Why this topic is important to us
In delivering our services, we depend on suppliers and subcontractors. To a significant degree, the quality they provide will determine our own performance. Wherever our supply chain is subject to failures or deficiencies, this may impair our relationships with our customers and other stakeholders. Accordingly, we set great store by a comprehensive supplier management system. This particularly holds true when it comes to ensuring that our suppliers act with integrity and respect human rights.
We use a Group-wide supplier management system (HANDLE Procurement Suppliers). This is described in detail in our Procurement Policies and Standard Operating Procedures (SOP); its use is mandatory for all our subsidiaries. The objective of this Group-wide regulation is to apply uniform standards in our dealings with suppliers, to create transparency regarding our suppliers’ capacity to perform, to minimize risk in the procurement process by defining potential hazards and identifying them early on should they arise, and to monitor compliance with our rules and standards. It is incumbent on Corporate Procurement to define, structure, continually enhance, and monitor the supplier management system.
Over the course of the financial year 2018, we reviewed all the SOPs of our subsidiaries and adapted them to the latest requirements. To ensure due consideration of the various country-specific laws and ordinances, we involved legal experts on site to assist with the review. In addition, a public auditing firm was hired to verify that the documents had been correctly translated into the relevant national languages and that the various sets of regulations were consistent with each other. Our Group Policies and SOPs are now available in a total of 15 languages.
Our supplier management system comprises of four core processes: supplier selection, supplier evaluation, supplier development, and supplier phase-out. In order to enable us to select the suppliers that are best suited for our needs, we apply uniform, Group-wide evaluation criteria. Besides price, quality, adherence to contracts, and performance in terms of deliveries and execution, they also include compliance, risk management, environmental protection, cooperation, innovation, as well as occupational safety and health protection.
We have made it our commitment to define and implement minimum economic, social, and environmental standards that apply to our entire supply chain. The basis for this is the Bilfinger Code of Conduct, the observance of which is mandatorily required by the Procurement Policy of Bilfinger SE. Any deviations from these policies and guidelines are permissible only in exceptional cases and require the consent of the competent Compliance Manager.
The Bilfinger Code of Conduct
Our Code of Conduct stipulates guidelines that govern everything we do. The principles for ethical conduct defined in the Code are binding upon all executives and employees of the company worldwide, regardless of where they work and which function they fulfill.
The Bilfinger Code of Conduct also sets out the principles that apply to our dealings with subcontractors and suppliers:
- We intend to be a fair and reliable partner for our subcontractors and suppliers and we want to enter into business relationships that are beneficial to both sides;
- We base our selection of suppliers on transparent criteria and procedures while duly considering the principles of free and fair competition.
- Our Code of Conduct for suppliers requires our subcontractors and suppliers to act in accordance with the principles of the Code of Conduct and with generally accepted standards, and to comply with applicable laws and regulations.
- Furthermore, we demand of our suppliers to ensure that their own subcontractors and suppliers observe the same principles in turn.
- If there is sufficient reason to assume that a subcontractor or supplier is not living up to our expectations or requirements, we will review whether we wish to continue to do business with the enterprise in question.
Our Code of Conduct for Suppliers, which is available in 15 different languages for all of our various markets, clearly formulates our expectations with regard to their integrity, legal compliance, and ethical conduct, in keeping with the principles of the UN Global Compact Initiative. They particularly include respect for human rights; combating corruption, illicit collusion, and undeclared employment; as well as the protection of the environment and of the fundamental rights of employees. We also call upon our suppliers to impose the corresponding principles upon their own suppliers in turn. In 2018, we further tightened the requirements made of our suppliers in terms of anti-corruption and bribery.
How we intend to reach our goals
As part of our supplier management system, we perform targeted supplier evaluations using a standardized, Group-wide procedure. In the process, we focus on our most strategically important suppliers (termed “category ‘A’ suppliers”). In order to assess their performance, Corporate Procurement surveys the various Group companies to determine how satisfied they are with these suppliers’ services. The evaluation categories applied in the process are “procurement,” “HSEQ,” “logistics” as well as “legal,” respectively “compliance.” The more important a given supplier, the greater the number of evaluations obtained. The responses are analyzed and subsequently discussed with the supplier concerned at their annual feedback meeting.
By way of supplementing the standardized evaluations performed as part of the supplier management system, Bilfinger has also been deploying an IT-based due-diligence tool since late 2012. This is used to review the integrity of those business partners whose contract values exceed a predefined threshold, as well as all distribution agents. In 2018, we used the tool to evaluate both new and existing suppliers. For further information about this tool, please see the “Compliance” chapter.
In 2017, we devised a concept allowing us to assess adherence to our supplier-related requirements with the assistance of an external agency. This concept calls for an independent partner to obtain voluntary self-assessments from suppliers, specifically with regard to the following sustainability topics: company management, company ethics, working conditions and human rights, ecology and environment, as well as supplier management, respectively supply chain management. The pilot phase of the concept was successfully completed. In 2018, we concluded a contract with an agency specializing in this service.
In the financial year under report, this agency was already commissioned with performing an evaluation based on the Sustainability Self-Assessment Questionnaires submitted by 115 suppliers. The suppliers in question mostly were selected using a specially developed, risk-based process. Their evaluation is to be completed in 2019. Moreover, it is planned to evaluate a larger number of suppliers in 2019.
Any supplier violating the Bilfinger Code of Conduct for Suppliers will be blocked in our system. This will also apply in the event public authorities initiate investigations against a supplier, or whenever an integrity review obtains a negative result. All employees are under obligation to report such cases whenever they occur or become known.
A Group Policy is in place that defines the procedure for blocking a supplier, thereby ensuring a standardized, Group-wide process. Thus, whenever a report is filed alleging that a given supplier lacks integrity, this will be reviewed, for example, in the first instance by the purchasing department of the corresponding company or by the competent management of the purchasing department, in each case with the assistance of the divisional Compliance Officer. Alternatively, Corporate Procurement will review the matter with the assistance of the Chief Compliance Officer. The above reviewing entities will then take the final decision as to the type of block to be applied. A so-called “supplier blacklist” is circulated Group-wide at least once per month, or on an ad-hoc basis if required, in order to notify all companies of the Bilfinger Group about any suppliers who have been blocked.