THE VALUE CHAIN- THE HEART OF OUR STRATEGY

Ferrovial considers that its suppliers and subcontractors are essential in its activities and services: collaborators in seeking mutual benefit in actions aimed at achieving the utmost competitiveness, quality and service.

Ferrovial's value chain is an essential element in its strategy; therefore, it wants to foster the company's sustainable development principles (ethics, abatement of environmental impact, health and safety, quality and innovation, etc.) among its subcontractors and suppliers.

The Construction and Services areas outsource products and services to a greater extent, so these two business areas have a more direct relationship with suppliers and subcontractors.

CONSTRUCTION

A priority objective in the Construction division's purchase management system is to optimise purchases via:
• centralised management of purchases of similar products and services since better conditions can be obtained by negotiating larger volumes; and decentralised purchase management, where this produces value; and
• globalised management to ascertain the needs in each country where the company operates; pooling global needs in order to optimise costs; and unified purchasing management procedures to ensure a common treatment that takes account of each country's specific features.
The company has internal IT systems tailored for the sector and the company's processes, ranging from purchase knowledge management to the purchase itself, using the Internet for communication with suppliers and between areas of the company, while providing adequate transparency and control:
• on-line purchase management program (B2B): from identification of potential suppliers to issuance of the purchase order or contract; plus the necessary management reports to facilitate the implementation of the purchasing strategy and to monitor compliance;
• query applications: these optimise decentralisation through knowledge management, enabling users to query databases about suppliers and real prices of products and services from any worksite or company location;
• real-time access, from any production centre, to information regarding agreements with suppliers, innovative products, alternative construction systems, technical publications, etc.;
• computerised production and control of orders to, and contracts with, suppliers, plus bills and payments.

New e-billing systems are currently being developed in the sector in order to receive the documentation required from subcontractors before the contract and during the work through the Internet.

Ferrovial is also encouraging suppliers and subcontractors to be trained in the use of new information technologies applied to purchase management and is part of the Obralia construction portal–an effective tool for making RFPs and bids, providing access, and sharing information in the sector.

Supplier quality is managed and monitored using the procedures established in accordance with ISO 9000 standards, which enable the company to identify incidents, adopt any corrective measures and cease working with a supplier if there are serious incidents.

Ferrovial periodically collects contractual compliance statistics on its suppliers, which enable it to analyse the complaints in terms of number, amount, causes and region.

In 2005, Ferrovial's construction area had 23,293 suppliers. Incidents were registered with 136 suppliers (0.6% of the total); this is a negligible percentage and is similar to previous years. Most of them were general incidents; only 10 were related to environmental issues and 13 to workplace health and safety.

Feedback and commitments

The company's mechanisms for dialogue and feedback with suppliers consist mainly of regular meetings with the main suppliers to analyse relations and seek continuous improvements in competitiveness; and annual remittal of questionnaires to update our database.

In 2005, Ferrovial implemented other significant initiatives:
• a survey on the basic features of corporate social responsibility among suppliers that account for around 46% of the construction division's purchase volume;
• a conference to explain the company's corporate responsibility commitments, specifically the commitments relating to the ten basic principles acquired when it adopted the United Nations Global Compact;
The objective of these two actions was to ascertain suppliers' situation in those matters and encourage them to adopt the Global Compact.
• as part of the policy of responsible use of forestry products, the company sent a survey to suppliers of wood and construction products made basically with wood in order to ascertain the origin of the wood and make them aware of the importance of requiring that their suppliers use responsible forestry management methods;
• discussions have commenced with Cemex España and Saint-Gobain Canalización to co-develop aid projects for disadvantaged groups in order to pool resources to increase the scope and social effects of the projects.

SERVICES

In the Services division, particularly urban services, purchases are based on a purchase management system backed by a SAP application that controls the selection of suppliers, product usage, delivery dates and quality criteria.

Machinery purchases are centralised and based on framework agreements with suppliers which are optimal from a quality and price standpoint; the company analyses suppliers each year and compares the following: purchase volume with supplier, supplier's position in the market where the company operates, quality, delivery times, administrative procedures, after-sales service, technical and commercial support, and price.

The relationship with suppliers is based on four criteria: ISO 9001-compliant suppliers and products; economic competitiveness; competitiveness in technological innovation and compliance with workplace safety regulations. In 2005, the municipal services division (Cespa) spent over 400 million euro on purchases.

This internal policy allows for relationships with Spanish and foreign suppliers and enables access to the latest technologies in machinery (chassis, street sweepers, collection vehicles, tanker trucks, etc.) and to the use of alternative energies (electricity, LNG, CNG, etc.) which are better for the environment. In 2005, 1.57% of the municipal services fleet of vehicles was powered with alternative energies. In order to foster an eco-efficient attitude among its suppliers, the company has added environmental factors to its certification criteria.

 

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