Vodafone Supply Chain’s Journey

Philip Wang

Asia Supplier Quality Manager, Vodafone

May 2012

2

Did you know? There are 7bn people world-wide…

…and there are 6bn mobile

subscriptions

6.0bn have access to running water

5.4bn have access to electricity

4.2bn have access to sanitation

2.1bn have internet access

1.2bn have a fixed-line telephone

1.1bn have a PC

0.76bn have broadband access

May 22, 2012

Vodafone Scale of world-wide business

3

398 million proportionate customers (Q3 2011/12)

Operating companies in 22 countries

45 partner markets

Group revenue: £45.9 billion (FY10/11) £32.5bn (Q3 11/12)

1 in 8 mobiles globally is connected to Vodafone

May 22, 2012

Strategic

Sourcing Centre The VPC

4 May 22, 2012

Network & IT

Equipment Devices

Network

Operations Services

Applica-

tions

Content

Providers

Commercial Complexity

Size of supplier ecosystem

Homogeneity of products

V1.3

~€12bn Spend Under management

33 nationalities In strategic sourcing

centre

3 Level One Categories Networks, IT and Services

(handsets in separate team)

24 procurement

organisations across the markets

~€1bn Spend Directly

Sourced in China Considerably more indirectly

through China manufacturing bases

1

Vodafone SCM operates across the entire telecoms value chain

Procures everything from individual products to complex managed services agreements

OneSCM: One Company, Local Roots

Accountability for all strategic category activities related to

suppliers, savings and trading operations as well as Partner

Markets and 3rd party business.

~170 people

Local accountability for stakeholder management and commercial savings realisation

in Local Markets

~ 650 people

Accountability for overall operational effectiveness of

supply chain across categories, VPC and operations

~20 people

Vodafone Procurement Company (VPC)

SCM Operations Teams Enablers Team

5

One Team build on three pillars

May 22, 2012 V1.3

China Sourcing Center

6

• Opened in March, 2007

• Reinforce Vodafone’s commitment to emerging

markets, and China in particular

• Support the strategy of the Chinese government

to assist local companies to develop a global

footprint

May 22, 2012

OneSCM Strategic Priorities – the picture

Customer

Obsession

Supplier

Relationship

Management

People

Global Scale Operational

Excellence Sustainability

Vision: To be recognised as the best SCM team in the world

“…We work in strong collaboration with our stakeholders, partners

and suppliers to ensure…”

“…the best service”

“We are a professional team always

delivering on our commitments and constantly adding

value...”

7 May 22, 2012 V1.3

Insert Confidentiality level | 22 May 2012 8

• China Sourcing centre

• Direct engagement with Chinese suppliers in China

• Building up Africa supplier base

• Driving tools usage

• Reducing duplication in the SCM organisation

• Single ERP system as basis for our tools roadmap

• Supplier portal and B2B hub

• Mobilisation of reporting and dashboards

• Driving sustainability into out tier 2/3 supply chain

• Focus on health and safety

• Focus on brand protection

• Driving strong NGO engagement

• Linking supplier performance with customer perception through Net Promotor

Score (NPS)

The Productivity

Imperative

The Global Grid

The Price of the

Planet

The Great Global

Rebalancing

We have identified 5 global trends for 2020

Collaboration with suppliers and partners becomes increasingly important

for value creation

The External

Rules

C2 – Vodafone Restricted| 22 May 2012 9

Sustainability supply chain approach

Code of

Ethical

Purchasing

Minimum Standards

• sets minimum ethical, labour

and environmental standards for

suppliers

• Included in qualification,

scorecards, quotations and

contracts with suppliers

Risk

Based

Approach

Based on location, size and

category

• evaluating new suppliers using

qualification

• responding to incidents robustly

• China Sourcing Centre

assessing higher risk suppliers

through site assessments

Measurement

Performance Scorecard

• Measure and work with our

strategic suppliers, evaluating

their sustainability performance

every six months using the

supplier performance scorecard

Cascade

Drive standards down the

supply chain • Through industry collaboration

and by ensuring our suppliers

take responsibility for working

with their suppliers

Engagement

Stakeholder engagement

• With NGO’s to improve our

capability to detect and prevent

concerns or incidents

• Embedding internally across all

functions through training and

involvement

Drive Health

& Safety

Drive health & Safety controls

• Following up on adherence and

change attitudes and behaviours

• included in all quotations and

new contracts for high-risk

activities.

• Working with key suppliers to

raise performance through audits

and training

C2 – Vodafone Restricted| 22 May 2012 10

Code of Ethical Purchasing

The Foundation of our Approach

Underage work

Environment

Individual conduct

payment

working Hours

Disciplinary

practices

Discrimination

Freedom of association

Health & safety

Forced labour

• No person under min

Legal age

• Optimise use

of resources

• Zero-tolerance

anti-bribery. No-

gifts

• Fair and

reasonable pay

for employees

• Does not exceed

maximum by law

• Employee treated

with respect

• No form of

discrimination

tolerated

• Employee entitled

to join

representative body

• Safe and

healthy

environment

• Free to leave with

reasonable notice

Speak

up

10 May 22, 2012 V1.3

C2 – Vodafone Restricted| 22 May 2012 11

Supply Chain Sustainability Goals

C2 – Vodafone Restricted| 22 May 2012 12

Supplier audits

• FY10/11 – 26 audits performed across supply chain and

terminals suppliers

• Collaboration and sharing audits between our peers

– One of the leading members in “Joint Audit Co-operation” with

Belgacom, Swisscom, KPN, France Telecom, Deutsch Telekom,

Telecom Italia on the 27th Oct 2011

• Audits based on the Code of Ethical Purchasing areas and

aligned with JAC approach

• 2 people support local audits of Asia suppliers in our China

Sourcing Centre (Beijing)

• Created new Anti-bribery supplier assessments to validate

requirements for the UK bribery act 2010.

Supplier Management | 22 May 2012 13

Supplier management

Segmentation

Performance

Evaluation

Performance

Optimisation

Qualification

Sustainability

Health & Safety

Relationship

Management

Sustainability

Product Development

Portfolio

Commercial

Delivery

Quality

Relationship

Innovation

Health & Safety

Finance

C2 – Vodafone Restricted| 22 May 2012 14