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Steel & Sourcing 360

The sourcing lens — bearing-grade steel (the largest material inflow), components & sealing materials, energy (91% renewable), logistics and contract manufacturing spend, terms and supply risk, with the cash and continuity move for each input.

AB SKF (SKF Group) · FY2025 (Jan–Dec 2025, audited anchor)
World's largest bearing maker today — clear #1 in industrial bearings
37,271 employees · 90+ sites · 130 countries
▲ Executive read· the answer, then the moves

Stretching to terms frees SEK 735 M of cash at no cost to profit — DPO sits at 58d vs the 62-day target. Capture it, secure the 5 at-risk inputs (bearing-grade steel the largest material inflow, plus the Industrial→Vertevo contract-manufacturing transfers), and consolidate the top tier before steel & energy prices spike.

2 of 4 headline metrics improving vs prior · still off target: DPO (Days Payable) 58d vs 60d, Gross Margin 26.8% vs 28.0%, Cash Conversion Cycle 111d vs 100d

Do now — ranked by urgency
  1. 1
    Secure the 5 at-risk inputsWatch
    Why it matters

    Bearing-grade steel (EU mills · green & recycled programs) & Components, cages & sealing materials & Energy & renewable electricity (91% renewable) & Contract manufacturing & MRO (incl. Industrial→Vertevo transfers) & Logistics & freight (airfreight-avoidance directive) carry medium+ supply risk and softer delivery — a single shortfall can stall production.

    What's driving it
    • 5 of 6 inputs at medium+ risk
    • Avg OTIF 93% across the panel
    FYI
    • Lock steel volumes and qualify alternate energy / logistics / contract-manufacturing sources before a price spike
    • Owner: Procurement (Steel & Inputs)
    Plan sourcing →
  2. 2
    Stretch to terms — free working capitalOpportunity
    Why it matters

    SEK 735 M of cash stays in the business by moving DPO from 58d to the 62-day target on SEK 40.0 bn of spend — no hit to margin.

    What's driving it
    • DPO 58d vs 62d target
    • SEK 40.0 bn spend across 6 input lines
    FYI
    • Early-pay discount capture ≈ 0% today — switch it on
    • Owner: CFO · Treasury
    Capture cash →
  3. 3
    Consolidate the top tier for rebate and priority supplyOpportunity
    Why it matters

    Bearing-grade steel (EU mills · green & recycled programs) (SEK 18.0 bn) and Components, cages & sealing materials (SEK 8.0 bn) are 65% of spend — concentrating volume earns rebates and priority allocation.

    What's driving it
    • Top two inputs = SEK 26.0 bn (65% of SEK 40.0 bn)
    • 6 input lines total
    FYI
    • Negotiation priority for the next term cycle
    • Owner: Procurement · CFO
    Negotiate →
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● LiveBuilt forGroup CFO · Treasury· free cash via payment termsChief Procurement Officer (Steel & Inputs)· consolidate spend & cut riskFactories & operations· protect input continuity

SEK 40.0 bn of steel, components, energy, logistics & contract-manufacturing spend runs through 6 input lines — bearing-grade steel the single biggest line and the largest material inflow (green & recycled sourcing programs cut Scope 3). This view turns that into two moves: a SEK 735 M cash release from stretching to terms, and a secure-supply plan for the 5 inputs whose risk could stall production.

Data backing: supplier (spend, score, OTIF, reject %, DPO, risk) · kpi.dpo · kpi.revenue/gross_margin
Total spend
SEK 40.0 bn
6 input lines
Days to pay (DPO)
58d
target 62d
Cash from terms
SEK 735 M
stretch to 62d
Avg on-time (OTIF)
93%
delivery reliability
At supply risk
5
medium+ risk
Where the money goes

Spend by input

Two inputs are 65% of spend — the negotiation priorities.

The two moves

What to do this quarter

Stretch to terms — free cash
SEK 735 M
DPO 58d → 62d on SEK 40.0 bn of spend, plus switch on early-pay discount capture (≈0% today). No hit to profit.
Owner: Group CFO · Treasury
Secure the supply
5 inputs
Bearing-grade steel (EU mills · green & recycled programs) & Components, cages & sealing materials & Energy & renewable electricity (91% renewable) & Contract manufacturing & MRO (incl. Industrial→Vertevo transfers) & Logistics & freight (airfreight-avoidance directive) carry elevated supply risk and softer delivery — lock volumes / qualify alternates before prices spike.
Owner: Procurement (Steel & Inputs)
Consolidate the top tier
SEK 26.0 bn
Bearing-grade steel (EU mills · green & recycled programs) (SEK 18.0 bn) and Components, cages & sealing materials (SEK 8.0 bn) — concentrate volume for rebates and priority allocation.
Owner: Procurement · CFO
Input by input

Supplier scorecards

Each card: spend, reliability and the specific move.

Bearing-grade steel (EU mills · green & recycled programs)
Bearing steel (primary input) · SEK 18.0 bn spend
Medium
Score
86
OTIF
94%
Reject
0.6%
DPO
60d
Move: Secure supply — medium risk, OTIF 94%. Lock volumes and qualify alternates on the most exposed inputs before a steel, energy or logistics price spike stretches supply.
Components, cages & sealing materials
Components & materials · SEK 8.0 bn spend
Medium
Score
84
OTIF
92%
Reject
1%
DPO
55d
Move: Secure supply — medium risk, OTIF 92%. Lock volumes and qualify alternates on the most exposed inputs before a steel, energy or logistics price spike stretches supply.
Energy & renewable electricity (91% renewable)
Energy · SEK 4.5 bn spend
Medium
Score
88
OTIF
97%
Reject
0.2%
DPO
30d
Move: Secure supply — medium risk, OTIF 97%. Lock volumes and qualify alternates on the most exposed inputs before a steel, energy or logistics price spike stretches supply.
Contract manufacturing & MRO (incl. Industrial→Vertevo transfers)
Contract manufacturing & MRO · SEK 3.8 bn spend
High
Score
80
OTIF
90%
Reject
1.5%
DPO
40d
Move: Secure supply — high risk, OTIF 90%. Lock volumes and qualify alternates on the most exposed inputs before a steel, energy or logistics price spike stretches supply.
Logistics & freight (airfreight-avoidance directive)
Logistics · SEK 3.2 bn spend
Medium
Score
82
OTIF
91%
Reject
1.2%
DPO
45d
Move: Secure supply — medium risk, OTIF 91%. Lock volumes and qualify alternates on the most exposed inputs before a steel, energy or logistics price spike stretches supply.
Lubricants, chemicals & process media
Chemicals & lubricants · SEK 2.5 bn spend
Low
Score
85
OTIF
93%
Reject
0.8%
DPO
50d
Move: Push terms — paying in 50d vs the 62-day target. Stretching to terms on SEK 2.5 bn keeps cash in the business at no cost.
The full panel

Every input, one row

Spend, score, delivery, terms and risk.

InputCategorySpendScoreOTIFReject %DPORisk
Bearing-grade steel (EU mills · green & recycled programs)Bearing steel (primary input)SEK 18.0 bn
86
94%0.6%60dMedium
Components, cages & sealing materialsComponents & materialsSEK 8.0 bn
84
92%1%55dMedium
Energy & renewable electricity (91% renewable)EnergySEK 4.5 bn
88
97%0.2%30dMedium
Contract manufacturing & MRO (incl. Industrial→Vertevo transfers)Contract manufacturing & MROSEK 3.8 bn
80
90%1.5%40dHigh
Logistics & freight (airfreight-avoidance directive)LogisticsSEK 3.2 bn
82
91%1.2%45dMedium
Lubricants, chemicals & process mediaChemicals & lubricantsSEK 2.5 bn
85
93%0.8%50dLow