Electrolux Professional purchases a wide range and large volumes of raw materials and components from external suppliers. The majority of purchases are direct materials such as mechanical, chemical and electrical components. Purchasing decisions are closely linked to the decisions made in the R&D organization, driving the direction of future production.
Electrolux Professional is strategically focused on sourcing raw materials from several suppliers in order to minimize supplier risk and dependency on certain suppliers for specific inputs. This specifically applies to materials that are critical for the production process, such as carbon steel and stainless steel, where the we strive to ensure above-industry quality of sourced materials. In addition, supplier agility is of the utmost importance to us, allowing the us to reduce lead times and minimize inventory, facilitating a more efficient production process.
In 2019, Electrolux Professional’s expenditure on direct materials including new acquisitions reached approximately SEK 2.7 bn, which amounts to approximately 80 percent of the total purchasing of direct material and products. In total, we have over 3,300 suppliers. In 2019, the direct materials purchased were primarily mechanical materials such as steel, aluminum and cast iron, amounting to approximately 40 percent of total direct material expenditure. In order to mitigate potential negative impacts due to price fluctuations, we usually fix prices in supplier contracts for some of its raw materials and components such as carbon steel, stainless steel, and others. This is typically done on an annual basis, but can vary depending on the circumstances.