Annual report Purchasing management
- Responsibility is the VR Group value that provides a solid basis for management, and an objective-oriented approach directs its activities.
- An objective-oriented approach means that VR Group operates efficiently so that it can provide high-quality services to its internal customers.
Internal customer satisfaction is measured annually. The results for 2015 showed an improvement from the previous year. Chief Procurement Officer Simon Indola is responsible for centralised procurement in VR Group.
Purchasing management strategy
Under its purchasing management strategy, VR Group seeks cost-effective solutions for the needs of its business operations from reliable partners in a systematic and transparent manner. The progress of projects is monitored with the purchasing management system.
In 2016, category strategies will be implemented in selected categories. The long-term objectives for these are defined on a per-category basis in cooperation with internal customers.
Purchasing policies and their implementation
Purchases are guided by the Group-level purchasing guidelines approved by the Group's Management Team, the guidelines for implementing projects and supplier management and the purchasing strategy. Provisions on competitive tendering in rail traffic are laid down in the Act on Public Contracts in Special Sectors.
The aims of purchasing, the operating principles governing them and their risk management are set out in operational planning and operational guidelines.
The guidelines governing VR Group's business operations also contain ethical requirements concerning the operations of VR Group's business partners. Starting a business partnership is conditional on adhering to these guidelines. Compliance with the requirements is supervised by means of regular supplier self-assessments.
Performance targets for purchasing management
Each year, VR Group’s Board of Directors sets savings targets for purchasing that are in line with the Group's long-term and short-term strategy. The strategy forms the basis for the purchasing action plans. The central objectives for 2015 were the wider implementation of supplier management and improving the monitoring of supplier performance.
Successes and setbacks in purchasing matters:
+ The savings target for 2015 was achieved
+ Electricity procurement is already from 100% renewable sources (objective for 2020 achieved)
+ Environmental criteria are used for 55% of competitive tenders in special sectors (the objective is 100% in 2020)
+ More systematic supplier management and centralised monitoring of monitoring information
- One competitive tender was interrupted as the tenders received did not meet our demands
- Problems in latest rolling stock wheel delivery availability due to the situation in Ukraine
Opportunities and risks in purchasing
+ VR Group is a well-known and reliable partner
+ New systems enable easier management and monitoring of projects
+ Increased rate of automation for orders
+ Implementation of supplier registries as required by the Act on Public Contracts in Special Sectors
- Challenges in the availability of spare parts
Changes in systems and structures during the review period that lead to improvements in purchasing management:
- The project management system has improved the monitoring of projects
- Planning and implementation of the contract management system
- The assessment work and investment proposal for the new purchasing system
