Supplier qualification process
Red Eléctrica considers its suppliers, as well as the provision of equipment, materials, services, manpower and civil engineering works they provide, as a key factor in the successful fulfilment of its business activity.
The Company requires that its suppliers meet a set of minimum requirements (business, financial, legal - and those regarding technical know-how and sustainability).Said requirements are verified in the initial qualification process and subsequently, on an ongoing basis, during the supplier performance and assessment process.
For the provision of services or supplies whose unique nature allows specific requirements to be defined, a ‘supplier profile’is prepared, which must be duly completed and fulfilled as a prior step to qualifying the supplier.
- For the provision of any service or supply that has a ‘profile´ associated, the supplier shall:
- be ISO 9001 certified
- be registered in RePro. If you have any questions about how to register, please contact the company called Achilles.
- In those cases where the provision of a service or supply may have an environmental impact, the supplier is required to be ISO 14001 certified.
- Similarly, for the provision of a service or supply that may have an impact on occupational health and safety, the supplier is required to be OHSAS 18000 certified.
Red Eléctrica has a new Supplier portal (PRORED) that allows any company to find out about the products and services Red Eléctrica acquires and what the minimum requirements are that must be met in each case. It also allows companies that are interested in becoming a Red Eléctrica supplier to register and commence the qualification process.
Red Eléctrica’s Supplier Portal
Our supplier portal allows our suppliers to autonomously manage certain tasks related to their relationship with Red Eléctrica, among which the following are noteworthy:
- Questionnaires: Access and manage your supplier activity qualification questionnaires as well as the information contained within them, both for those that have been filled in and sent, and those pending completion.
- Company details and user data: If you wish, you can modify the data of your users and/or company, as well as the Set of services/areas of Activity your company may have requested qualification for or is currently qualified for.
- Qualification: This section allows you to request a qualification process, access information regarding requests that have been completed or are underway, or ask for the cancellation of a request currently in process.
- Supplier data file: This section enables you to consult all the information you have provided about your company, as well as any other legal, documentary and financial aspects that have been provided to Red Eléctrica by the companies called Achilles and Axesor.
Transfer of requirements to the supply chain
Red Eléctrica, as part of its commitment to also transfer its qualification requirements to Tier 2 suppliers, requires that supplier subcontractors’ who provide services or supplies, classified as relevant and critical, meet and comply with the same requirements demanded from the Tier 1 suppliers awarded a contract and, who in turn, were the Tier 1 supplier previously qualified by Red Eléctrica.
Monitoring of suppliers
Once the supply process has begun, Red Eléctrica continuously monitors the performance of its suppliers and verifies compliance with all the requirements (business, financial, legal - and those regarding technical know-how and sustainability) which may have been established by the Group at the moment the supplier qualification is processed.
Although all the pertinent areas of the RE Group monitor the performance of the suppliers whose contracts are under their department’s responsibility; the Supply Area also conducts the following monitoring tasks:
- Constant monitoring of a supplier’s business and legal statuary requirements (i.e. being up to date with payments to the Spanish Tax Authority and Social Security, having a Civil Liability insurance in force, etc.), in addition to ensuring that suppliers are keeping up-to-date regarding the capabilities and resources established and required from suppliers during the qualification process.
- Monitoring the financial solvency of all qualified suppliers and applying corrective measures if and when they might in a weak financial situation. As part of its sustainability strategy, Red Eléctrica is committed to continue working with those suppliers that are in financial stress, but additionally it must manage the risk derived from working with suppliers that may potentially be in financial difficulties.
In order to identify if a supplier is in this situation, the Company relies on the scoring calculated by Axesor, an expert company in credit risk management and one of the top Spanish Rating Agencies in this field. Additionally, Red Eléctrica has jointly developed its ad-hoc financial solvency index with Axesor, which allows the identification, assessment and evaluation of suppliers whose financial difficulties may have an impact in their ability to adequately perform the work contracted by the Company. If a supplier in this situation is identified, its supplier qualification status may change, as a measure of transparency, and the supplier will be notified of its new status along with information regarding the measures that Red Eléctrica will put in place until the situation is resolved. This measure allows the Company to mitigate the risk associated to a potential unfulfillment of the contracted work, whilst maintaining an adequate business relationship with the supplier in order to help it overcome its weak financial situation.
- Analysis of incidents related a supplier’s performance during the execution of the service, works or the provision of supply works awarded. Said analysis is conducted in collaboration with the different areas of the Company responsible for monitoring and overseeing the contracts.
- Identification of improvement actions and definition of improvement action plans that allow incidents to be resolved and which contribute to the professional development of the supplier. Ultimately, if a supplier is not successful in implementing the action plan, the Company may apply a financial penalty or may change the supplier’s qualification status (issuing a warning notice, temporary blocking or disqualification).
- Setting up of KPIs and Service Level Agreements (SLAs) for awarded contracts.
Social responsibility monitoring
- Conducting of social audits in order to assess compliance with the Supplier Code of Conduct.
- Identification of improvement actions and setting up of action plans that allow the supplier to develop professionally, measure their evolution and verify the improvement implemented, making sure that it has a favourable impact on the development of the supplier.
- Comprehensive assessment and evaluation (incorporating business, technical and corporate responsibility aspects) of suppliers in order to obtain a global vision of their situation, prior to their participation in tenders with significant impact.
Continuous improvement of the monitoring process
Red Eléctrica continues to work to improve communication and transparency with its suppliers in the monitoring and tendering processes. This allows, on the one hand, a more fluid dialogue to be established and ensures that Red Eléctrica’s expectations are known by the supplier, and on the other, it contributes to the professional development of suppliers, increasing the Company’s commitment to creating value for them.
To this end, a series of actions are being carried out, such as: strengthening the figure of the Key Supplier Manager, which will enable a more fluid communication with suppliers that are key for Red Eléctrica, as well as the progressive implementation of Service Level Agreements and Key Performance Indicators for contracts awarded.