POSCO Group is expanding its "benefit-sharing system," which shares the results of joint technology development with suppliers, to second-tier and lower suppliers. More than 20 years after becoming the first Korean company to introduce the system in 2004, the group is now broadening its scope to the entire supply chain, part of a strategy to raise the level of mutual cooperation by strengthening supply chain competitiveness based on technology collaboration.
On the 16th, POSCO Group held a win-win cooperation agreement ceremony at the POSCO Center in Gangnam-gu, Seoul, attended by about 130 people including Fair Trade Commission Chairman Joo Byung-ki, POSCO Holdings President Lee Ju-tae, POSCO President Lee Hee-keun, POSCO International (047050) President Lee Kye-in, and representatives of first- and second-tier suppliers. The parties pledged to implement four key action items: improving payment terms, revitalizing the win-win payment system, giving preferential treatment to first-tier suppliers that join in cooperation efforts, and providing win-win cooperation support to enhance suppliers' competitiveness.
The core of the agreement lies in expanding the scope of cooperation, including benefit-sharing, to second-tier and lower suppliers. The benefit-sharing system, under which POSCO shares the financial results achieved through joint technology development with suppliers, had previously applied only to first-tier suppliers, but will now be expanded to second-tier and lower suppliers. The benefit-sharing system, first introduced by POSCO in 2004, subsequently spread across the industry and established itself as a leading model of cooperation between large and small businesses.
Financial support will also be provided in parallel. POSCO Group plans to pay suppliers in full in cash-equivalent within an average of 10 days, and will have first- and second-tier suppliers pay their lower-tier suppliers within a maximum of 30 days each. The group will also increase the use of the win-win payment system to help suppliers collect payments. First-tier suppliers that sign fair trade agreements with second- and third-tier suppliers will be given incentives during supplier evaluations to encourage the voluntary spread of a cooperation culture. The agreement is expected to benefit about 5,300 suppliers within POSCO Group's supply chain.
"Win-win cooperation will be the foundation for POSCO Group's continued innovation and an investment that can elevate the entire industrial ecosystem to a higher level," Chairman Joo said. "I hope a culture of cooperation becomes a new standard for our economy." President Lee Ju-tae said, "We will spread a transparent and fair trade culture across the industrial ecosystem and strengthen partnerships of trust to become a reliable partner."
