This was declared by Anatoly Kruchinin, Severstal’s general director, at the conference for Severstal-group’s top-management team as he spoke of implementing 6 strategic programs in the previous 5 years (1997-2002).

The programs of HR development, sales, purchasing, organization-technical, and organization-economic measures, as well as the strategic business plan has allowed Severstal to change approaches to business.

For example, the Severstal’s sales program concentrates on working with key target customers with emphasis on client feedback, which has lead to an increase in the product portfolio, stock of orders, etc. As a result, the main objective of the sales program, which was to get rid of middlemen, was met. The share of sales to end customers has gone up from 43% in 1998 to 60% in 2002. The share of domestic market has gone up from 43% to 51%.

“The program of organization and technical measures, aimed at receiving desired output and quality while keeping the expenditure at a reasonable level, has allowed Severstal to save 1.5-3% on cost of sales. The success of the latter program was confirmed by receiving integrated certificates for the quality management system, the environmental management system, and occupational health and safety system, ” said Kruchinin.

According to the general director, the purchasing program involved a number of activities, including those aimed at reducing costs. They have allowed to make savings on raw materials without compromising quality. In 2002, it lead to saving up to US $ 40 million.

The strategic development program was completed by 2002 and fulfilled its mission in terms of company progressing towards its goals. Simultaneously Severstal has been actively pursuing other innovative projects. It has began implementing the Balanced Score Card to evaluate the impact of the project-process approach on reaching the strategic objectives.

The Balanced Score Card is a system of strategic management which is based upon measuring the latter’s effectiveness on a number of criteria picked to take into consideration all significant strategic aspects such as finances, production, marketing, etc.

A switch to the Balanced Score Card was caused by a need for creating a system of goal-setting and strategic communications within the company. It will help management departments to tie together various aspects of companies activities to achieve synergy. Today the Balanced Score Card is applied at Severstal on the whole.

12 March 2003