We only do business with reliable and carefully selected partners. Our procurement processes are guided by Act 349/2007 on public contracts in special sectors. General requirements are complemented by Caruna’s own sustainability requirements whose realisation we monitor regularly.
- In 2016, we launched an auditing process and audited a total of five service or material suppliers.
- We adopted the electronic auctioning system made possible by the Act on public contracts in special sectors.
- In accordance with the new network construction procurement strategy, the sourcing of key materials was transferred from contractors to Caruna.
- We scrutinised Caruna’s network building and service procurement needs, on the basis of which we created a procurement strategy for the coming years.
- We also launched an online course for contractors to improve the customer experience.
Caruna’s supply chain
We carry out our network investment and repair work with the help of our contractors and their subcontractors. In addition, we have outsourced our project management supervision during construction in order to be able to guarantee sufficient capacity and expertise in the monitoring of the electricity network’s building and maintenance.
At Caruna, we are in charge of the general planning of the electricity network, which is based on the reliability, age and maintenance analyses of the network. Our contractors draw up terrain and electrical plans based on Caruna’s instructions. Caruna then approves the plans, the contractors build the network and the network is put into operation in cooperation with the contractors. The operator in charge of project management supervision oversees the activities during construction and also performs the checks during the guarantee period. Any anomalies are documented and photographed using mobile devices in order to ensure clear reporting.
In 2016, Caruna had thirteen main contractors and 238 subcontractors building its networks.
In 2016, Caruna had thirteen main contractors and 238 subcontractors building its networks. Due to the growth of our project sizes, contracting has been centralised to a fewer number of large main contractors than earlier. Caruna’s contractors reported that their share of foreign workers was less than one per cent of the total workforce.
Contractors may use their own subcontractors to fulfil their contractual obligations after Caruna has approved the subcontractor. Subcontractors must observe the same principles and requirements as the main contractors and commit themselves to Caruna’s instructions and obligations. We began regular contractor auditing in 2016.
Through our sourcing, our operations have considerable direct and indirect financial impacts. Our projects provide employment directly or indirectly to thousands of people around Finland.
In all our contracts, we set suppliers strict requirements to which every partner must commit themselves. The contracts are founded on Caruna’s contractual practices which take quality monitoring and risk management into account. All partners must also commit themselves to observe Caruna’s Supplier Code of Conduct, which obliges contractors to act according to Finnish legislation and regulations. Therefore, all contractors must observe at least the rules and regulations of the generally binding national collective agreements on the terms and working conditions of employment relationships.
The requirements concern, for example, financial stability, working conditions, client liability and taking environmental factors into account.
Sustainability requirements are a part of our documents relating to competitive tendering. The requirements concern, for example, financial stability, working conditions, client liability and taking environmental factors, such as material recycling, into account.
A person working in Caruna’s network building is required to speak Finnish to ensure occupational safety. The legislation imposes certain requirements on the use of foreign workers. Caruna treats all its service and material suppliers equally and without discrimination, observing the EU-level public procurement legislation on special sectors.
We exclude suppliers from competitive bidding who have been sentenced for the crimes mentioned in Act 349/2007 on public contracts in special sectors.
Caruna’s supplier management activities focus on the comprehensive management of the relationship between Caruna and the supplier. Our target is to develop new operational models and operative activities in collaboration with our suppliers throughout the agreement term. We regularly monitor the activities of all our partners and their fulfilment of the contractual terms. The persons involved with the supplier or the project in question participate in the monitoring meetings relating to Caruna’s supplier management.
We regularly monitor the activities of all our partners and their fulfilment of the contractual terms.
Caruna’s suppliers are divided into three categories and we work in close cooperation with all of them. We meet our largest and most critical contractors four times a year at special development meetings, the purpose of which is to improve our mutual operations and make them more effective during the agreement term, as well as to ensure smooth cooperation between the companies. Caruna’s procurement organisation is responsible for monitoring any development areas and the implementation of actions that have been agreed upon.
Over the year, we developed our cooperation with our partners by renewing our Partner Website aimed at contractors, which includes, for example, the Supplier Code of Conduct. The development work on customer experience, which involved the entire Caruna Group, also incorporated our partners: in the autumn of 2016, we launched an online course dealing with customer encounters for our contractors and their subcontractors.
Case: Caruna brings its partners together to improve operations
Procurements and their quality play a crucial role for a company like Caruna which invests hundreds of millions of euros every year in developing its electricity network. This underground network must function for at least 40 years, in any weather, in our northern climate, to provide Finns with electricity, no matter the circumstances.
“Our starting point is to acquire, cost-effectively, network components that are as high in quality as possible and to build our network using skilful professionals,” says Procurement Manager Mervi Haukilahti.
In 2016, Caruna focused specifically on making its contractors’ production processes more efficient. The network is built in association with many different players who would not necessarily engage in such close collaboration without Caruna: contractors, material suppliers, project managers, Caruna’s recycling partner and a huge group of Caruna employees.
“We are developing the best possible collaboration model for this to make our orchestra of many parties play as efficiently as possible,” Haukilahti explains.
More than 600 development ideas were collected through a workshop and an electronic survey directed at contractors, material suppliers and service providers.
These included some great ideas, for example, on recycling. In 2016, Caruna adopted the eService tool which allows contractors to order recycling containers to the worksite. The tool also provides Caruna with up-to-date information on what materials are being recycled and how much.
There were also many development ideas concerning safety issues. In future, the planning of health and safety issues, employee orientation and the use of protective equipment will be monitored more systematically. In addition, data security was a key theme in 2016 in new contracts relating to data communications, and Caruna performed four data security audits on its ICT suppliers.
In 2016, we developed a supplier auditing process and put it into operation. This auditing is a part of our supplier management concept and its aim is to monitor our key suppliers and help them develop their operations.
In 2016, we performed five supplier audits.
In 2016, we performed five supplier audits, involving three of our main contractors for investment programmes for our distribution networks, one material supplier and one service provider of project management supervision. The focus areas of the auditing were stakeholders and the operating environment, management and leadership, expertise and resources, sustainability and sustainable development, managing anomalies, data management and communications, and contractual obligations and projects.
There were very few deviations in the audits and corrective actions on those discovered are underway.
In 2017, we will audit six new suppliers. Together, these 11 suppliers encompass roughly 70% of Caruna’s purchasing value.
Caruna’s procurement process
In 2016, we digitised our entire tendering and contract process. This has made the procurement process considerably more efficient and transparent. We now take care of the whole process via an electronic tendering portal, from the preparation of contractual data to tendering and completed agreements. Suppliers can see our invitations to tender on the Tarjouspalvelu.fi supplier portal, from where the data is transferred to the national HILMA announcement portal for public procurement and the EU-level TED portal. Using the electronic portal is free for suppliers and they can also find supply agreements in the same system.
In 2016, we digitised our entire tendering and contract process.
In 2016, we also adopted an electronic auctioning system made possible by the Act on public contracts in special sectors. We used this system for the first time for inviting tenders for contract and primary transformer projects.
Caruna’s purchases are made using the IFS purchasing tool. The purchases are coordinated by Caruna’s Procurement Department, which adds control and transparency to the ordering and payment process.
Plan to Source to Pay
In 2016, we charted Caruna’s network building and service procurement needs, on the basis of which we created procurement strategies for the coming years.
Our procurement strategy for network building defines our focus areas for the next few years, as well as the key network materials that Caruna procures itself. Transferring the responsibility of the largest acquisitions of materials to Caruna has made the monitoring of material quality and accountability requirements more efficient and increased cost-effectiveness. It also makes follow-up and reporting simpler. The quality, safety and environmental aspects of the materials used by Caruna are carefully considered both when inviting tenders and during factory audits afterwards.
New electricity networks are built using mainly new materials.
Materials, such as cables, transformers and secondary substations, are essential for building and renovating networks. The key raw materials of network building are aluminium, copper and steel. As a rule, new electricity networks are built using new materials.
In 2015 and 2016, we invited tenders on essential network building materials, including all the key materials identified in our procurement strategy, such as cables, transformers and secondary substations. The deliveries of material under the consequent new agreements started at the beginning of 2016. In addition, we invited tenders on materials for primary transformers and secondary substations in 2016, and the agreements resulting from this will take effect in 2017.
We select all our material suppliers via Caruna’s electronic procurement system without discrimination and according to the requirements set on competitive tendering in relation to public procurement.
The recycling of the materials dismantled from Caruna’s networks is the responsibility of Kuusakoski Oy. Kuusakoski ensures that the materials are processed and recycled appropriately and supplies Caruna with detailed reports.