Procurement and supply chain
Tieto’s Supplier Sustainability Programme continued in 2016, helping to strengthen implementation and management of Tieto’s ethical requirements throughout the supply chain. By the end of the year, the Supplier Code of Conduct Rule coverage represented 85% of total spend among regular suppliers.
Tieto’s supplier base consists of direct and indirect suppliers. Direct suppliers deliver IT products and services needed for customer deliveries, including hardware, software and IT consultant resources. Indirect suppliers deliver products and services needed for our own operations, such as human resources services, facility management and travel services.
In 2016, the total monetary value of procurement amounted to EUR 609 million (605), representing 41 per cent of revenues. Approximately 160 of Tieto’s suppliers represent as much as 80 per cent of the company’s spending, making it essential to have an aligned perspective on issues related to corporate responsibility (CR). The vast majority of purchases take place in the Nordic countries. Purchases from suppliers invoicing Tieto from Finland, Sweden or Norway represent over 70 per cent of the total annual purchase volume.
Tieto’s Procurement Policy is based on the company’s values, Code of Conduct Policy and Operative Decision Making and Authority Policy. The Procurement Policy applies to all Tieto companies and employees in all countries of operation. Our Supplier Code of Conduct Rule specifies the ethical business practices applying to suppliers, and is applied to all new supplier contracts to ensure sustainability throughout the supply chains. This rule is based upon the principles of the United Nations Global Compact, of which Tieto is a signatory, and also complemented with Tieto specific expectations.
The Group-level Procurement unit holds a key role in the implementation of Tieto’s Procurement Policy as well as Supplier Code of Conduct Rule, and works in close co-operation with Tieto’s businesses. Compliance with the Supplier Code of Conduct Rule is also part of the personal KPIs for everyone working in the Procurement unit.
In general, first-tier suppliers enable easier control and thus better possibilities to address sustainability related issues. As a result of consistent consolidation, the number of suppliers in Tieto’s supplier base have decreased significantly during the past years, from 7 200 in 2014 to 6 500 in 2016. As a result, Tieto’s procurement is more centralized and focused on preferred suppliers today, compared to a few years ago, helping the company to mitigate supply chain related risks.
The Supplier Code of Conduct Rule coverage represents 85% of total spend among regular suppliers.
Tieto’s aim is that all external business undertakings providing goods, services, technology or subcontractors to, or through, Tieto on a regular1 basis, comply with the minimum requirements stated in the company’s Supplier Code of Conduct Rule by 2017. By the end of 2016, 49% (31%) of all regular1 suppliers had accepted Tieto’s Supplier Code of Conduct Rule. The coverage represents 85% (81%) of spend among regular suppliers. In addition to this, Tieto also actively implemented aligned business practices to hundreds of new suppliers followed acquisitions made during the year. Zero violations of the Supplier Code were encountered in 2016 through audits or whistleblowing.
The need for more frequent follow-up of the supply chain has increased in the light of the continuously evolving supplier base. In 2016, a Supplier Code of Conduct Rule compliance campaign was initiated. Among other things, compliance reporting was improved through consolidation of CR information from multiple sources to one single database - the company’s ERP system. Furthermore, a user-friendly online tool for sharing information, where suppliers can manifest their compliance with Tieto’s Supplier Code of Conduct Rule, was implemented.
One of the main highlights in 2016 was the new headquarters in Espoo, Finland, where Tieto’s Procurement organization supported the project and integration of a number of sustainable solutions and services.
Going forward, Tieto plans on continuing robust implementation of the Supplier Sustainability Programme. In addition, the supply chain related KPIs will be revised to focus more on suppliers involved with customer deliveries. The renewed targets will be determined through Tieto’s updated CR long-term.
1) 1 invoice/month, minimum 12 invoices during the year