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Ferrovial

Ferrovial - Integrated annual report 2013 / Supply chain

In keeping with Ferrovial’s commitment to responsible management of the supply chain, it considers its suppliers and/or subcontractors to be essential stakeholders in the development of its business and value chain.

In terms of collaboration, both sides seek mutual benefit by joining forces in order to offer clients higher quality services, while ensuring compliance with the Principles of the Global Compact and respect for the environment as the mainstays of the company’s Corporate Responsibility. Management of the supply chain is one of the basic aspects of Ferrovial’s environmental management in some business areas, such as Construction and Services, where the level of subcontracting can be significant and the sustainability of many projects depends largely on the performance that the company can demand from suppliers and contractors.

In line with the strategic Corporate Responsibility plan and with the aim of expanding its activities across the whole value chain, Ferrovial strives to have a good longterm relationship with its suppliers, wherever possible.

Supply Chain

Supply Chain2013 2012 2011Var 13-12
Number of suppliers * 60,936 57,458  61,354 6%
Suppliers evaluated 6,038 8,402  8,415 -28%
Suppliers rejected 540 773  685 -30%
Suppliers with incidents 592 381 343 55%

* This figure has been obtained by using country-specific revenue data, so there are suppliers that have been counted more than once, although the impact of this is very limited.

Supplier classification

A classification system for high-risk suppliers was implemented in 2012, from the point of view of Corporate Responsibility, by product and country of origin. The system is based on the Global Compact principles and the FTSE- 4Good supply chain standards. An analysis carried out by the different company businesses in 2013 does not reveal significant changes with respect to the previous year. Most of Ferrovial’s investments are in OECD countries, or in upper-middle or high income countries according to the World Bank classification. Their legislation recognizes and guarantees respect for Human Rights, which is why Ferrovial’s supply chain risk has been rated as low.

Profile of Ferrovial suppliers

In 2013 Ferrovial had dealings with 60,936 suppliers, including not only suppliers, but also leasers and subcontractors.

It is worth highlighting the fact that most Ferrovial suppliers belong to OECD countries, so they are considered low-risk in terms of Human Rights violations and compliance with labor and environmental regulations. At the same time, the sectors in which Ferrovial operates through its different divisions are related to activities in which there are no significant risks in the supply chain, according to the criteria of the aforementioned institutions..

Ferrovial’s different businesses promote the use of local suppliers, and the number of local suppliers used in each country is 96% of the total on average. Local suppliers are contracted predominantly in all the markets in which Ferrovial operates.

However, given that the company operates worldwide, in order to ensure competitive purchases globally, prices are checked internationally for the most important purchases, to take advantage of the competitive conditions offered by other markets around the world.

Global Procurement Committee

A new corporate-level committee called the Global Procurement Committee was created in 2011. Its aim is to ensure the coordination, monitoring and control of global procurement activity in Ferrovial, in order to:

  • Take advantage of synergies between businesses.
  • Share good practices.
  • Improve the global procurement function.
  • Increase mutual knowledge.

The committee is headed up by Ferrovial’s CIO (chief information officer), and is composed of all the purchasing managers of the different business divisions. It is responsible for approving general procedures, guides and recommendations on purchasing in the company.

A manager is appointed for each purchasing project, making it easer to identify the synergies in the group and use volume aggregation when purchasing, thus saving costs. The Global Procurement Committee meets every four months. It also has other objectives, such as promoting studies of Best Practices within the industry, and participating in workshops and conferences with experts.

Global Purchasing Policy

There is a global Purchasing Policy in place that affects all the companies in Ferrovial. It is based on mandatory principles for procurement, both during the purchasing process and after it, and on a principle of integrity that should apply throughout the entire process, based on Ferrovial’s Code of Business Ethics and Corporate Responsibility policies. In some businesses there are specific purchasing policies that supplement and develop the corporate policy.

Training

In 2013, Summa, the corporate university, carried out the first Purchasing Training Program for the different purchasing managers around the world, with the aim of getting to know the best purchasing practices. A total of 38 employees took part, receiving 760 hours of training.

Buyers’ Code of Ethics

Supplier management and relations should be based on rigorous, ethical and effective ties with respect to the Global Purchasing Policy. The aim of the document is to draw up the general lines of action for day-to-day work in purchasing, without aiming to cover all the possible situations exhaustively.

The Buyers’ Code of Ethics for the Purchases Department in the Construction division was updated in 2009. Particular attention was paid to compliance with the Corporate Responsibility rules in procurement, both from the point of view of the source of products and the labor force used in their manufacture. The Services business has a similar code and following changes in the division it was implemented in the entire business in Spain in 2013.

The document supplements the Code of Conduct and applies to all staff in the Purchases Departments in which it is in force. The staff are trained in the Code and required to acknowledge their commitment to it in writing.

The Code establishes that Ferrovial’s general interest is the overarching goal of any negotiation, as well as the following principles:

  • Integrity. An immediate supervisor must be advised of any direct or indirect conflicts of interest arising from family connections, personal ties, financial interests or other factors. Employees involved in purchasing are prohibited from accepting special discounts or gifts valued at over € 90 in one year. Gifts of a lesser value may only be accepted if they are delivered to corporate headquarters. The immediate superior must give prior approval for any invitations for trips and events, or payment of company meals. The Code requires the purchaser to ensure compliance with the Corporate Responsibility rules and to promote the Principles of the Global Compact among suppliers.
  • Professionalism. Professionalism aims to prevent personal relationships outside the strictly professional realm with suppliers from interfering in negotiations. Information that may influence the final result of a concession must be treated in a formal way by the purchaser. The purchaser must also maintain an appropriate level of professional training.
  • Confidentiality. Confidentiality is required for commercial or technical information related to the purchase in question, and for any other aspects that may affect the company’s position in the negotiation, or benefit a particular supplier over others.

Corporate Responsibility Clause

In 2008, the Construction division introduced a specific Corporate Responsibility clause into its supplier-partner agreements. These agreements are made with major suppliers. In 2012, this clause was also included in orders and contracts at an international level, as well as in the Services division, in order to continue with Ferrovial’s commitment and responsible management of its supply chain.

The Corporate Responsibility clause includes the following commitments for the supplier:

  • Comply with the Global Compact Principles.
  • Comply with all environmental and sector-based legislation applicable to any aspect of Ferrovial’s activities or services.
  • Comply with all health and safety rules and occupational safety commitments established at Ferrovial workplaces.
  • Study possible collaboration with Ferrovial to carry out joint aid projects for disadvantaged groups.

Failure to comply with the requirements established in this clause could lead to a prohibition on contracting with the supplier in question. This also applies to any suppliers that violate Human Rights, as compliance with them is a requirement of the contract. Compliance with all the clauses in the contract is monitored monthly.