Choosing suppliers

Potential suppliers must undergo a rigorous and thorough qualification process, as this is the only possible way for a company to indicate its current capacity and future potential. To ensure the suitability of suppliers with respect to procurement needs, in 2017 Snam conducted a deep Market Intelligence activity on approximately thirty different product categories related to its core business and new activities (as the construction of new compression and storage stations for automotive methane gas). The number of spontaneous applications received from prospective suppliers amounted to approximately 1,900.

There are many aspects subject to evaluation in the qualification process: technical and management skills, economic and financial reliability, ethical and reputational risk, commitment to anti-corruption, environmental protection, promotion of healthy and safe working conditions, absence of forced labour and economic exploitation of children.

In 2017 Snam simplified its qualification process by streamlining procedures and reducing the documentation to be produced depending upon the (public or private-sector) path: the private sector path requires the submission of a smaller and more simplified set of documents, with the consequential reduction of processing times. Also, the duration of the qualifications/accreditations was extended to a five years’ period and the administrative evaluation of suppliers already present in the Vendor List, but requesting to be included in new product categories, was streamlined.

The requirements are more binding for the categories of suppliers deemed to be more critical, based on a classification scale increasing from level D to level A, which involves all the commodity related sectors (goods, services and works) and it is assigned on a technological complexity and impact on performance basis.

Specifically, for the works category (criticality classes A and B) having Management Systems certified in accordance with international standards (ISO 9001, ISO14001, OHSAS 18001) is required. Starting from 2017, Snam has set the goal of extending the requirement for a certified environmental management system to the goods category suppliers (criticality class A).

The actual possession and maintenance of the requirements is subject to specific controls: in 2017, 1,647 suppliers and subcontractors were audited in relation to their regularity of paying social security contributions, through 3,739 inspections which revealed an irregularity rate of 3% (2.8% in 2016; 4.6% in 2015).

Breakdown of procurement
by critical class (%)