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Selection, assessment and controls

05/18/2016 - 00:00 PM

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il processo di selesione, valutazione e controllo

The selection, assessment and control of the Telecom Italia Group’s suppliers involves a pre-contractual qualification stage, which is designed to assess their economic/financial and technical/organisational characteristics. Once these are ascertained, the suppliers can be enrolled in the Group's Register of Suppliers (the Register). In this stage Telecom Italia requires and assesses some aspects concerning their business ethics and their respect for human, labour and environmental rights.

In all the contracts signed, there is a specific clause which makes it mandatory for the supplier to accept the principles expressed in the Group's Code of Ethics and Conduct.

Concerning domestic operations, registered Italian suppliers with non-negligible  orders (the threshold is only 3,000 euros a year) receive an initial screening relative to their compliance with the principles of the Code of Ethics and are subject to periodic assessments. This procedure does not apply to Public Administrations. Actions carried out by Telecom Italia in order to check its suppliers vary according to the riskfulness of the supplier and the amount of spent: from simple questionnaires, to more and more complex questionnaires, to checks of documents and in the supplier’s premises, to specific sustainability audits.

Specifically, in 2015, 100% of new suppliers registered on the Group Supplier Database signed a specific questionnaire in which they undertook for themselves and for any authorised subcontractors, collaborators and employees to observe the principles of behaviour contained in the Group’s Code of Ethics and Conduct In 2015, in Brazil, such percentage was 98%.

While the supply is taking place, registered companies which have received purchase orders normally undergo incoming quality control checks (a requirement for the acceptance and use of the purchased goods) and monitoring of the vendor rating. Environmental and social checks are also carried out. In particular, checks on Health & Safety and on the environment are carried out, and their results are part of the supplier’s rating, to which the penalty/incentive system is linked. Also, checks are held concerning compliance with labour laws.

The purchasing departments focus on specific sectors, so as to provide accurate responses to the requirements of internal customers and stakeholders. These expectations are constantly monitored through surveys of both internal customers and suppliers in order to verify the quality of the services delivered.

Telecom Italia's purchases are made principally in the two geographical area where the Group's major operations are sited: Italy and Brazil, and are directed for the most part towards the following categories of products/services:

  • Telecom networks
  • Telecom products
  • Information Technology
  • Technical and Professional Services
  • Power
  • Others

Information on purchases made in 2013, 2014 and 2015, grouped by Business Unit and product/service type, is available in the Group purchase tables.

In total, in 2015 there were 6,595 suppliers which had purchase orders with the Group1, (-2% compared with 2014 and -11% compared with 2013), of which 3,641 were for the domestic BU (+4% compared with 2014 and +6% compared with 2013), 1,865 for Brazil (-12% compared with 2014 and -19% compared with 2013) and 442 for the Media BU (+5% compared with 2014 and -48% compared with 2013).

For some sectors, the Group also measures and monitors subcontracting suppliers; in particular, for network works, there were 819 subcontracting businesses (+9% compared with 2014 and -6% compared with 2013). In this sector, therefore, the estimated total number of suppliers involved in the supply chain is 839.

In the last three years no significant changes have occurred in the structure of the Group’s supply chain, excluding those caused by the changes in the Group’s perimeter through the sale of assets in Argentina and television assets.