Sustainable supply chain
When Telenor needed a new system in place to improve their supply chain management, they turned to DNV.
Telenor established a project to improve their supply chain management in response to the production of a Danish documentary revealing substandard working conditions at companies in the supply chain of GrameenPhone, a Telenor subsidiary in Bangladesh.
"I was really surprised when this project landed in my lap," says Stein Hansen, referring to the HIT project, an acronym for Health, Safety, Security and Environment (HSSE) in Telenor. Mr Hansen was in charge of HIT from its inception in May of last year until the project came to a close March 1, 2009, when he became Senior Vice President of the newly created permanent Group HSSE Assurance unit at Telenor.
By the time the documentary was aired, investigations were already in motion, with DNV personnel doing onsite assessments of the tower manufacturers at the time of broadcast. These assessments revealed substandard working conditions at all the plants, and it became evident that Telenor’s policies regarding HSSE and business conduct had not filtered through to GrameenPhone’s suppliers. Mr Hansen, who was Head of Group Technology at Telenor ASA for six years prior to this, was asked to lead the project.
Global scope
"A lot of people think that we’ve only included the Bangladesh supply chain in the project, but that is not the case. It was a group-wide project on working conditions and environmental management across Telenor’s Operating Companies and our supply chains," says Mr Hansen.
The Telenor Group is among the largest mobile operators in the world with mobile operations in 13 markets across the Nordic region, central and eastern Europe and in Asia. DNV was brought in to offer both consulting and assessment services to the project. The first step was to set up criteria and select assessment candidates globally to get an overview of the factual situation in the supply chains. DNV’s global presence and ability to mobilise resources locally gave the assessments a harmonised approach and comparable results.
"We organised it very quickly, but DNV was flexible – and we have cooperated well," Mr Hansen says. A number of 65 suppliers and sub-suppliers were audited by DNV in the course of just a few months.
To manage the information and prioritise the actions Telenor applied a risk based approach. Mr Hansen, his team and DNV worked together to bring new systems in place. DNV’s EasyRisk Manager tool, tailor-made to Telenor’s needs, was used to collect information and apply risk categorisation. A selection of almost 800 suppliers, where the risk was assumed to be high, was asked to complete a self-assessment electronic online survey, and high-risk suppliers were identified for further follow-up.
Safety improvements
After the initial audits there have been subsequent re-inspections. "We gave the suppliers concrete plans for improvements, and we’ve seen improvements," says Mr Hansen. "It could be things like putting up fences around dangerous areas, enforcing use of helmets, sorting of waste materials, or cleaning the warehouse area. In some cases we’ve done health checks of employees. We’ve also gone through employee contracts and made sure they’re up to standard." Other improvements include posting danger signs where needed.
He is now hiring for the new Group HSSE Assurance unit at Telenor, and may eventually have up to 10 employees, including HSSE auditors. "We’ve put a system in place, with processes for how we’re going to work on this globally. We can’t guarantee that there aren’t substandard conditions anymore, but we can say that we’re working on it systematically. We have a system, and if certain things haven’t been caught by the system yet, we’ll have to take them on in the next round," he says.
The EasyRisk Manager tool gives the company a rating that represents the supply chain risk level globally. "Now we have a baseline," says Mr Hansen. "We’re going to continue to measure it, and of course the goal is to improve constantly," he says.
Taking on the challenge
One thing that surprised Mr Hansen was how positive many of the suppliers were to the project. "Some have really taken the challenge. Of course, others have done so to a lesser degree," he says. One positive example is the owner of one of the galvanisation factories that were included in the original documentary highlighting the problems in Bangladesh.
"Firstly, he said that it was good that we demanded higher standards. They had many international companies as customers, and it was important to improve and fulfil higher standards. Secondly, it was at no great cost. He said he had used 0.5% of annual revenues on the improvements. Not only that, but there was also a visible improvement in absence rates. So in the end they might actually have increased profits. And he wasn’t the only example. Of course, they didn’t all respond that positively. But that’s our challenge – to get this to become something positive."
On the question of whether improving working conditions globally is a satisfying job, the response is matter-of-fact. "We’re not near the finish line yet. The work is just beginning now," he says.