The impact that companies have is multiplied through their supply chain. In the case of multinationals, this can involve thousands of companies in different sectors and countries. This is the reason for the importance - and difficulty - of guaranteeing responsible management throughout all parts of the chain.
Telefónica has thousands of suppliers throughout the world, and its purchases are worth around 26 billion Euros (awards many of its purchasing contracts - around 83.6% of the total volume in 2010 - to local suppliers), so it is very important its promotion of corporate responsibility in its supply chain. For this reason, the strategy has based on evaluating the potential level of risk of providers and defining actions in accordance with the risk and the country.
The Telefónica Purchasing Model is based on the principles of: Concurrence and equality of opportunities, transparency in the process and decision making, objectiveness and unanimity in adjudication decisions, commitment of service to internal and external clients, mutual compliance with commitments with suppliers.
Furthermore, the Purchasing Model promotes compliance with Telefónica’s Business Principles and commitment to sustainability in the supply chain.
Lines of Action
- Monitoring the level of compliance: our on-site audits are a key tool for ensuring compliance with our minimum requirements.
- Sustainability training for suppliers: raise awareness of our responsible supply chain management strategy and learn how to strengthen their own CR culture.
- Sector and inter-sector initiatives: Telefónica works with Global e-Sustainability Initiative to promote initiatives and good practices; participates in Itri Tin Supply Chain Initiative and is part of the Public-Private Alliance for Responsible Trade Minerals, launched by USA in November 2011.
- Fulfilling the commitments we have assumed: we work to improve the processing of invoices in order to meet the commitments we have assumed.
Commitments and policies defining relationship with Telefónica suppliers
- Public Commitment: Telefónica's Business Principles drive Telefónica to make a commitment to sustainability in our supply chain, incorporating social, employment and environmental aspects into purchasing decisions in order to build a better future.
- Supply Chain Responsibility Policy: Through this policy Telefónica informs its suppliers of the minimum sustainability criteria the company expects from them: working conditions, health and safety, human rights, the environment, etc.
Telefónica has also established Responsible Purchases Regulations, which establish internal processes and tools to promote and ensure compliance with the minimum requirements laid down for suppliers. With this update, Telefónica aims to improve the efficiency of the processes by establishing monitoring mechanisms in line with the risks inherent in the supplier and the country.
The internal areas involved in implementing the solution are: Sustainability and Environment, Purchasing, Health and Safety, Human Resources, Auditing and Budget Holders.
The external stakeholder involved in implementing the solution is: suppliers, international organizations (sectorial and inter-sectorial).
- To continue to consolidate activities regarding high-risk suppliers while taking each region’s situation into account.
- To take advantage of our involvement in organizations and initiatives to promote dialogue and education among suppliers.
- In the last survey of Telefónica on satisfaction of suppliers, the suppliers identify the following issues as capable of improvement: the time devoted to each purchasing process, need for a greater diffusion of the Social Responsibility policy in the supply chain, the delivery of orders in due time and proper form, and more clear specifications.
- The successful of Responsibility in the Supply Chain project depend on the suppliers implication. They have to perceive the project as an useful tool to improve, not as a way to control thought audits.
- The promotion of CSR in the suppliers chains need to combine compliance with minimum requirements, training and awareness.
- It is very important that the suppliers extend the good practices to own supply chain.
- Audits performed on at-risk providers by Telefónica: 840 in 2009 and 1,163 in 2010.
- Telefónica also continued to promote the use of E-TASC (a GeSI self-assessment tool) among its global suppliers. Accordingly, in 2010, we invited 40 of our major suppliers to complete E-TASC. Through information provided by the suppliers, we will be able to identify potential risk areas and we will be able to track the level of compliance in corporate responsibility criteria for each of them throughout 2011.
- Inclusion of sustainability criteria in procurement processes in Europe (product code related to merchandising activity). Since making this award, work is being done with the supplier from a cooperative standpoint, urging them to integrate aspects of sustainability into their processes when purchasing their products.
- In the last survey of Telefónica on satisfaction of suppliers Corporate Social Responsibility was among the best valued issues.
- Best practice in “Standards for Suppliers” in Dow Jones Sustainability Index last year.
Annual Corporate Responsibility and Sustainability Report 2010: