourcing Strategy & Recommendations 9 Wrap-up of established solutions 9 Integrating procurement in the information system 11 AT Kearney’s Supply Strategies applied to the POSCO Case 12
Exhibits & Tables 13
Sources 18

Steel Inside!!
The Korean Steel industry and POSCO
Steel is probably one of the most important production inputs that we have nowadays. Many other industries depending on steel as a main input like the car or construction sector. The developed countries have a lot of steel-intensive manufacturing and creating a strong demand for steel. In the Korean metal industry, the revenues of iron and steel selling are completely dominating the industry. Posco’s creation in1968 and its development in the 1970’s occurred at the same time as the development of the country.
There is a large range of steel products but for our case study it is more convenient to talk about the steel products (hot rolled, cold rolled products, plates, wire rods, silicon steel sheets and stainless steel products) as a whole.
Posco is traded on the London and New York exchange market since the 1990’s (under the name of Pohang until 2002). It has signed strategic contracts with Nippon Steel in 2001 in order to put together their effort in technological development and in raw material procurement. Since this year Posco agreed on other strategic collaborations with GM Daewoo, Hyundai Heavy Industries and Dongkuk Steel Mill to name only some of them. The company is strongly centered on research and development.
Today Posco employs around 30,000 persons. and had net income of 4.35 trillion Korean Won in 2008.

Posco’s main competitors
The three