Pirelli & C.

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Interaction between Pirelli and its suppliers

Relations with suppliers are defined and enforced by specific Company processes. There are two fundamental underlying phases to supplier management:

  • Approval of new suppliers (or Vendor Approval), where the interdepartmental process based on specific “Quality Standards” led to the addition of the approved material/vendor to the Vendor List. This is the Company’s List of approved suppliers for each individual product. The sustainability requisites have been integrated in this phase since 2007.
  • Monitoring of suppliers (Vendor Rating), assessed on the basis of the quality of the product supplied or service provided, the quality of the commercial relationship, technical/scientific cooperation, performance in terms of occupational safety, environmental and social responsibility through on-site audits and periodic monitoring of the progress of the actions scheduled in any improvement plans that have been signed. The vendor's sustainability is assessed in an independent audit. The Vendor Rating covers all merchandise and geographical areas of purchase and is used as an integral component of commercial negotiations.

These procedures are supported by a special website available online through the Purchasing Portal. This website supports the Regulations (including the Purchasing Manual, General Conditions to be applied by suppliers), the Vendor List, surveys, Vendor Rating with feedback and the definition of support actions. This portal provides both an assurance of process uniformity and a guarantee of transparency, in addition to being a communications, ongoing training and knowledge sharing tool.

The processes of dialogue and interaction with suppliers are the object of process improvement, in terms of both quality and tools.

Specifically, the Vendor Rating results are regularly revised and commented on by the Sector Purchasing Department. This process involves meetings organised with the suppliers, aimed at identifying any corrective actions or measures to improve performance. Each purchase contract includes the name of the buyer contact, to provide the supplier with a company channel that is always available for any feedback.

Several new projects to improve the purchasing process and support relationships with suppliers were developed and implemented in 2009. In particular:

  • refinement of the raw materials business intelligence tools, for more efficient monitoring and management of purchases in each merchandise category and by individual vendor;
  • refinement of management and audit tools by the corporate Purchasing Department for CAPEX purchases, and creation of a register of approved vendors, which are classified and assessed according to their strategic importance to production;
  • development of IT systems for systematic analysis and monitoring of the provision of indirect materials and services;
  • preparation of quarterly reports for monitoring service contracts at the Italian sites, in order to audit enforcement of the safety rules; these reports are issued by the Purchasing Department and verified by the Supervisory Body;
  • creation of a list of professional service and specialised consulting providers, shared and approved by the Department that uses the service, the Purchasing Department, the Finance and Audit Department and the Security Department, and ratified by the Supervisory Body.