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Having won a tender bid, SGS Vostok Limited (Russia) has started providing quality control services in two OMZ Special Steels Ltd. factories in St. Petersburg and Yekaterinburg.

The contract, which started on 1 July 2005, stipulates that SGS inspectors will provide 24-hours per day control of the incoming raw material and the outbound finished products at critical points in OMZ Special Steels production process.  These critical points were identified during a preliminary audit of the process.

The USA and Canada were the first countries where companies started to outsource their quality control. Those companies gradually came to the conclusion that their own quality control department was less effective then a 3rd party company that specializes in that activity. The transfer of non-core functions to a professional subcontractor helps to optimize expenses on these auxiliary activities, releases internal resources to develop core competences, gives access to up-to-date technology and skilled personnel.

Moreover, the possibility of the 3rd party company to rotate inspectors avoids conflict of interest and gives a much more objective picture. Particularly, reliable and systematic information combined with a professional view enables the company to rationalize the production processes, optimize logistics and minimize the expenses by reducing the production losses.

In Russia, the first outsourcing projects carried out by SGS Minerals Services dates back to 1998. However, Russian enterprises as a rule were disposed to only outsource one of the control functions (for example, only control for the incoming or outgoing flows). Therefore, OMZ Special Steels must be considered a pioneer in the Russian steelmaking industry, since this project consists of a comprehensive service including control of the incoming raw material, outgoing finished products and the monitoring of the flows in warehouses and in workshops. 

Sergey Krasnokutski, manager of SGS Minerals Services in Moscow considers that  «The emerging demand for outsourcing complex supervision on the part of leading metallurgical players demonstrates that the Russian market is maturing and the management culture developing». Sergey adds that «in the past, there was often a lack of understanding on the essence of our quality control service. However, we now speak the same language and there is no longer any need to explain what is outsourcing and why it is a better option than having one’s own quality control department».

OMZ Special Steels Ltd. is one of the leading steel-makers in Russia, manufacturing a broad range of semi-finished specialty steel products, including corrosion-resistant alloys, heat and cold resistant alloys for critical service in the upstream, midstream and downstream sectors of the petroleum industry. The company also produces radiation resistant alloys for NPPs and products specifically designed for other high tech and exotic applications.