OUR PROCUREMENT POLICY
Ponsse procures direct and indirect services, products and components at a considerable financial value. Procurement is largely based on competitive bidding and procurement agreements. The need for direct procurement, raw materials and components comes from the manufacture of end products and sales of spare parts. Indirect procurement consists of products and services, as well as investments that are required to support the company’s structures and support functions.
Procurement principles
- minimising quality and business risks in supplier selections and procurement
- seeking total cost savings by entering into joint procurement agreements
- combining purchasing volumes and reducing process costs
- harmonising the procurement process and increasing its transparency: a smooth and appropriate procurement process, and sustainability starting from procurement needs
- ensuring that procurement management and reporting support the procurement process.
The goal of the procurement policy is to improve the cost-efficiency and appropriateness of procurement.
Key measures to achieve this goal
- the development of procurement control and the distribution of tasks
- plans
- the use of electronic procurement tools and solutions
- competitive bidding
- agreement management
- risk management
- sustainability
- meeting the requirements set for harmonised, smooth and transparent procurement activities
Procurement is guided by the procurement strategy, guidelines and process.
The systematic implementation and development of procurement processes and activities call for strategic guidance.
The procurement policy includes general procurement guidelines and key policy selections. The company’s rights of representation have been defined in the Articles of Association, while procuration information is available in a Trade Register extract. Limits for procurement decisions have been defined in separate guidelines.
The company has defined procurement guidelines in addition to this procurement policy. Procurement activities are carried out in accordance with the procurement strategy.
This document is valid until further notice and will be updated as required.
1. The role and organisation of the procurement department
At Ponsse, procurement has been divided into direct and indirect procurement.
Direct procurement
Direct procurement concerns raw materials and components that are used to manufacture the company’s end products and deliver its spare parts. At Ponsse, the procurement and purchasing departments are responsible for direct procurement.
Indirect procurement
Indirect procurement includes all other procurement that supports the company’s operations such as office supplies, IT equipment, as well as various services and investments. The procurement department, with other functions, is responsible for indirect procurement. Any changes in agreements (including changes in prices) are processed by the procurement category manager responsible for each agreement. Differing procedures have been agreed for certain functions at Ponsse, and they will be continued for the time being. Ponsse’s various functions present proposals for the procurement of products or services. Function-specific specialists define the characteristics of products and the content of services, i.e. what will be procured. Each indirect procurement must be approved, either through an approved investment proposal or a budgeted and approved procurement recognised in expenses.
Role of the procurement department
At Ponsse Plc, the procurement department is responsible for activities in compliance with the procurement strategy, process and guidelines, and for producing added value through knowledge of the supplier market, the management of invitations to tender and agreements, as well as agreements on the commercial terms required. In Ponsse’s subsidiaries, procurement is agreed separately in each company. Ponsse’s procurement risks can be reduced significantly and the cost efficiency of the procurement process can be ensured by agreeing upon commercial terms, as well as through quality assurance and other contractual matters.
2. Procurement process
At Ponsse, raw materials and components are procured by the procurement department, which is responsible for supplier selections, commercial terms and logistics. Before the procurement of products or services, Ponsse enters into an agreement or agreements to define terms and conditions between the contracting parties.
The goal of indirect procurement is also to achieve cost savings through competitive bidding and by entering into joint procurement agreements, combining purchasing volumes, developing tools and reducing internal process costs. Through cooperation with business units, the procurement department ensures that units are aware of the suppliers selected and that the selections support the needs and core processes of units.
3. Sustainability in Ponsse's procurement
In accordance with our sustainability goals, we seek to build trust with our stakeholders through open cooperation and long-term business.
We are committed to sustainable procurement. We do not make compromises over our sustainable procurement practices under any circumstances, as they are an integral part of our procurement culture, as well as supplier selections and assessments.
Commitment to the Supplier Code of Conduct is one of Ponsse’s key performance indicators (KPIs) defined for sustainability. The code must be approved to be accepted as Ponsse’s supplier, in addition to which suppliers must comply with all applicable laws and regulations. Suppliers must also ensure that their subcontractor and partner network complies with Ponsse’s Code of Conduct or similar guidelines. Any violations of the Code of Conduct can be reported anonymously through the ethical whistleblowing channel available on Ponsse’s website.
We recommend our suppliers to monitor, report and reduce greenhouse gas emissions generated in their operations and value chains. Suppliers must also develop their activities to minimise their other negative environmental impact.
We require our suppliers to be able to report information related to environmental and social sustainability at Ponsse’s request for various reporting purposes. This is why our suppliers must know the origin of the raw materials and components used in their products.
In their value chains, our suppliers must also pay special attention to human rights and ensure that their operations and procurement chains do not involve any forced labour, human trafficking or other human rights violations.
4. Tasks and goals of procurement
The procurement policy serves to carry out the tasks and roles of procurement (mission) and provide guidance to achieve the goals set for procurement (vision). A systematic procurement model with effective guidance forms the basis of the successful and productive implementation of the procurement policy. Therefore, specific focus has been placed on the strategic assessment of procurement. The procurement department is responsible for ensuring comprehensively that suppliers can deliver the technological solutions required in a high-quality, reliable and cost-efficient manner. The aim is to have multiple suppliers to enable effective risk management and competition.
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4.1. Tasks – mission
Our customers succeed together with us.
The task of the company’s procurement department is to support the company by professionally procuring the raw materials, components, products and services in accordance with the required technologies, having knowledge of the supplier market and seeking high-quality results, while addressing the principles of sustainable development.
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4.2. Goals – vision
Ponsse is the preferred partner in sustainable forestry.
The company procures raw materials, components, products and services sustainably using market supply in a determined manner and following straightforward rules and high procurement expertise. The procurement department helps ensure Ponsse’s external competitiveness and internal performance.
Clear goals are set for procurement, which are monitored actively. The position and significance of procurement are developed with a determined approach, and the effectiveness of procurement is sought to be increased systematically.
The company and its employees are committed to sustainable, ethical and moral activities in line with the procurement policy. Processes pertaining to the procurement guidelines are implemented through instructions, joint events and daily activities, forming part of the company’s procurement culture.