Maxam is one of the largest explosives manufacturers in the world. Present in 40 countries with more than 60 industrial facilities the business is focused on applying all of its talent, energy, and knowledge to the mining and civil engineering sectors at any time anywhere. This year celebrating its 150th Anniversary, like any business with this history Maxam has continuously evolved. We spoke with the then Head of Procurement at Maxam – Carlos Acha Garcia-Noblejas, who played an integral role in centralising the procurement function in the most unprecedented of times.
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Carlos, what does your responsibility as Head of Procurement cover?
We currently negotiate in the Corporate Purchasing team and its subsidiaries, more than €250 million across Raw Materials, Services and Capex.
We have a team of 6 people located in Madrid, divided by categories, which makes it easy to reach suppliers and meet the needs of our subsidiaries.
With two main plants in Spain, 35 in total, and representation in 150 countries and as the 4th largest explosives manufacturer in the World, Maxam has a considerable footprint. How is procurement structured to handle the complexities that must exist considering your presence across such a diverse area?
We really operate 59 sites, spread across 7 regions.
As you say, this really is a challenge in terms of atomising our locations and getting raw materials to our destinations.
More than 75% of our contracts are negotiated globally, with suppliers who can cover more countries geographically. Given the degree of geographical dispersion we have there is a requirement for categories to stay away from reliance on one or two suppliers to ensure security of supply.
In addition, we have distributors of raw materials that help us to supply in those countries where the purchase volumes are lower, and where certain product categories cannot be delivered directly by the manufacturer.
The unprecedented global supply chain challenges of the past 2 years have caused headaches for many procurement and supply chain functions. How has your function adapted during this time to mitigate risks and maintain continuity?
Fundamentally, we have based all our efforts on ensuring that all our plants worldwide do not suffer from a lack of raw materials supply. New suppliers have been sought who could supply the main raw materials in time so as not to stop any production that could affect commitments to our customers.
We had to create a system to manage the most critical raw materials, ensuring there were alternative suppliers in case is of supply challenges. Everything was monitored from Spain, supporting all plants globally.
Did the supply chain challenges caused by covid result in a review of your processes and proposed implementation of new practices?
Honestly, we have tried to implement, fundamentally, tools of analysis of market indices, evolution of raw materials and services.
The post Covid era was very complicated when it came to being able to travel freely around the world, analyse new markets and look for new suppliers, so these type of tools have allowed us to analyse many critical points from a different perspective.
Maxam has typically grown via acquisition. This growth pattern can cause issues as the legacy of previous systems and processes are not always compatible. What has been done to rectify this?
In fact, since my incorporation in 2017, that has been the goal. Harmonising and homogenising the entire purchasing system of the company globally.
There have been (and still are) many years of trips to our subsidiaries, meetings, formations, to be create alignment and a common strategy.
Times change and company structures change. But the process of centralisation from 2016 to 2021 helped that today, due to the changes of world order that was created by Covid, we can have the peace of mind that our regions and subsidiaries, follow the same purchasing management system.
The emphasis on procurement is to work strategically with key suppliers and leverage relationships. A vast majority of your spend is within commodity-based products. Does this limit the opportunity to work strategically or has Maxam managed to forge long term strategic relations?
Absolutely. In the end, it’s all about relationships. Whether it’s with suppliers or customers. As you say, this has allowed us to move forward with suppliers who have supported us (and continue to do so) despite the difficulties experienced for two years to this part.
Never in my professional life have I experienced a pandemic, an inflation like the one we are witnessing, much less a war in Europe. All this has meant that our main suppliers have wanted to be at our side and support us, while, from Maxam, we have recognised the issues with pricing in the markets and factored this into our activities. Today, in 2023, we are reaping the fruits of that work.
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What have the supply chain challenges of the past years taught you about your function, the business, and of course the value of supplier relations?
I think we have learned to consider and try to control what is not even in our hands. That is, think beyond what is always possible and try to think about what may be impossible, because sometimes it happens.
Anticipate possible market contingencies, act quickly.
Would you say procurement is perceived differently now to what it was in 2019?
No doubt. Before 2019 there was a time of great price decreases, of need to do business and bill, so both suppliers and buyers lived a sweet time in shopping, with large price decreases and the possibility of reaching agreements in the medium and long term.
We have spent several years where that was unthinkable. Manufacturers demanding advance payments, inability to secure purchase volumes and, worst of all, no guarantees to transport raw materials.
Today the market has changed again. The logistics has adapted and reduced its cost and the suppliers are again wanting to take out, somehow, the stock that remained in their warehouses for the causes we have commented before.