How we work

Procurement policy

Procurement policy
Our procurement policy enables us to achieve KPN’s strategic goals. The main aspects of the procurement policy of KPN are continuity (both in terms of service and of the relationship with suppliers), information security and risk management. These aspects are part of our General Conditions of Purchase, which is the basis of our contracts with suppliers.

We use supplier qualification to manage our supply chain properly, whereby we limit the number of suppliers and work mainly with preferred suppliers. We have a (framework) agreement and a collaborative relationship with preferred suppliers in which we challenge them and help them to come up with innovative and sustainable solutions. We purchase about 85% of our procurement volume with our preferred suppliers.

In its procurement policy, KPN has identified the main risks in the supply chain. These are based on risk assessments of the financial, socio-ethical and environmental aspects. The principal financial risks are continuity, quality of service and compliance with legislation and regulations. The principal socio-ethical risks are child labor, labor conditions and workers’ rights. The principal environmental aspects in our view are energy, packaging, raw material use and recycling. Information security is a significant risk for KPN as well. These risks are part of the General Conditions of Purchase and the Supplier Code of Conduct , and are taken into account in the selection and assessment of suppliers.

Procurement process
All procurement agreements are based on KPN’s General Conditions of Purchase. These also include conditions relating to sustainable procurement. KPN encourages all of its suppliers to practice corporate social responsibility in their production. This is laid down in our Supplier Code of Conduct with which all suppliers have to comply. In the Supplier Code of Conduct we have laid down social and environmental requirements for suppliers. This code is based on the United Nations Universal Declaration of Human Rights and the core treaties of the International Labour Organization (ILO). The code contains conditions relating to human rights, labor conditions, privacy, safety, environment, bribery and fraud. The code is part of the General Conditions of Purchase and the standard contract for suppliers and is applicable throughout the KPN Group. Suppliers with ongoing contracts of which the code does not form part are obliged to sign the code separately.

Key performance indicators (KPIs) and strategic performance indicators (SPIs) are agreed with preferred suppliers. The KPIs include indicators such as reliability of delivery and quality of service. SPIs are oriented to innovation and CSR. The contract is the legal framework for collaboration between KPN and the supplier. Technical and functional specifications for the service or product to be supplied by the supplier are laid down in a supplementary specification agreement. Sustainability specifications are described in this agreement as well.

Within our group of suppliers we have identified environmental and social risk suppliers: companies in low wage countries in Asia, Africa, Eastern Europe, and Central and South America. We regard them as risk suppliers because good working conditions, environmental protection and compliance with human rights are not self-evident in these countries. We define high-risk and medium-risk suppliers. High-risk suppliers produce goods in low wage countries. Medium-risk suppliers provide services in or from low wage countries. The group of risk suppliers are responsible for 55% of our procurement expenditure and supply mainly network equipment, computers and software.

Procurement organization
At KPN, the supplier policy and supplier management are organized centrally at the Corporate Procurement Office (CPO). The Corporate Procurement Officer leads the CPO and reports to the CEO. The CPO is organized in six procurement categories and is the internal business partner for all business units.
To ensure that our entire procurement procedure is sustainable we have set up a Sustainable Procurement steering committee for the whole of the KPN Group, with the corporate procurement officer as chairperson, that reports to the Board of Management. As well as KPN procurement professionals this steering committee comprises sales managers and product developers from all business units of the company. In this way we make certain that attention is paid to energy and other sustainability aspects throughout the chain.

Partnerships
In the context of its procurement policy, KPN takes an active part in national and international networks and consultations to strengthen the impact and to share experiences and ideas:

Dialog with suppliers
We communicate in various ways with our suppliers. We do this partly through our regular communication channels such as websites, customer magazines and customer contacts, and we also organize dialog sessions during which KPN enters into discussion with suppliers and other stakeholders.