Vodafone spent more than £23.8 billion purchasing products and services from more than 40,000 suppliers in 2007/08. We do not manufacture anything ourselves. Instead, we source equipment for our networks and the handsets we sell from third party manufacturers which themselves source components and assembled products from other suppliers.
Unlike supply chains in some other sectors, Vodafone's suppliers of telecommunications and IT equipment are mainly large multi-nationals (often well-known brands) that either operate their own assembly factories, or source from independent manufacturers, or both. We also source services from companies around the world.
We strive to work with suppliers that maintain high labour and environmental standards and our Code of Ethical Purchasing (CEP) sets out our expectations of suppliers. Our strategy is to engage directly with our first-tier suppliers and assess their compliance with the CEP. We emphasise their need to engage with their own suppliers in a similar way.
As we develop our business strategy to include more Vodafone-only branded products, we are effectively removing the traditional first tier of our supply chain, dealing directly with contract manufacturers. For example, we are working directly with original design manufacturers to produce Vodafone-only branded affordable handsets.
We recognise that this change of approach potentially increases CR risks in the sub-tiers of these supply chains and the potential impact on our reputation given that Vodafone is the only brand label on the product. We are working with strategic Tier 1 suppliers to improve capability and provide reassurance that labour and environmental standards in their sub-tiers meet the requirements of our CEP.
We are working with other companies in our sector to bring capability improvements to the ICT industry as a whole through industry partnership.
