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Supply chain management.

  • Number of suppliers registered in E-TASC remained stable.
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  • 97 experts discuss sustainable procurement in the ICT industry.
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  • Magyar Telekom gives DELFIN Award to responsible suppliers.
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Processes and tools for evaluating suppliers are key aspects of supply chain management at Telekom. These are, for example, valuable in identifying financial improvement potential and in controlling supplier progress in social and environmental areas.

By practicing systematic supply chain management, Telekom is able to quickly identify potential risks in the supply chain and respond to them.

We also rely on dialog with regard to sustainability in cooperation with our suppliers. For us at Telekom, it is important to know that our business partners are supporting new ways of achieving sustainable business practices. This is the only way to effectively improve the supply chain. In addition to our suppliers, who are our most important external procurement stakeholders, our collaboration partners, institutions and NGOs are important stakeholders when it comes to making the supply chain more sustainable. We also work to improve ethical social and environmental standards as a member of industry initiatives such as the Global e-Sustainability Initiative (GeSI) and the Joint Audit Cooperation.

Advancing E-TASC.

E-TASC, or the Electronics Tool for Accountable Supply Chains, is an online information system used throughout the industry for assessing the sustainability-related risks involved in supplier activities. As a member of the Global e-Sustainability Initiative (GeSI), Telekom played a key role in the development of this system and is also involved in its further development.

We collaborated actively on the development of version 2.0 of the information system in 2011. Updates included revising the E-TASC questionnaire and the supplier risk assessment. The design was improved and the system restructured for increased user friendliness as well. Plans for 2012 include adding a supplier and facility comparison feature to the system. This feature will make it possible to compare registered suppliers. New questions on topics such as fighting corruption and the extraction of raw materials from regions that are experiencing conflict will be incorporated as well. There are also plans to expand the system to include a management feature for corrective measures and audit results.

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The online information system E-TASC, or Electronics-Tool for Accountable Supply Chains, which is used throughout the industry, helps us quickly identify current or potential CR risks in the supply chain and respond to them appropriately.

Suppliers use the system to provide detailed information on their social and environmental production conditions and their management systems. They also benefit from using the cross-industry system because this helps them to demonstrate their CR status to other business partners and skeptical members of the public.

If a supplier is not able to provide the requested information, an internal, multiple phase process is initiated to encourage the supplier to use E-TASC. In many cases, a few conversations are often enough. Multiple escalation phases are initiated if discrepancy persists.

Using E-TASC at Telekom.

We use particularly strict criteria to evaluate strategically important suppliers for possible sustainability risks. That is why we require them to use E-TASC even during the selection process.

We asked 33 additional suppliers to provide information in E-TASC between January and December 2011. 18 of these had responded to this request by the end of the year. Even so, the share of our procurement volume from suppliers that have provided information on E-TASC fell from 55 percent to 38 percent. This reduction of 17 percent is reflected in a reduction of the order volume which is around 12 percent. The number of registered suppliers in the system is stable and the reduction of the order volume through E-TASC is as much due to cost-cutting measures as it is to an altered list of suppliers in the E-TASC system.

Supplier scorecard for strategic suppliers.
In addition to the E-TASC tool, which is used throughout the industry, our supplier scorecard (SSC) is another element for evaluating selected suppliers. The SSC is generated every six months. In addition to evaluating key financial performance indicators, it also provides a Group-wide overview of the sustainability performance of our strategic suppliers.

CR Report from the previous year

Supplier workshops for a more sustainable supply chain.

Telekom Deutschland organizes workshops with important suppliers in order to more firmly integrate sustainable elements into the supply chain.

During the reporting period, we conducted two sustainability workshops on CO2 management in the supply chain. We worked with participants to develop a method that can be used to included the CO2 emissions generated by our suppliers and their sub-suppliers into our CO2 calculation as precisely as possible. Establishing the required trust within the process posed a particular challenge. That challenge was particularly a factor when it came to our suppliers' trust in their sub-suppliers. Once we have approved the procedure for calculating our CO2 emissions from the supply chain in collaboration with our strategic suppliers, we plan to draft mandatory target agreements to reduce greenhouse gas emissions.

The project was originally scheduled for completion in 2010, a deadline that we were unable to meet due to delays in the international standardization process. With the new GHG Protocol for calculating scope 3 emissions, however, which was passed in October 2011, the foundation has now been laid for extensive recording of scope 3 emissions. That means we will be able to effectively continue our sub-project and complete it in 2012. We are also developing a procedure to calculate the CO2 that our customers generate when using our products and services.

We are actively participating in the creation of an industry supplement to the GHG Protocol for the ICT sector. With these efforts, we are pursuing the industry-specific specification of policies for recording and publishing greenhouse gas emissions in the ICT industry.

CR Report from the previous year 

Sustainable Procurement Stakeholder Dialog Day.

The fourth Sustainable Procurement Stakeholder  Dialog Day was held on November 10 and 11, 2011, in the Chinese city of Shenzhen. It was the first time we hosted the event in China. This was Telekom's first dialog event outside of Europe and the first time ever this type of event was held in China.

By deciding to host a dialog event in China, we acknowledged the important role that the Chinese market plays in our global supply chain and were also able to gain valuable knowledge of local conditions and expectations.

A total of 97 participants, including Telekom employees, suppliers from China and representatives of governments, NGOs and research institutes, used the event to share information on different aspects of sustainable procurement in the ICT sector. The question of how to improve the various stakeholders' collaboration in order to comply with established environmental and social standards was the focal point of the event. This gave us the ideal opportunity to demonstrate the significance of CR for the success of our company and the resulting requirements for our suppliers, and to offer assistance in better meeting these requirements.

By working together, companies and their suppliers can resolve problems identified in the global supply chain such as working hours, occupational health and safety, and fair pay, as well challenges such as the conservation of natural resources and climate change. Compliance with ecological and social standards in the global supply chain is a fundamental aspect of our CR risk management. That involves creating transparency throughout the entire supply chain, something that still needs improvement. We will demand greater cooperation from our suppliers in this respect in future.

CR Report from the previous year

Sustainable Sourcing Excellence research project.

We saw initial results within the scope of the Sustainable Sourcing Excellence research project during the reporting period. Telekom is a participant in three of the project's five work packets:

  • Developing a procedure for measuring environmental impact caused by purchasing and procurement logistics. This included analyzing requirements on standardized measuring methods and reviewing earlier approaches taken by industry partners.
  • Developing an international, mandatory guideline for purchasing and procurement logistics. We finalized an initial working version of the Sourcing Governance Code in the third quarter of 2011.
  • Establishing a procurement platform to help calculate the costs resulting from CO2 emissions generated by purchasing and procurement logistics processes in order to make these a quantitative factor in procurement decisions. We will then begin developing strategies to prevent CO2 emissions. Within the scope of this work packet, we analyzed current procurement platforms and compiled industry partner requirements into a specifications sheet.

In addition to this research project, Telekom teamed up with the EBS university (EBS Universität für Wirtschaft und Recht) to initiate another research project entitled "Sustainability & TCO." The aim of the project is to make it possible to quantify and evaluate the costs and savings associated with sustainable activities. With the results we hope to be able to provide our buyers with an effective tool for price-based evaluation of sustainability effects.

We began the first pilot projects to calculate costs generated by sustainability activities in October 2011. Within the scope of the projects, we plan to test the applicability of scientific methods and user acceptance of those methods. We will then decide whether to make further adjustments for systematic implementation based on the results.

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Since December 1, 2010, Telekom's Corporate Procurement – Procurement Excellence & Vendor Management department has been participating in the Sustainable Sourcing Excellence project within the scope of the EffizienzCluster Logistik-Ruhr program, which is being conducted by the EBS university and the Supply Chain Management Institute in Wiesbaden, Germany.

The project is focused on the following:

  • Developing a procedure for the integrated measurement of environmental impact caused by purchasing and procurement logistics
  • Creating a sourcing governance code
  • Creating guidelines for sustainable purchasing and procurement logistics
  • Establishing a CO2 efficient sourcing platform
  • Developing an IT-based sustainability risk management system for purchasing and procurement logistics

Telekom decided to participate in this project, which is sponsored by the German Federal Ministry of Education and Research (BMBF), for a period of two years to begin with.

Magyar Telekom recognizes dedicated trading partners.

In June 2011 the Hungarian subsidiary presented the DELFIN Award for the fourth time to suppliers for particularly successful efforts in the area of sustainability. The purpose of the prize, which was first awarded in 2008, is to promote the idea of sustainable development and honor progress made in this direction. Award recipients must exhibit exceptional performance in the following four categories:

  • Supporting equal opportunity and anti-discrimination within and outside of the company
  • Sustainable innovation
  • Sustainability education and awareness
  • Investment and development in the area of climate protection

CR Report from the previous year

Update on the 2010/2011 CR program.
Sub-targets Status of implementation/measures
Further develop suppliers through harmonization and raising awareness of Telekom's sustainability requirements, in annual dialog rounds or workshops dedicated to the topic   Target achieved.
  • Sustainable Procurement Stakeholder  Dialog Day in 2010.
  • International CR Stakeholder  Dialog Day held in China on November 10 and 11, 2011.
  • Four workshops were conducted with suppliers on sustainability topics in 2009 and in 2010 as well.
  • Two workshops with selected suppliers on the carbon management supply chain were conducted in 2011.
 

2010/2011 CR program

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

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