Snam has produced an "Ethics and Integrity Agreement" with suppliers to improve their commitment towards Snam's core values.
Snam’s suppliers are familiar with the Model 231 and the principles of the Code of Ethics, which they have adopted as a means of sharing Snam’s commitment to occupational safety, health and environmental protection, and labour law
In 2016, Snam continued the campaign to raise awareness of the ten principles of Global Compact among its suppliers
Knowledge of Model 231 and Snam’s Code of Ethics are the prerequisite for establishing a collaborative relationship with suppliers.
In the early stages of the qualification process, all Snam suppliers are required to make themselves familiar with the organisational,management, monitoring and control model (Model 231) and the principles of the Code of Ethics and to comply with the regulations on occupational safety, health and environmental protection, and labour law.
Furthermore all Snam Group companies have communicated the ten principles of Global Compact to their suppliers through the relevant contractual documentation with the aim of disseminating the values contained therein.
>Read the Code of Ethics' pages about suppliers (bilingual).
The "Ethics and Integrity Agreement" represents a major commitment from suppliers towards Snam's core values.
Snam has implemented an "Ethics and Integrity Agreement" with suppliers to protect the integrity of the sustainability process of the supply chain and to retain further commitment from suppliers / subcontractors to comply with the principles and values deemed most important and of great reputational significance to the company.
Each supplier / subcontractor,in order to receive an order from Snam, are asked to sign this document requiring them to comply with Snam's principles of loyalty, transparency and fairness, and to respect and mantain the standards set out in the Code of Ethics.
>Read more on how Snam manages relationship with third parties
Suppliers due diligence
In 2016, more than 1,200 reputational checks were carried out on suppliers, subcontractors and potential suppliers of the Snam Group. The checks covered: subcontract authorizations (495), supplier qualification processes (514), participation in calls to tender (97) and allocation/revision of contracts (23).
Following the checks conducted 38 provisions were adopted: 22 rejections of sub-contractor authorisations; 5 qualification suspensions; 2 rejections of the qualification authorisation; 2 qualification withdrawals; 7 rejections of the tender authorisation.
Reputational check breakdown by activity (%)
Measures adopted (no.)
Vendor management in 2016
In the interests of transparency generally, Snam aims to ensure that the selection process – both during the qualifying phase and the award of contracts – guarantees equal opportunities for all suppliers, once they meet the required quality standards.
In order to begin collaborating with Snam, each supplier must pass several stages of preliminary assessment depending on the criticality level of the product category to be supplied. To achieve this, Snam uses assessment criteria that take into account the volume of orders supplied, their economic importance, the extent of investments made, and the analysis of operating costs. The assessment is performed with the support of IT systems to ensure the traceability and comparability of the information gathered.
Especially during the qualification phase, Snam pays particular attention to the management of risks related to the economic, environmental and social context of the supplier. This takes place for the most critical product categories, whose procedures also contain very stringent requirements, such as, for example, the implementation by the supplier of certified management systems.
The vendor management process is constituted by three phases:
|1) Checks during the qualification phase||Assessment is based on key issues broken down into four different levels (A, B, C, D) allocated to each category of goods depending on technological complexity and impact on Snam’s performance.
Many elements are assessed, starting with technical and operational capabilities. We pay particular attention to the candidate’s financial reliability and to their commitment to workplace health and safety and environmental protection.
We have further requirements relating to the most critical categories of goods (A and B), such as possessing management systems that have been certified in accordance with international standards.
|400 suppliers were subject to renewals and new allocations
As at 31 December 2016, there were 2,245 suppliers on the vendor list.
|2) Service monitoring during the contract execution phase||Monitoring includes audits, inspections and assessments of services with the help of the teams responsible for managing the contracts.||
We got 634 pieces of feedback from 185 suppliers
We performed 3,089 checks on 1,502 suppliers and subcontractors as to the regularity of their social security contributions, uncovering 87 irregularities (2.8%).
|3) Performance evaluation||
Snam uses a ratings index that assess compliance with technical and HSE contractual requirements (Quality), compliance with delivery deadlines (Punctuality) and relations for the duration of the contract (Conduct). We periodically send our evaluation to the suppliers in the form of analysis.
Snam is entitled to limit, suspend or revoke the qualification of any supplier that falls short of the agreed standards. Suppliers who manage to complete their gas infrastructure construction or maintenance work with no accidents will be rewarded in their score.
There were 40 instances of noncompliance, for which we issued warnings, suspensions or revocations.
Suppliers sustainability analysis
Throughout their collaboration with Snam, suppliers are monitored by means of audits, inspections and performance assessment processes, both to respond to any requests for assistance and to confirm that the partnership will continue in a linear, consistent manner over the years. As part of the performance assessment process, behaviours in terms of social and environmental responsibility are rated highly. In the following table it is possible to find the number of suppliers (total and critical one) divided for category submitted to checks about sustainability issues.
|Suppliers (1)||number||working practices (2)||environmental criteria||human rights (3)|
|Total qualified Goods suppliers||754||42%||42%||100%|
|of which critical||129||100%||100%||100%|
|Total qualified Labour suppliers||310||75%||75%||100%|
|of which critical||83||100%||100%||100%|
|Total qualified Services suppliers||1,631||34%||34%||100%|
|of which critical||133||100%||100%||100%|
(1) A single supplier may be in possession of more qualifications
(2) Aspects relating to health and safety
(3) Ethical aspects (regular contributions/DURC, Law 231, child labour, forced labout, etc.)
The entire Snam Group avails itself of a centralised function for supplier management
By revisiting the organisational model the Chief Corporate Services Officer was put in charge of the supply chain function in order to guarantee greater
coordination of procurement activities within Snam.
The extended application of strategic sourcing methods will make it possible to achieve cost savings in line with business activities and to maintain an adequate pool of suppliers to manage tenders and planned procurement requirements.
19 April 2017 - 15:03 CEST