AK&M Rating Agency presents results of first Ranking of Procurement Directors (2016)

The Ranking of Procurement Directors assesses the performance of procurement directors at the leading Russian companies.

The procurement activity in Russia has seen major changes over the last ten years. New laws, control mechanisms, procurement announcement and dealing opportunities have appeared. The recent years' economic crisis calls for a substantial increase in the effectiveness of procurement activities, flexibility and the skill of prompt reaction to changes in the business environment. While privately-held businesses are not obliged to use the tendering procedures provided for by federal laws 223-FZ and 44-FZ in their procurement activities, new companies are being involved in the system of effective procurement activities on a mass scale. Under these circumstances, the role of the procurement director kept growing steadily at both privately-held companies and state-owned enterprises. That said, there has not been an all-Russian ranking reflecting their professional achievements until now.

The purpose of this ranking is to reveal the best specialists in the sphere of procurement, irrespective of whether the company's activities are subject to procurement regulating laws.

The first Ranking of Procurement Directors fundamentally differs from all currently existing studies of procurement activities. AK&M Rating Agency primarily focuses on people responsible for the organization of effective procurement systems at companies. To a large extent, the company's success in this segment depends on their proficiency. The activity of procurement directors obviously influences the whole production process, the final cost of goods produced or services provided and eventually, the final result of the company's activity.

The Ranking of Procurement Directors results from the available data on the professional achievements of heads of procurement divisions at the leading Russian companies and the analysis of these companies' procurement performance indicators as the ultimate outcome of the process they are in charge of. The ranking is based on the 2016 data, the trends were calculated for the 3-year period (2014-2016). The data were obtained from the companies by means of questionnaires. Where possible, the information was checked using the data publicly disclosed by the companies.

The core of the ranking research is a weighted assessment of a set of economic and qualitative factors. This method enables a comprehensive study of the level of procurement activity achieved by the company as a whole and particularly, by the head of the procurement division.

The ranking follows the principle of distributing weighted average relative values of various criteria. For each of the criteria, AK&M Rating Agency determined the company's (the specialist's) position on a standardized scale of values calculating the relative criterion value in a range of 0 to 100. The relative values of the criteria were summed taking into account the weight factors which determine how much the final rating is impacted by criteria or groups of criteria.

The rating methodology takes into consideration a combination of objective (verifiable) criteria (including economic efficiency, dynamics, transparency, and automation of procurement activities), and subjective drivers (including the appraisal of the business reputation and professional qualities of procurement directors by their colleagues).

Roman Zimonas, Director of the Methodology, Procurement and Quality Managemnt Department of Rosatom State Corporation, is on top of the ranking. Rosatom State Corporation ranked first among the companies in the level of procurement organization in both amount of procurement (which is expectable for a company of such scale) and the quality of procurement organization. Mr. Zimonas ranked first in professional competence scoring 86.3 points owing to his track record, membership in NGOs and involvement in lawmaking. At the final stage when the ranking participants voted for their colleagues Mr. Zimonas's leadership became undisputable as he earned a majority of votes and won by a large margin.

Valery Shorzhin, a member of the Management Board, Vice President for Procurement and Administrative Matters of Mobile TeleSystems PJSC, stands second. The appraisal of the procurement organization level at the company and his personal professional competence earned him the fourth position, from which he moved up two positions owing to the high appreciation of his achievements and proficiency by his colleagues.

Dmitry Filatov, a member of the Management Board, Head of the Procurement Division of Inter RAO Group, ranks third, primarily owing to the high level of the procurement organization at Inter RAO Group (the 4th position) and Mr. Filatov's professional competence (the 9th position); the voting of his colleagues also ranked him fourth.

Pavel Vasev, Head of the Equipment and Services Procurement Department of OJSC Magnitogorsk Iron & Steel Works (MMK), is on the fourth position. The voting by his colleagues ranked him third, but the relatively low level of procurement organization at MMK (only 35.2 points, the 13th position) negatively affected the final ranking position.

Yevgeny Gaidukov, Procurement Director at PJSC Rostelecom, rounds out the top 5. At the first stage, he ranked second owing to the high level of procurement organization at the company (60.3 points, 3rd position). The voting of colleagues earned Mr. Gaidukov a position in the top 10.

As previously mentioned, Rosatom Group takes the lead among the companies in the amount and quality of procurement (72 points), followed by Novolipetsk Steel (66.2 points), Rostelecom (60.3 points), Inter RAO Group and MTS.

More information on the results of the first Ranking of Procurement Directors is available on AK&M Rating Agency's website www.akmrating.ru.

For estimation purposes, we completely rely on the reliability of information provided by the companies. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

This press release is based on the questionnaires provided by the ranking participants and the applicable Procurement Director Rating Methodology as of February 13, 2017.

The ranking, along with any information and conclusions provided in this report, only conveys our opinion and shall not be construed as a recommendation to lend money resources to the companies.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

AK&M Rating Agency

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www.akmrating.ru

Phone no.: (495) 916-70-30, fax no.: (499) 132-69-18.