Managing the supplier network

In 2015, VR Group purchased goods and services worth more than EUR 650 million. VR Group has about 2,000 regular suppliers of goods and services.

The number of supply chains is higher and they follow the logic of different business operations. In all supply chains, most of the goods and services are purchased for own use to support the services offered.

The most important supply chains involve the rail rolling stock with its spare part and support service needs, infrastructure engineering with its material and service needs, energy purchases, and the needs concerning VR personnel and premises. The needs of road traffic in the field of subcontracting, vehicles, spare parts and services play a smaller role.

In 2015, VR Group purchased goods and services worth EUR 658.8 million, mainly through centralised purchasing. The breakdown of the purchases by business division and type of cost was as follows:

Most of the suppliers are based in Europe

Some 98 per cent of all suppliers are based in Finland and other European Union countries. The most important 275 suppliers come under supplier management and their operations are monitored on a centralised and regular basis. These suppliers account for slightly under half of all purchases.

The suppliers are divided into three monitoring categories. Depending on the monitoring category, the suppliers conduct self-assessments on specific intervals. The self-assessment focuses on e.g. the environment, non-discrimination and employment terms.

New suppliers must always conduct a self-assessment, and a risk analysis is made on them as well.

The supplier risk analyses that are made by category managers in purchasing provide a more comprehensive opinion on the supplier’s financial situation, position in the market and performance.

By seeking an invitation to take part in a competitive tendering process organised by VR, by submitting a tender in response to an invitation to tender or by entering into a contractual relationship, a company also commits itself to comply with the VR Group ethical guideline on purchasing. The guidelines apply to working conditions, environmental protection and other similar standards. The suppliers also pledge that their supply chains comply with the ethical guideline.

In 2015, supplier monitoring resulted in 175 risk analyses and 92 self-assessments. The aim for having a monitoring coverage of 90 per cent in 2015 was not completely achieved.

As a result of the monitoring, 65 per cent of the suppliers that responded had, partially had or were planning to introduce an ISO 14001 compliant or a similar sort of environmental system. In the same way, 87 per cent had written principles for preventing discrimination. Around 93 per cent of suppliers were able to prove that they follow international legislation on working time and overtime. 90 per cent of the companies that responded had written employment contracts for all employees, while other companies had written employment contracts for over 75 per cent of their employees.

Since the beginning of 2016, a full-time quality manager has been hired to improve the quality and responsibility of the supply chain.

In 2015, a total of 23 competitive tendering processes for EU-based suppliers were finalised. There were also a total of 60 other competitive tendering processes. VR Group also concluded a total of 331 new or revised contracts.