Annual report Purchasing management
VR Group’s values in purchasing management
Responsibility is the VR Group value that provides a solid basis for management and an objective-oriented approach directs its activities. An objective-oriented approach means that VR Group operates efficiently so that it can provide internal customers with high-quality service.
Purchasing management strategy
Under its purchasing management strategy, VR Group seeks cost-effective solutions for the needs of its business operations from reliable partners in a systematic and transparent manner.
Purchasing policies and implementing them
The purchases are guided by the Group-level purchasing guidelines approved by the Group's Management Team, the guidelines for implementing projects and for supplier management and the purchasing strategy. Provisions on competitive tendering in rail traffic are laid down in the Act on Public Contracts in Special Sectors.
The aims of purchasing, the operating principles governing them and their risk management are set out in operational planning and operational guidelines.
The guidelines governing the company's business operations also contain ethical requirements concerning the operations of VR's business partners. Starting a business partnership is conditional on adhering to these guidelines. Compliance with the requirements is supervised by means of regular supplier self-assessments.
Performance targets for purchasing management
Each year VR Group’s Board of Directors sets savings targets for purchasing that are in line with the Group's long-term and short-term strategy. The strategy forms the basis for the purchasing action plans.
Successes and setbacks in purchasing matters
+ Conclusion of the purchase of the electric locomotives on economically advantageous terms
+ Achievement of the savings laid out in the performance target
+ A total of 24 competitive tendering processes under the Act on Public Contracts in Special Sectors (349/2007), none of which led to appeals to the Market Court
+ Supporting the supplier contracts in connection with the separation of Finrail
- Delays in the preparation of the purchase of the new diesel locomotives
Opportunities and risks in purchasing
+ Strong balance sheet: much of the financing for the exceptionally sizable investments in the next few years from the cash flow from operations
+ Opportunities for enhanced efficiency in business processes
+ Effects of the global economic situation on supply and prices
- The weakest suppliers may find themselves in serious difficulties as a result of the global economic situation
- Strong growth in rail traffic in the Far East may cause shortages of the most important wear parts needed in rail traffic
Changes in systems and structures during the review period that lead to improvements in purchasing management
- Introducing the first stage of the purchasing management system
- Appointing key account managers for the most important business sectors and participation in the work of the management teams of the sectors
- Appointing purchasing coordinators for business sectors helped to clarify decision-making
