Indesit Company Turkey Purchasing Manager Mr. Paolo Fabbricatore
March 2014

Dear BEYSAD readers,

We are proud to present you an important interview in this issue of our magazine. We have long made efforts in order to introduce to you Mr. Paolo Fabbricatore, Head of Purchasing at Indesit Company Turkey. We are grateful to him for sparing his time to this interview amidst his busy schedule and answering all our questions frank heartedly. We wish him a successful career in Turkey …”

Mr. Paolo Fabbricatore, can you please briefly tell us about yourself and your professional career?

I was born in Italy in 1972 (Napoli). After a degree in mechanical engineering I spent more than 10 years on international sourcing, procurement and supply chain in the Automotive field with Fiat, Aeronautics with Finmeccanica and RailwayTransport with Alstom. I started in Indesit in 2008 as Supply chain Manager

What is the secret for success as to you? Can you please tell us about the way you work and your principles?The secret is believing in what you do every day, challenging myself to achieve the best possible results for my company every day. My approach at work with my team but also with my suppliers is really open. The ability to listen to them but also the capacity to make a quick recap of all the input I receive and then take the right decision is on the basis of my work philosophy. The most important thing is the enthusiasm. As said by an American philosophy : Nothing great was ever achieved without enthusiasm, I strongly believe in it.

What is your position at the management chart of Indesit Company? Can you please inform us about the organizational management chart?I’m reporting to the group Sourcing Director of the Indesit company. Beside Human Resources, Quality and Finance the operations of our organization are divided in two main areas: products and technologies, including purchasing and sales & marketing. Chairman of the Board of Indesit Company Turkey is Neriman Ülsever and Country Manager of Indesit Company Turkey is Turgay Dağ. Pietro Alba is the industrial site Director.

How do you assess the current position of the white goods industry in Turkey? Where does Indesit stand within this improvement?

We consider the improvement of white goods industry in Turkey as a story of success. A great leap has been achieved in the product quality and applied technologies since the 90s. The industry has moved quite forward in R&D and design during the last 20 years. White goods manufacturers in Turkey are now transferring technology to other countries. White goods companies that manufacture high-quality products at low costs have raised their shares in worldwide production and export. Turkey has become the leading white goods manufacturer in Southeast Europe, Middle East and Europe. White goods industry of Turkey is the European leader with its 25 million items of manufacturing capacity.

We, one of the largest white goods manufacturers in Europe, entered the Turkish market in 1994 with the acquisition of a factory with nearly one thousand items of manufacturing capacity. Through the investments we have made during the last 20 years, our manufacturing capacity reached up to about 1.5 million items annually.

The investments we have made in Turkey during the last 20 years is a sign of our faith in Turkey. Our new factory investment and growth plan is the greatest proof of our target for being one of the strongest actors in white goods industry of Turkey.

Where are Indesit facilities located in Turkey and in the world? What are the products manufactured there?

Indesit Company owns a cooler factory in Manisa with a manufacturing capacity of 1.5 million items, and an average of one thousand employees. 80 percent of products manufactured in Manisa Cooler Factory are exported mainly to European countries. Turkey also stands as an export base for Middle East and Middle Asia countries within the group.

Indesit Company, one of the leading white goods (washing machines, dryers, dishwashers, fridges, freezers, cookers, ovens and hoods) and small house appliances manufacturers in Europe, is in the leader position in markets such as Portugal, England, Ukraine and Russia.

Main brands of the group are Indesit, Hotpoint and Scholtes.Indesit Company serves in eight industrial zones in Italy, Poland, England, Russia and Turkey, with over sixteen thousand employees. These industrial zones are organized as follows: 3 in Italy, 1 in UK, 2 in Poland, 1 in Russia and 1 in Turkey. In these facilities we produce more than  12 milions products of which 5 millions washing machine, 3,5 millions refrigerators, 2,5 millions cooking appliances and also 2 millions dryers and dishwashers

We were hosted by you on February 26, 2014 for some great news. Indesit is investing for a washing machine factory in Turkey. How do you feel and think about these news and could you also inform us about the new investment plans of Indesit in Turkey? 

We, Indesit Company, realized the Manisa Washing Machine Factory project in our 20th year in Turkey, and the Investment Ceremony was held with the participation of our CEO Marco Milani and Minister of Economy, Nihat Zeybekci on February 26, 2014. Together with this new investment, total value of investments we have made in Turkey exceeded £150 million. Our new investment has strengthened our trust in Turkey, and we believe that it will rally our pace of growth even more. With a projected total investment cost of £35 million, our washing machine factory will enable us to renew the export records we have broken previously via our cooler factory, and to set the bar even higher as Indesit Company Turkey. Expected to employ about 750 people and operate on a closed area of thirty-two thousand square meters, our new facility will have an annual manufacturing capacity of 1,400,000 items. 75 percent of production will be exported mainly to European countries. Indesit Company Washing Machine Factory will commence test production on July 1, 2014, and production on October 1, 2014.

What about your company targets and work conducted to reach these targets?

Speaking of our targets for Turkish market in 2014, we will keep growing with our new stores, and open at least 150 stores more. We aim to maintain the performance we have achieved in small home appliances under the Hotpoint brand thanks to marketing activities. In order to improve our post-sales services, we will strengthen our call center that was rebuilt in 2013. Air conditioners will be sold in our stores in 2014.

Improvement of dealer network is most probably one of the essential steps of improvement; could you inform us about the developments in this regard?

We, Indesit Company Turkey, have focused on the new Hotpoint store openings. Hotpoint is a long-established and strong brand with its history of 103 years, and received the award of most reliable white goods brand in England for 11 consecutive years. We sell our products at about 3,000 points through all channels across Turkey. Our goal is to constantly increase ourgrowth in a healthy and profitable manner. As part of our organic growth plan, we invested in a total of 325 new Hotpoint stores during the last 20 months. We broke our own record in 2013 by opening a new store every 28 hours. We aim to raise this figure up to 800 by the end of 2016. We had a turnover of £150 million in domestic sales in 2013, and our current market share is about nine percent. The most significant role in accomplishing this success belongs to our dealers, which are our traditional channels.

We would like to benefit from your experience in other countries, as well. Can you please make a comparison between the Turkish supply industry and its counterpart in overseas countries?

Thanks to my previous role as group sourcing director metals , I had the chance to make business with suppliers coming from all over Europe and Russia. What I can say is that the approach of Turkish suppliers is quite similar to the Italian one . They are friendly with positive energy and very focused on the target. Disagreements between us are less than I expected compared with other countries

What are your policies relating to your suppliers do you have any messages for them?

Transparency, fair negotiating, integrity, impartiality and contractual equity: these are our values in dealing with suppliers.

Becoming a supplier of Indesit Company implies a substantial involvement on the part of suppliers in terms of both compliance with qualitative standards and the sharing of objectives and the working practices adopted to achieve them.

Our supplier selection policy applies best–in-class logic and rates suppliers using the parameters of financial solidity, competitiveness and quality.

In which areas should the Turkish supply industry firms invest, what do you recommend them? Do you think would it be possible for the supply industry firm to come together under the roof of BEYSAD and jointly manufacture some of the components that are not currently manufactured in Turkey? Would you support such an initiative, if it comes true?

We think that Turkish supplier base has to be reinforced with additional players on these products: compressors, motors and electronics. We actually buy out of Turkey all our needs but with the support of BEYSAD and the government and with the right address by Indesit, we can speed up the localization process. Something already started on motors but is not enough.

Are the purchasing operations for all the facilities of Indesit carried out from one center? Can you tell us about the way it works?

As multinational company operating across different countries, our sourcing organization works as a matrix. We have global commodity such as raw materials managed together by a group commodity manager and the head of regional purchasing. However, the local supplier base is managed by the head of purchasing in each producing country. Economics and financial results are under the responsibility of each country but always shared at corporate level.

What are primary expectations of Indesit from its suppliers as part of the purchasing process and what are the criteria they should meet?

Competitiveness, quality/service level and flexibility are the main expectations

On this basis we can establish a long term relationship with our suppliers based on trust and transparency.

What was your global purchasing volume in 2013, including Turkey?

It was around 2 bilion€ including indirects spend and Turkey

Do you expect an increase in your purchasing volume in 2014?

We expect to grow a little bit in volumes of production. Of course the new washing machine plant will support this growth especially in 2015 when we will be at full capacity

Where do you most often experience problems with your suppliers? Can you please answer this question from the perspective of quality, logistics and price elements?

I think that the keys for a profitable collaboration are commitment from supplier side and clear communication of customer's needs. We are structured and experienced enough to export the best practices to our supplier, and that is what we are pursuing right now with our world class manufacturing model IME (Indesit manufacturing excellence). Once shared these practice, price discussion comes as the natural completion of the sourcing process.

Can you please compare your local and foreign suppliers with their positive and negative sides? If there is superiority for a specific country, in what areas are the suppliers from this country superior?What I can say after 7 months here in Manisa is that the local supply base is good enough if compared to the Indesit standards. Despite this, together with my team we continue to share with them our best practices to become a global player for Indesit. On the other hand they need to invest in qualified people, in management education and new technologies

Do you perform joint activities with your suppliers and at what stages?

Meetings with suppliers very often end up with useful ideas and solutions being found. To mention a recent good example, on glasses we had been using steel boxes and one of our suppliers came up with the solution of carton boxes which has considerable advantages compared to the current metal frames. After a series of evaluations on the proposed solution, we decided to shift our packaging to carton boxes. At the end we have benefited on both maintainance costs and also simplified our logistics.

What is the rate of local and foreign input in Indesit products manufactured in Indesit plants in Turkey? (If the input from Turkish suppliers is lower) What measures can be taken in order to increase the input of Turkish suppliers?

In terms of value we can say thaton the refrigerator side 52% of the bill of material is produced by local suppliers. It is a good result, I think. Expectations on the washing machine have to be the same. We are already close to 33% now.

Just like I already told you we have to focus our attention on motors, compressors and electronics.

How do you share your expectations with your suppliers? Do you give them assurances for making investments? How do you support your supply industry, the Turkish supply industry in particular?

Our approach is to develop a long term relation with our suppliers, in Turkey as in all the countries we operate. My personal target is to give to the Turkish supplier the right address to become a global partner for Indesit. With the new washing machine plan I’m pretty sure we will be able to contribute to the growth of the Turkish suppliers. As we work in a matrix organization, all the activities we are performing with the local suppliers are shared at each level of our purchasing organization

Do you have any foreign suppliers who have moved their manufacturing operations to Turkey upon your request or for Indesit?

Our decision to invest on a new washing machine plant in Turkey has created some problems on the Italian suppliers base operating close to the actual plan located in the south of Italy. Because the Indesit Company has built a business model which, besides economic and social performance, also takes into account social and environmental performance, we have supported some suppliers to move their manufacturing to Turkey to continue our long business relation. Except these few cases, Indesit is developing business with local companies since we found a mature and experienced supplier base.

What percentage of your Turkey production and to which countries do you export? May I have your opinions about competition conditions? Regarding the brands in Turkish market or foreign countries that you consider as competitors...

We export about 80 percent of coolers that are manufactured in Manisa Cooler Factory to European countries, mainly England and Italy.

Finally, what is your opinion about BEYSAD and what are your expectations from BEYSAD?

BEYSAD was one of the first point of contact I had once arrived in Turkey. Thanks to your support I was involved from the beginning in Turkey’s home appliances business. You have a significant role in the growth process of industry. You enable the industry to express its needs, and all the relevant institutions to act in cooperation for efficient solutions. I believe that BEYSAD's activities in some industry-specific matters, such as those that contribute in energy efficiency and R&D, by means of setting up project teams contribute greatly in both the white goods manufacturing companies and consumers, and the development of industry.

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