In 2011, we focused on continuing to improve transparency and efficiency in our supplier selection process through measures such as the Supplier Management Portal (SMP) with its seamless prequalification process including transparent voluntary information provided by suppliers via targeted questionnaires. The SMP acts as the central gateway for suppliers to Deutsche Telekom's Procurement department.

Launched on January 17, 2011, the SMP was initially run parallel to the Corporate Procurement Portal, which was being used at the time. We have been registering new and regular suppliers exclusively via the SMP since July 4, 2011, resulting in one standardized communication channel between Deutsche Telekom and its business partners.

We can use the new portal to make communication between suppliers and our Procurement department more transparent and to structure our business processes to be more sustainable. For example, the portal makes it possible to share information and documents for order processing and billing transactions for materials and services digitally, thereby doing away with the need for paper documents. We have also been able to improve data quality by simplifying our procedures.

We continue to develop ways to make the SMP more user-friendly and to add new, innovative features in order to support our suppliers and simplify their daily business processes when doing business with Deutsche Telekom. For example, we are planning to introduce new tools for supplier evaluation starting in the third quarter of 2012. Subsequently, we intend to implement the supplier file as a new way to transparently share and manage documents.

We comprehensively optimized the prequalification process in 2011 based on our revised guidelines. The prequalification process helps the Procurement department develop and shape the supplier portfolio. In this process, suppliers fill out a questionnaire and their responses are then used to evaluate that supplier.

Main focal points in improving the prequalification process particularly included limiting potential supplier-related risks and systematically expanding our sustainability requirements to the supply chain. The optimized prequalification process enables more effective supplier evaluation and helps the Procurement department select the best business partners. The key optimization measures include:

• Convenient, user-friendly invitation to participate in the prequalification process for potential suppliers
• Risk minimization through automated checking of black lists during the invitation process
• Inclusion of sustainability criteria in the supplier questionnaire
• Use of supplier information in any follow-up processes (invitations to bid and auctions, vendor master data, purchase-to-pay process, reporting)
• Support for buyers with software-supported evaluation processes

Additional improvements are planned for 2012:

• Making the process international (multilingual, country-specific questions for the supplier questionnaire)
• Process adjustment in line with merchandise groups
• Possible re-qualification of regular suppliers
• Rating of responses and analysis of sales data from suppliers in the Global Procurement Business Intelligence System (GPBI)
• Visual illustration via "supplier cockpit": Key supplier information at a glance

The Hungarian subsidiary Magyar Telekom expanded the supplier prequalification program that it introduced in December 2010 and evaluated additional suppliers during the reporting period. The subsidiary evaluated the sustainability risks of its top 38 suppliers based on the GeSI questionnaire and conducted an even more thorough sustainability assessment of its top 10 suppliers using the supplier scorecard (SSC) in 2011. The company informs suppliers of the results to encourage them to improve their performance. Magyar Telekom also plans to introduce a comprehensive process to guarantee a sustainable supply chain in the context of its new sustainability strategy.

T-Systems Iberia integrated its supplier selection process into T-Systems International's global processes, which also require suppliers to undergo sustainability prequalification, during the reporting period. Slovak Telekom also began reviewing its top 100 suppliers for compliance with CR policies. The subsidiary reviewed 40 companies in December 2011 and January 2012 and plans to continue the process over the course of the year in order to help establish CR and sustainability criteria at its suppliers' companies.

After developing various criteria for assessing the sustainability of proposals in 2009 and 2010, we have been actively encouraging compliance with these criteria during bid processes since 2011. Our goal is to systematically establish sustainability criteria as a permanent component of our bid processes by 2013.

During the reporting process we took an initial step in this direction by standardizing the questionnaires and evaluation systems for bid processes, thereby making them considerably easier to use for buyers and suppliers. We will develop additional product-specific criteria in 2012 and 2013, which we intend to make a permanent component of the bidding process as well.

Sustainability criteria have been systematically included in the award notice for major orders since 2010.

CR Report from the previous year

We revised the content and method of our internal corporate responsibility online training tool in cooperation with Humboldt Universität in Berlin in 2010 and will introduce it in the second quarter of 2012. We made the application more efficient and easier to use by shortening training time and reducing the amount of content. These changes should make the tool easier to use.

2010/2011 CR program

The current 2011/2012 CR program can be found in the "Strategy & management" section.