Dear BEYSAD readers,

In this issue we are pleased to make an interview with Mr. Polat Şen, Purchasing Director of Arçelik, who is a young and dynamic manager, trusts Turkish supply industry a lot and supports BEYSAD all the time. We would like to extend profuse thanks to him for sparing his time both for this interview and activities made in the scope of Strategy Paper.

Can you please tell us about your position in the Arçelik's organizational structure?

I am currently working as a purchasing director under the Assistant General Manager of Purchasing and Supply Chain who is reporting directly to the General Manager of Arçelik A.Ş. 

What are your evaluations about the current position of the white goods industry in the Turkish market? What is the role of Arçelik in this development?

As you are aware, the Turkish white goods industry has today turned out to be one of the largest white goods industries of Europe. We are closely competing against such countries as Germany and Italy which have run ahead of us for many years. A decade ago such a situation could not be anticipated by many professionals working in the industry. We have actually anticipated this development at an early stage and mentioned about the Turkey's potential in different platforms. Today, we are proud to see this has literally come true. As a country, Turkey should do its best to preserve its position and take it even further by making necessary planning in an efficient manner. We should always bear this in mind and work even harder. The competition in the market is truly intense. The market conditions always require more innovative products at lower prices and in a quicker fashion. All the manufacturers focus their activities on these areas. 

Arçelik is now the third biggest organization in Europe. As you know, Arçelik is a market leader in Turkey for many years. In the European market, Arçelik is a market leader in Romania, in addition to occupying the number one position in some products in England. In such countries as Germany and France, Arçelik has been regularly increasing its market share. Arçelik continues to offer innovative and high quality products equipped with state of the art technology. We always aim at further development and create different strategies to reach better results. We desire to ensure our position is sustainable in the market as well.   

Where are Arçelik's plants located worldwide? What products are manufactured there?

As you also know, Arçelik has now become a global company. The company has production facilities in Europe, Russia, China and South Africa together with Turkey. Information for production plants and their locations can be summarized as follows: 

                        Turkey             Istanbul           Washing Machine and Television

                                                 Eskişehir          Refrigerator and Compressor

                                                 Ankara             Dishwasher

                                                 Bolu                 Oven and Cooking Devices

                                                 Çerkezköy        Drying Machine, Electric Engines and Coffee Machines

                                                  Romania          Gaesti              Refrigerator and Chest-type Refrigerators

                                  Russia              Kirzach             Refrigerator and Washing Machine

                                                 China                Changzhou      Washing Machine

In line with the investment decision taken for Africa as part of our growth objectives in the global markets, an acquisition agreement was signed on 20 July 2011 to purchase Defy Appliances (Pty) Limited, headquartered in South Africa, from Franke Holding. When the process is completed after necessary approvals are taken, Arçelik will have production facilities in the following locations as well: 

                        South Africa     Durban              Oven

                                                   East London    Refrigerator

                                                   Esakeni            Refrigerator and Chest-type Refrigerators

How much of your production output in Turkey is exported and to which countries are they exported? May I learn your opinions about competition conditions? Please do answer my second question from the perspective of countries and brands that you see as competitors both in the Turkish market and overseas.

Almost 70% of products that Arçelik manufactures in Turkey is exported to overseas, primarily European countries. In addition to such European markets as England, Germany and France, which are major markets for us, Arçelik products are exported to America, many countries in Africa, Turkic republics and China. Today, consumers in 115 countries in different parts of the world can have access to Arçelik's high quality products and services. 

While trying to preserve our already high market share in the Turkish market, we do our best to increase Arçelik's market share in foreign markets. 

Can you please tell us a little bit about Arçelik's long-term objectives? In order to allow supply industry firms to anticipate new developments, can you please also mention about new product ranges?

In addition to boosting our growth and profitability in the global arena, we aim to manufacture innovative and environment-friendly products that are equipped with advanced technology and consume less energy. 

I know Arçelik cares a lot about sustainable development, innovation and energy efficiency. Can you please inform us about recent developments in this area?

In line with its vision "Respectful to World, Respected in the World" Arçelik A.Ş. acts on the basis of “Sustainable Development” approach and always takes into account the preservation of environmental and natural resources by ensuring its operations are sustainable in many aspects.           

Arçelik A.Ş. aims to develop and offers to consumers highly efficient and user friendly productsthat consume less energy and resources and are innovative both in terms of design and technology. As part of its operations Arçelik also focuses its efforts on to ensure a clean and healthy environment is left to the next generation, energy and natural resources are used efficiently, negative environmental effects are minimized starting from design to the end of life cycle, population is prevented at the source and both Arçelik personnel and the society gain awareness about environment. 

What are recent developments about your R&D activities?

Arçelik A.Ş. develops its products with its original technology and offers the same to world markets with its own brands and our R&D infrastructure allows this to happen. With a specialized staff of almost 900 people, Arçelik manages its entire R&D activity. Arçelik is the only Turkish company in the ranking of top 100 countries with international patent applications and occupies the 95th place.           

Is the entire purchasing procedure for all Arçelik plants operated from Turkey? What is the operational structure?

As a global company Arçelik A.Ş. manages its purchasing processes centrally from Turkey. In addition, in order to be able to provide our foreign enterprises with faster services, we also have local purchasing functions in relevant territories. These functions manage the purchasing processes in an effective manner in cooperation with the central purchasing department. 

We also have offices in China and Taiwan for research of new supplier firms, materials and products. In this scope, our Far East operation employs approximately 70 specialized people, 60 of whom are local people. Thereby, an integrated, cooperative, closer and stronger business relationship is maintained both with our existing and new suppliers. 

What was your global purchasing volume in the world in 2010 including Turkey?

In 2010 Arçelik's total global purchasing cost amounted to approximately USD 2.5 billion. 

Is an increase expected in this figure in 2011?

In line with the increasing volume and rising commodity prices we foresee that our total purchasing cost in 2011 will rise to a certain extent. 

What is the main expectation of Arçelik from supply industry firms in the scope of purchasing processes and what are your criteria? How purchasing processes are managed?

We expect our suppliers to develop long-term cooperation with Arçelik based on mutual trust, transparency and shared values, thus allowing us to achieve sustainable growth.  

We also expect our suppliers to reduce losses and wastes regularly, enhance operational efficiency, research and constantly improve alternative materials and processes, specialize in inventory management, be familiar with economies of scale and take the leadership in the field of cost management.  

Arçelik desires to work with suppliers which are enthusiastic about taking part in creative/innovative product projects that will strengthen Arçelik's position in the market and take it even further and have the necessary capabilities for co-design and creation of products with added value. 

Suppliers which can implement integrated systems, transfer data in both directions easily, manage its businesses on the basis of statistical data and resolve problems rapidly should compose more of Arçelik's suppliers in its portfolio. Moreover, our suppliers should care about possessing a corporate structure and making progresses in this field. 

We believe Arçelik will be even stronger, when it cooperates with suppliers that comply with both international specifications and those of Arçelik, act rapidly in response to corrective activities and quality problems and have high level awareness about quality. Investment in human capital is of vital significance in today's business world. Thus, our suppliers should invest in their human capital and make sustainable planning in this respect. 

Finally, Arçelik expects its suppliers to manage their wastes in the most efficient manner in order to leave a better world for next generations, use natural resources and energy in a conscious manner, manufacture materials that do not contain harmful, forbidden or restricted components, comply with national and international laws, regulations and legislation about environment and have an in-depth awareness about the environment. 

At what point do you mostly encounter problems with your suppliers? Can you please answer this question from quality, logistics and pricing perspectives?

Now and then, we identify improvement areas with our suppliers. These are:

• Increasing the number of suppliers with whom we can make innovative designs,
• Increasing the number of suppliers that will take the leadership in the field of technology,
• Working more with suppliers that have an in-depth understanding of total cost,
• Increasing the number of suppliers that are always open to improvement in all aspects,
• Improving the recruitment of qualified personnel on supplier side, and
• Improving environmental awareness among suppliers. 

May I ask you to make a comparison of your foreign and local suppliers? If there is superiority on country basis, where does it stem from and what exactly are they?

Compared to past, our local suppliers have reached a remarkable level. However, local supply industry firms, which mostly concentrate their efforts on processed materials, should place more emphasis on the production of components with higher added value and making available the required technology, equipment and labor force in this respect, in addition to caring more about environmental issues.           

Does Arçelik carry out joint works with its suppliers and at what level are they conducted?

Although we carry out joint works with our suppliers with respect to such issues as efficiency, participation in design and logistics, we believe we will be able to cooperate on higher number of projects on the basis of a closer relationship. 

How do you make sure your suppliers are aware your expectations? Do you give any assurances for encouraging them to make investments? How do you support your supply industry, in particular Turkish supply industry?

We inform our suppliers about our expectations at the regional meetings or one-to-one meetings and encourage them to make investments. We exchange opinions with local supply industry firms as regards their investments in a specific component or material production and provide them with support whenever necessary. 

Are there any foreign suppliers which have based their operations in Turkey upon request by Arçelik?

There are a few suppliers which have invested in Turkey as a result of our invitation and support in order to manufacture particularly mechanical and electronic components. 

What is the ratio of local and foreign suppliers in Arçelik's manufacturing activities? If the ratio of Turkish manufacturers' products is lower, what can be done to increase their share?

Although this ratio varies in each plant and product, share of local and foreign suppliers' products is almost equal. In order for local suppliers to increase their share in Arçelik products, they should focus more on production of components with more added value, as I have mentioned earlier. Of course, there are certain improvements that local suppliers should implement in the fields of cost, technology and innovation.  

We have been regularly consulting your opinions for the preparation of the Strategy Paper for White Goods Supply Industry, but I will ask you to share these with our readers as well. What are your expectations from the Strategy Paper? Which topics should certainly be included in it?

I would like to reiterate that I attach much importance to the preparation of the Strategy     Paper. I see this paper as a constitution which defines how we can go further beyond this level and makes our current position sustainable. Strategy Paper should not be put in a shelf, after it is completed, instead it must be a dynamic roadmap for all of us and revised on regular basis in order to ensure relevant objectives are achieved. I would like stress that Arçelik will provide all the necessary support for the preparation and effective implementation of the Strategy Paper. 

Our expectations from the Strategy Paper for White Goods Supply Industry can be summarized as follows:

• Identifying the needs of supply industries for strengthening their R&D infrastructure, connecting these with relevant areas and making proper planning,
• Planning of actions to be taken in order to grow the market of white goods supply industry,
• Planning legal and administrative arrangements in a way that helps the development of the industry,
• Planning of infrastructure and investments for the development of the supply industry and identification of legislation needs in this respect,
• Making a detailed SWOT analysis for the white goods supply industry, identifying strengths and weaknesses as well as areas for improvement,
• Creating policies and strategies that are attractive for new investments,
• Planning actions to be taken for increasing the export volume of supply industry,
• Planning of actions necessary for innovative and advanced production technologies in the scope of cooperation between supply industries and universities, and
• Identifying additional supports that can be made available to supply industries. 

What are your opinions about BEYSAD and what do you expect from BEYSAD? What can BEYSAD do for main industries in addition to Strategy Paper?

I am fully aware that BEYSAD has made significant contributions to supply industries in helping them reach these levels. I have observed that BEYSAD has played a major role in helping Turkish supply industry firms, which used to sell products solely in the domestic market, enter into overseas markets and increase their export volumes. BEYSAD has been making intense efforts to ensure the industry and supply industries grow. I believe activities carried out up until now could be more effective, once they are supported with project-based works.