Why this topic is important to us
We depend on our suppliers and subcontractors for the provision of services. To a large extent, their quality determines the performance we deliver. Failures and deficits in our supply chain can have a negative impact on the relationship to our clients and stakeholders. For this reason, we place great importance in a comprehensive supplier and subcontractor management system focused on quality aspects. This also particularly applies to ensuring integrity.
The concept we pursue
We have put in place a Group-wide, comprehensive supplier management system (HANDLE Procurement Suppliers) in order to implement uniform standards in our dealings with suppliers, to demonstrate transparency regarding the suppliers’ ability to perform, to reduce the risk in procurement processes by defining and identifying risks early on and minimizing them, and to monitor adherence to our compliance regulations. Our supplier management system is composed of four core processes: supplier selection, supplier assessment, supplier development, and supplier phase-out.
In order to select the best suppliers for our business, we apply uniform Group-wide evaluation criteria which, in addition to price, quality, contract fidelity and supply and/or execution performance, also include the criteria of compliance, risk management, environment, cooperation and innovation as well as occupational safety and health.
We are committed to defining and maintaining economic, social, and ecological minimum requirements across the entire supply chain. This also includes the observance of human rights. These minimum requirements are reflected in the guidelines on procurement and supplier management.
In our Code of Conduct for Suppliers, we express clear expectations regarding integrity, compliance with the law and ethical conduct in line with the principles of the Global Compact initiative. These principles specifically include combating corruption, bid rigging, and illegal employment practices as well as respecting the fundamental rights of employees and protecting the environment. We also ask our suppliers to require their own subcontractors and suppliers to adhere to these principles.
How we want to achieve our goals
Our objective is to assess those suppliers who are of greatest importance for our company (so-called “category ‘A’ suppliers”), at least once per year in the context of our supplier management and to do so in a uniform manner throughout the Group. In the prior financial year, we assessed a total of 413 suppliers, among them many of our category “A” suppliers.
In order to assess our suppliers, each year the Corporate Procurement department makes inquiries into the satisfaction of the Group companies with their suppliers. The greater a supplier’s significance, the more assessments are made. The assessment results are analyzed and discussed with the supplier in annual feedback meetings.
In addition to a standardized supplier evaluation in line with our supplier management system, since the end of 2012 Bilfinger has used an IT-supported due diligence tool to review the integrity of business partners that have exceeded a predefined volume as well as all sales intermediaries. The tool was updated in 2017 and the criteria intensified. Purchasing assessed not only new suppliers but existing suppliers as well.
In 2017, we developed a concept that allows us to assess compliance with the requirements of our suppliers using an external agency. In financial year 2018, this concept will be carried over into a test phase and commissioned to the selected agency.
How we counter risks
If unethical conduct or inferior quality service occur within the supply chain, this will have a negative impact on customer satisfaction, orders received and/or the reputation of our company. This conduct could also result in legal consequences. We counter these risks through a comprehensive supply chain management system, by defining our standards throughout the Group and through regular assessments / inspections of our suppliers.