Procurement and supply chain
We set high ethical and environmental standards for ourselves as well as our suppliers. In 2015, the implementation of our Supplier Sustainability Programme continued at undiminished pace to ensure sustainability throughout our supply chain.
On a high level, our suppliers can be divided in direct and indirect categories. The direct categories consist of IT suppliers delivering products and services that are needed for customer deliveries. These include hardware, software and IT consultant resources. Indirect categories comprise suppliers that deliver products and services needed for our own operations, such as business support services, human resources services, facility management and travel services.
The vast majority of purchases within the group take place in the Nordic countries. In 2015, the total monetary value of procurement amounted to EUR 605 million (642), representing 41% of our revenues. About 150 of our biggest suppliers represent 80% of the spending, making it essential to have an aligned CR vision and perspective with suppliers.
Management of sustainability in supply chain
Our aim is that any and all external business undertakings providing goods, services, technology, or subcontractors to or through Tieto on a regular1 basis should comply with the minimum requirements stated in our Supplier Code of Conduct Rule, either by signing the rule or by other means manifesting fulfilment. This rule touches upon human rights and labour conditions (including abolition of child and forced labour), environmental issues, anti-corruption, compliance and auditing.
Our long-term target is that all suppliers serving Tieto on a regular1) basis will adhere to the principles of this code by 2017. To strengthen Supplier Code of Conduct Rule compliance we conducted a special campaign in 2015, targeted to regular1 suppliers that had not been otherwise approached by our procurement unit during the year. By the end of 2015, 31% (30%) of all our regular1 suppliers had accepted our supplier code, representing 81% (74%) of our total spend. Zero violations of the Supplier Code were encountered during the year through audits or whistleblowing.
Our Supplier Sustainability Programme, which was launched in 2014, continued in 2015 and is targeted towards our most significant suppliers that were identified in supplier base analysis. As part of this programme, about one hundred of our most significant suppliers, were invited to take part of our CR self-assessment surveys, which cover environmental aspects, human rights, labour conditions as well as anti-corruption. Based on the results, follow-up actions are taking place together with individual suppliers. The survey results are also linked to our Tieto Supplier Relationship Management program (Supplier One), which aims at improving collaboration with our most significant suppliers by setting joint targets for the collaboration, formal governance and follow-up on suppliers’ performance and how they adhere to our CR compliance requirements.
From supplier category management perspective, one of the highlights of the year was the consolidation of hotels in our travel category to preferred hotels. In this group, preferred hotels represent 88% of the nights now, which have had a positive impact on Supplier Code of Conduct compliance. Environmental aspects were important consolidation criteria when selecting preferred hotels. Another achievement was the implementation of an Environmental Management System, and update of e-waste management and labour rights policies, for a supplier that did not comply with our Supplier Code of Conduct Rule - a concrete example of our commitment to sustainability in supply chain.
In general, first-tier suppliers enable easier control and thus better possibilities to address CR-related risks. Risks related to second and third-tier suppliers are more difficult to address, which is why we have put a lot of efforts to improve CR compliance and consolidate our supplier base during the past years. As a result, the number of suppliers have gone down from 9 000 in 2013 to 7 200 in 2014, and 6 300 in 2015. This development supports a more centralized procurement with our preferred vendors and will also help to reduce supply chain related risks.
Sustainability - a regular part of our procurement practices
Our Procurement Policy applies to all Tieto companies and employees in all countries of operation, and describes how purchases shall be handled in the group. This policy states that the Tieto Supplier Code of Conduct Rule should be implemented in all new supplier contracts. Thus, discussions about ethical and environmental topics are a regular part of procurement.
Our group-level Procurement unit is headed by our Chief Procurement Officer, and holds a key role in Procurement Policy and Supplier Code of Conduct Rule implementation. This unit works in close co-operation with our businesses, supporting sourcing as well as purchasing processes. Our Legal and Corporate Responsibility units assist where necessary.