Posco eliminates practice of selecting suppliers on pricePosco will stop selecting suppliers based on price starting next month, the steelmaker said Wednesday, making it the first major Korean company to abolish the practice.
Any bidder that suggests a price lower than 85 percent of the average - calculated based on bidding prices and the standard price - will be automatically dropped from the bid.
Posco said the tendency to select bidders that offer the lowest price has led to poor practices such as cutting operational expenses and sending low-quality products.
Posco will enforce a policy to evaluate bidders based on product quality and competitiveness. The steelmaker is already known for its transparency, making records of supplier bids open to the public since 2015. Any potential bidder can use the records to freely participate in future bids.
“The new policy will help small and medium-sized suppliers participate in bids with a price that ensures appropriate margins,” the company said. “This will give them more stable profits, leading to more employment and research and development investment on their side, while Posco will be able to produce high-quality products and prevent risks to safety.”
By Song Kyoung-son
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