Availability of the components is a challenge
In 2019, difficulties with the availability of certain passive components was a significant challenge in sourcing. The situation was caused by higher demand in the electric vehicle market and the 5G market as well as the expansion of the Internet of Things (IoT) concept to various product categories. This also led to a temporary rise in procurement prices. However, we were able to ensure the availability of components thanks to our strong supplier relationships and by seeking alternative sourcing channels. The typically long life cycles of Teleste’s products nevertheless involve certain special requirements with regard to component life cycle management.
The digitalisation of purchasing
Teleste uses a software robot that assists with operational purchasing and updates parameters in the ERP system without the need for routine manual tasks. This was the first step towards the digitalisation of purchasing. In 2019, Teleste continued to assess ways to automate other aspects of communication with suppliers, such as the updating of contact information, terms of delivery and various documents. The goal is to allow the sourcing team to focus more on expert work, such as serving product development and supplier development.
Training programme to continue
The first stage of the Teleste Sourcing Academy was completed in 2019. Employees from the sourcing teams in various international subsidiaries were invited to participate in the training programme to provide all of the teams with the same level of know-how, inspire the exchange of ideas, strengthen the common operating models and promote co-operation across organisational and national boundaries. The next stage of the training programme will continue in 2020 with a special focus on supply chain management.
International supplier network
Teleste’s international supplier network consists of suppliers from more than 20 countries. Co-operation with suppliers is based on annual contracts, a long-term approach and the principle of continuous improvement. The relationships with suppliers are steered and monitored by means of audits, supplier evaluations, the Teleste Supplier Code of Conduct, various guidelines concerning component logistics as well as supplier self-evaluations and meetings.
Sourcing is divided into two main categories. Direct sourcing consists of various components, semi-finished products and modules used in the production of Teleste’s products. In direct purchases, 20 per cent of suppliers account for 80 per cent of all sourcing. Indirect sourcing concerns goods and services that Teleste uses for its own business operations.
Teleste’s sourcing is divided into strategic sourcing and operational purchasing. Strategic sourcing selects suppliers, negotiates contracts and is responsible for supplier relationship management. Operational purchasing places orders with suppliers and is responsible for daily supplier interaction.
Strict selection criteria
Supplier selection is based on Teleste’s values: customer centricity, respect, reliability and result orientation. The aspects taken into account in supplier selection include technological know-how, the quality of products and deliveries, delivery reliability, operational ethics and cost efficiency. Before engaging in more active co-operation, each new supplier fills in Teleste’s comprehensive self-evaluation that consists of approximately 100 questions related to corporate governance, information security, occupational safety, corporate responsibility, compliance with law and environmental regulations as well as the organisation and its know-how and ability to innovate. Teleste categorises suppliers into key, primary, approved and new suppliers. The category specifies the relationship and management model between Teleste and the supplier. Key suppliers and primary suppliers are evaluated annually, approved suppliers at three-year intervals and new suppliers at the beginning of the supplier relationship. Active evaluation of the supplier base and reviews of suppliers’ business continuity plans are part of the supplier-related business continuity risk management.
ECOVADIS evaluates responsibility
Teleste always aims to ensure that all components and related materials are from responsible sources and that all suppliers observe international regulations and norms concerning human rights, corruption and bribery. The company uses a third-party service to maintain the necessary information pertaining to the legitimate trade of natural resources and supply chains in line with sustainable development. The third-party service monitors the origin of the raw materials used in standard components (conflict minerals, 3TG). Teleste only purchases products and components that fulfil the requirements of the RoHS directive.
Teleste participated in the ECOVADIS business sustainability rating framework in 2019 and was awarded a silver medal in recognition of the company’s achievements in the area of corporate social responsibility. The rating evaluates organisations with respect to the strength of their policies, actions and results under four themes: the environment, labour and human rights, ethics and sustainable procurement. Teleste scored particularly well in the assessment of sustainable procurement.