Supply chain and procurement

We only do business with reliable and carefully selected partners. Our procurement processes are guided by the new Act on procurement in specialised sectors, which came into force at the beginning of 2017. Caruna’s own responsibility criteria complement the general requirements set by law. We regularly monitor the activities of our partners and their fulfilment of requirements.

  • Caruna now observes the new Act 1398/2016 on public procurement in specialised sectors, which came into force on 1 January 2017.
  • We adopted an electronic signature system for supply agreements.
  • We continued developing our procurement process for network building materials and introduced an electronic ordering process.
  • We continued the auditing process of contractual suppliers and audited a total of six contracting, ICT and material suppliers.
  • In cases of competitive tendering which exceed the threshold value for procurements, businesses are required to provide a European Single Procurement Document (ESPD) in order to ensure that the grounds for exclusion will not put undue strain on the candidate or supplier and that the candidate or supplier meets Caruna’s suitability requirements.
  • We organised the first contractor day for the subcontractors of network builders; it focused on customer experiences, safety and quality.

Caruna’s supply chain

We carry out our network investment and repair work with the help of our contractors and their subcontractors. In addition, we have outsourced our project management supervision during construction in order to be able to guarantee sufficient capacity and expertise in the monitoring of the electricity network’s building and maintenance.

At Caruna, we are in charge of the general planning of the electricity network, which is based on the reliability, age and maintenance analyses of the network. Our contractors draw up terrain and electrical plans based on Caruna’s instructions. Caruna then approves the plans, the contractors build the network and the network is put into operation in cooperation with the contractors.

The operator in charge of project management supervision oversees the activities during construction and also performs the checks during the guarantee period. Any anomalies are documented and photographed using mobile devices in order to ensure clear reporting. We also check the installation depth of the cables to make sure that they have been installed in accordance with requirements.

Our projects provide employment directly or indirectly to thousands of people all over Finland.

In 2017, Caruna had 13 main contractors and 480 subcontractors building its networks. Because our projects have grown, our contracting is now spread across a smaller number of large main contractors than before. Caruna’s contractors reported that their share of foreign workers was less than 1% of the total workforce.

Contractors are free to use their own subcontractors to fulfil their contractual obligations after Caruna has approved the subcontractor. Subcontractors must observe the same principles and requirements as the main contractors and commit themselves to Caruna’s instructions and obligations. We audit our suppliers according to an annual auditing plan.

Through our sourcing, our operations have considerable direct and indirect financial impacts. Our projects provide employment directly or indirectly to thousands of people all over Finland.

Sustainability requirements

In all our contracts, we set suppliers strict quality, safety and environmental requirements to which every partner must commit themselves. The contracts are founded on Caruna’s contractual practices which take quality monitoring and risk management into account.

The requirements concern, for example, financial stability, working conditions, client liability and taking environmental factors into account.

All partners must also commit themselves to observe Caruna’s Supplier Code of Conduct, which obliges contractors to act according to Finnish legislation and regulations. Therefore, all contractors must observe at least the rules and regulations of the generally binding national collective agreements on the terms and working conditions of employment relationships.

Sustainability requirements are a part of our documents relating to competitive tendering. The requirements concern, for example, financial stability, working conditions, client liability and taking environmental factors, such as material recycling, into account.

A person working in Caruna’s network building is required to speak Finnish to ensure occupational safety. The legislation imposes certain requirements on the use of foreign workers. Caruna treats all its service and material suppliers equally and without discrimination, while carefully observing the EU-level procurement legislation for specialised sectors.

We exclude suppliers from competitive bidding who have been sentenced for the crimes mentioned in Act 1398/2016 on procurement in specialised sectors.

Monitoring suppliers

We regularly monitor the activities of all our partners and their fulfillment of the contractual terms.

Caruna’s supplier management activities focus on the comprehensive management of the relationship between Caruna and the supplier. Our target is to develop new operational models and operative activities in collaboration with our suppliers throughout the agreement term. We regularly monitor the activities of all our partners and their fulfillment of the contractual terms. The persons involved with the supplier or the project in question participate in the monitoring meetings relating to Caruna’s supplier management.

Caruna’s suppliers are divided into three categories and we work in close cooperation with all of them. We meet our largest and most critical contractual suppliers four times a year at special development meetings, the purpose of which is to improve our mutual operations and make them more effective during the agreement term, as well as to ensure smooth cooperation between the companies. Caruna’s procurement organisation is responsible for monitoring any development areas and the implementation of actions that have been agreed upon.

Supplier audits

We audited our suppliers in 2017 according to an annual auditing plan. This auditing is a part of our supplier management concept and its aim is to monitor our key contractual suppliers and help them develop their operations.

In 2017, we performed six supplier audits.

In 2017, we performed six supplier audits, involving three of our main contractors for the investment programmes for our distribution networks, two material suppliers and one ICT service provider. The focus areas of the auditing were stakeholders and the operating environment, management and leadership, expertise and resources, responsibility and sustainable development, managing anomalies, data management and communications, and contractual obligations and projects.

The audits revealed a small number of deviations and corrective actions on those discovered are underway. Whenever necessary, re-audits have been performed and in 2017 there were two.

So far we have audited 11 of Caruna’s largest contractual suppliers. Together, these 11 suppliers encompass roughly 70% of Caruna’s purchasing value.

Caruna’s procurement process

Caruna’s tendering and contract management processes have been digitised. We take care of the whole process via an electronic tendering portal, from the preparation of contractual data to tendering and completed agreements. Our orders for material are handled the same way.

Caruna’s tendering and contract management processes have been digitised.

Suppliers can see our calls for tender on the Tarjouspalvelu.fi supplier portal, from where the data is transferred to the national HILMA announcement portal for public procurements and the EU-level TED portal. Using the electronic portal is free for suppliers and they can also find supply agreements in the same system.

We have also used the electronic auctioning system, made possible by the Act on procurements in specialised sectors, for inviting tenders for power supply transformers, among others.

Caruna’s purchases are made using the IFS purchasing tool. The purchases are coordinated by Caruna’s Procurement Unit, which adds control and transparency to the ordering and payment process.

Caruna’s procurement process

Material procurement

In terms of material procurement in 2017, we proceeded according to the procurement strategy we created earlier.

The quality, safety and environmental aspects of the materials used by Caruna are carefully considered both when inviting tenders and during factory audits afterwards.

Our procurement strategy for network building defines our focus areas for the next few years, as well as the key network materials that Caruna procures itself. Transferring the responsibility of the largest acquisitions of materials to Caruna has made the monitoring of material quality and accountability requirements more efficient and increased cost-effectiveness. It also makes follow-up and reporting simpler.

The quality, safety and environmental aspects of the materials used by Caruna are carefully considered both when inviting tenders and during factory audits afterwards.

Materials, such as cables, transformers and secondary substations, are essential for building and renovating electricity networks. The key raw materials of network building are aluminium, copper and steel. As a rule, new electricity networks are built using new materials.

In terms of the procurement of key network building materials, such as transformers and cables, we continued the existing agreements with option years. The new supply agreements for secondary substations came into effect at the beginning of 2017. As a new category for agreement materials for Caruna, we invited tenders for cable cabinets, and the resulting supply agreements will come into effect at the beginning of 2018. In addition, we invited tenders via the electronic auctioning system for power supply transformers, among others, in 2017.

As a rule, new electricity networks are built using new materials.

Also for key network building materials we switched to using an electronic ordering interface. We select all our material suppliers via Caruna’s electronic procurement system without discrimination and according to the requirements set on competitive tendering in relation to public procurement.

The recycling of the materials dismantled from Caruna’s networks is the responsibility of Kuusakoski Oy. Kuusakoski ensures that the materials are processed and recycled appropriately and supplies Caruna with detailed reports.

Read more about our material recycling.