Global Supply Chain Management And Logistics Of Nokia

At Nokia, they work hard to anticipate risk, demonstrate company values, enhance our governance practices, increase employee satisfaction, and look after the environment and communities where we do business. They expect the companies in our supplier network to take a similar ethical business approach and to demonstrate progress and achievements in these areas as well as in educating and overseeing the practices of their own suppliers.

Their aim is to ensure that environmental, ethical, and health and safety issues, as well as labor practices, are not separate add-on features, but are embedded within all our sourcing processes, including supplier selection and relationship development. This section provides information on their requirements, supplier performance and support we provide.

Approach -At Nokia they feel that sound environmental and social principles are an important part of sustaining a successful and responsible business.

Industry collaboration-As well as working with our own suppliers, it is important that we also look at supply chain issues from an industry perspective.

Mining of metals from the Democratic Republic of Congo

Even though Nokia does not source or buy metals directly, they are very concerned about poor practices at some mine operations around the world. They require high ethical standards in our own operations and our supply chain. If they find that standards are not being met we do not walk away but work with that supplier to address the issues and in so doing help to raise overall standards. Mining activities that fuel conflict or benefit militant groups are unacceptable.

Nokia became aware of the potential link between mining of Coltan and financing of the conflict in the Democatic Republic of Congo (DRC) in 2001 and took action immediately. Coltan in an ore that contains Tantalum, which is a material, used in many consumer electronics products. Based on Nokia Substance List 2010, written statements they require from our suppliers and ongoing discussions, our products do not include Tantalum derived from illegally mined Coltan.

Despite the complexity and the fact that there are typically 4-8 supplier layers between Nokia and any mining activities, they are actively working to tackle these issues. They are committed to continuing our efforts in solving issues around mineral sourcing and health, safety, environmental, and labor standards. For many years now, they have been driving action and awareness of ethical standards with our own suppliers and within the wider electronics industry. For example, they have rigorous health and safety, environmental and labor standards that all of their suppliers must meet, and they require them to apply the same to their own suppliers.

Before agreeing to work with a supplier they ensure that these standards are met, and they visit a number of suppliers on an ongoing basis to review standards. They work with suppliers on training and support to help them implement and improve standards. They are also working to improve transparency and support verification of the supply chain of metals.

Making progress requires commitment at a company level but also requires industry-level action amongst electronic companies, the mining industry and other industries that trade and use metals. Nokia has been actively involved in the work within the Global e-Sustainability Initiative (GeSI) and the Electronic Industry Citizenship Coalition (EICC). These groups have conducted extensive research into the key challenges surrounding the supply of metals, the ability to trace and track the sources of metal used in electronic products and the industry’s ability to influence conditions.

The results of these studies have been shared with various organizations and NGOs who were consulted on the next steps for the industry. Further action is now being taken to try and trace the supply of Tantalum as well as Cobalt and Tin, back to their original source. This will include the mining industry and other experts. The results will help inform further discussions on the obstacles of tracing metals and how this can be improved.

Tantalum

Tantalum is a material used in many consumer electronics products. The mobile phone industry uses a very small amount of the world’s total supply of Tantalum. DRC is one of the places where Tantalum, or rather Coltan, one of the ores that it comes from is naturally found and mined. The country only accounts for a very small amount of the world’s supply of this material, but it can be found in the east of the country where there is conflict, leading to concerns that this Tantalum may be mined under conditions breaching human rights or sold to fund war and illegal activity.

As soon as they became aware of this issue they began requiring suppliers of capacitors used in our mobile phones to confirm they do not source this material from the conflict areas of DRC. This is checked on an ongoing basis. The DRC provides a tiny amount of the world’s source of Tantalum. The vast majority of it is mined in other places around the world including Australia, Brazil, Canada, Russia, China and a number of other countries in Central Africa.

Other materials

More recently the company has been working with suppliers of other minerals, such as Cobalt and Tin, to improve transparency of the supply chain and understand how standards can be promoted.

For example, DRC supplies 40% of the world supply of Cobalt, a material used in batteries. This substance is found in the south of the country, away from the conflict zone and is mined legally by many large, well established companies.

Supplier diversity

Supplier diversity is highest on the corporate responsibility agenda in the US. They recognize that our spending with suppliers there can have a significant impact on economic development.

Their Supplier Diversity initiative encourages the creation, growth, and expansion of small, minority, and women-owned businesses within our supplier network. Their goal is to continually increase the ratio of minority and women-owned businesses in their supply chain, and monitor their spending with these groups.

Supplier performance

Openness and trust are important aspects when working together with suppliers and driving compliance and performance improvements. They find that some suppliers have well-developed corporate responsibility programs, while others need more support.

Supplier assessments (self and on-site) are used to understand a supplier’s performance level and compliance to their requirements. Trained Nokia assessors conduct the majority of their supplier assessments so that we are involved first hand. They believe it is important for Nokia assessors to see the factories for them, to understand the problems and to work directly with suppliers to drive improvements. This hands-on approach means that both Nokia and its suppliers take their performance very seriously. Occasionally, Nokia work with third parties for specific expertise or investigations, or as part of joint industry assessments. This is part of Nokia’s aim for continuous improvement although they would not completely outsource this work or rely only on third party assessments. They do, however, invite our suppliers to use NGOs or similar parties to assure the effectiveness of their own labor standards and environmental practices.

Assessments are useful because they highlight a supplier’s best practices as well as risks and opportunities for improvement. However, they typically provide a “snap shot” of a situation and used alone, they do not always provide the right solution.

To drive sustainable change Nokia often need to combine assessments with other tools and approaches including face-to-face meetings, performance metrics and targets, development programs, trainings and supplier-focused events.

Nokia Supplier Requirements

An essential part of our work is to define clear expectations for their suppliers wherever they are located. Nokia have developed a comprehensive set of global Nokia Supplier Requirements (NSR), which include specified environmental and social requirements. NSR’s environmental and social requirements are based on international standards ISO 14001, SA 8000, OHSAS18001, PCMM and ILO, and UN conventions.

Nokia recognize that there are other standards and management systems in use and accept those which are equivalent to or exceed their own requirements. These requirements are updated according to business and stakeholder needs.

Nokia have also developed environmental requirements for the products, components and parts that they source. New suppliers (like our existing suppliers) must commit to meeting Nokia’s requirements (e.g. NSR and environmental product requirements) as part of the contractual agreement. Excerpts from the global Nokia Supplier Requirements can be found within this section.

Suppliers in India

We know that there are n numbers of supplier of Nokia in all around the world. But the main suppliers in India are- GOPALJEE TELECOM SERVICES LIMITED, CENTURY CELLCOM, NOKIA CDMA MOBILES, NOKIA SIEMENS NETWORKS, NOKIA SIEMENS NETWORKS, KALRA ENTERPRISES, K. G. N. MOBILE CENTER, ACE TEL LINKERS PRIVATE LIMITED, LONGAIM INTERNATIONAL LTD, CONPLEX INTERNATIONAL LIMITEDADE, BRIGHTPOINT INDIA PRIVATE LIMITED etc.

Main features

Direct sourcing – taking care of the material supply for Nokia products, such as components, parts, packaging, software development and research and development.

Indirect sourcing – covering equipment such as office furniture and computers. It also includes services like catering, IT consultancy, and marketing which purchase for Nokia’s own use.

Integrating CR practices into our business – Nokia’s aim is to ensure that environmental, ethical, and health and safety issues, as well as labor practices, are not separate add-on features. They are embedded within all our sourcing processes, including supplier selection and relationship development. Nokia expect those companies in their supplier network to take a similar approach.

Close cooperation – One of our core development principles is to work closely with customers and suppliers. It allows end-to-end efficiency and speed – key success factors for the entire supply chain. In addition to customers and suppliers, we also engage with other stakeholders such as non-governmental organizations, governmental organizations and industry associations.

Continuous improvement – Nokia continually strive to improve our way of working as they learn how to be more effective and efficient. As a result, the requirements, tools, methods and processes described in these pages will develop over time.

At Nokia the people feel that sound ethical and environmental principles are an important part of a sustainable business. Nokia requires its business partners, subcontractors, or suppliers to comply with applicable laws and regulations. Nokia encourages its partners, subcontractors, or suppliers to strive beyond legal compliance in areas such as governance, human rights and the environment. Nokia incorporates ethical, social and environmental criteria in its procurement agreements and commits to monitoring the performance of its partners and to taking immediate and thorough remedial steps in cases where the ethical performance of its business partners comes into question.

Code of Conduct

Nokia’s aspiration to be the world’s most loved and admired brand can only be achieved by considering not just what they do but how they do it. It requires us to strictly adhere to laws and regulations and to go beyond this, by setting our goals much higher. They want to be the leader in ethical business conduct.

The Nokia Code of Conduct sets our approach to ethical business practice. It outlines Nokia’s commitment to respect and promote human rights and fair workplace practices, equal opportunities, environmentally sustainable business, and their zero-tolerance policy on bribery and corruption. The Nokia Code of Conduct, which was first introduced in 1997, has had its latest renewal in 2009.

They apply the Code of Conduct globally in their own operations and require the same standards from their suppliers. All Nokia employees must understand and comply with the Code of Conduct.

Overall Award Winner 2008: Nokia Siemens Networks

The Overall Winner Award is the most highly coveted supply chain award in Europe. Over the 12 years of the European Supply Chain Excellence Awards there has been a succession of truly excellent winners, companies and organizations that have led the field for their innovative strategies, dedicated leadership, team engagement and exemplary execution. This year is no exception; the outright winner of the 2008 Awards demonstrates all the characteristics and attributes of a world-leading supply chain. In the words of the judges: “With this model they are going to be a leader in the transformation of their industry.” Who are they talking about? Well, let’s go through the process of filtering through the top contenders first.

Salient features in supply chain management

No one has done what they have in the industry in managing glass in this way. They have an extensive range of windscreens – there are issues around transportability, around availability – and they have a need to get to the scene very quickly. The way they manage, store and secure glass and offer the product variety that they do without actually carrying lots of inventory is pretty clever.” This project involved the optimization of its whole network, from order through to delivery to the customer, and in the judges’ view, “this was all about providing outstanding customer service.

It had transformed its organization to create a truly end-to-end supply chain. The solution included an intelligent strategy, sound process architecture and a new IT system that supports the new strategy. Its primary focus was on increasing the transparency and visibility along the supply chain and it was evident that the company had clearly achieved this. The judges recognized that Mondi’s supply chain was customer focused, involved deep collaborative planning with customers, was a multi-year transformation and worked across all five core disciplines. Indeed, “Mondi has done all the things you would hope and expect to see in a supply chain improvement programme.” But for the judges there was only one clear winner.

NSN’s supply chain is really futuristic, it’s driving and enabling the strategy of the whole company. NSN is in a highly competitive market that is very margin/cost sensitive and equipment companies are less and less able to make enough profit on just the sale of boxes alone. The strategy it has adopted is to move to a service and solutions-orientated model, facilitated by the digitalization of the whole telecoms business. NSN’s aim has been to create revenue streams from operating the product for the customer or by providing service contracts. This has refocused the supply chain around efficient means of installing, commissioning and servicing.

Nokia Siemens Networks operates in a highly competitive global market place where low-cost manufacturers from the Far East are driving western telecoms network equipment providers to consider significant and far reaching strategic change. In fact the company is the result of a merger between Nokia and Siemens’ network businesses, created to compete in this fierce market.

NSN has followed a radical transformational strategy where new processes were defined and implemented, new facilities established, and major SAP changes undertaken – all significant tasks. The extensive programme of implementation has completely transformed the previous operating structure (Siemens and Nokia), creating a new best-practice model – a truly end-to-end supply chain. The results are impressive: installation cost reduction per installed system of 50 per cent; service installation cost reduction of 20 per cent; installation engineering productivity improved by a factor of 2-3.

The company has gained benefits through the use of such techniques as remote commissioning, where service engineers no longer need to be present on site. What really impressed me about the NSN solution is that they have taken a step into a part of supply chain management that is still uncharted territory, where the supply chain brings software and hardware together. They apply a lot of leading practices, such as merging products in transit at different points in the global supply chain network, with the ability to make decisions where pre-installation or commissioning takes place – in the hub or on site.

NSN has also done a lot of traditional things like: having an end-to-end process architecture, having the associated supply chain strategy, using KPIs and making them the driver for organizational behavior. The company too has demonstrated that it has put in place the traditional components of a leading end-to-end supply chain, but has applied them in a new way.

Nokia Siemens Networks has done a great job by using all the best practice approaches to supply chain management and has applied them to a new area of the supply chain – an area which will become much more important in the future.

Nokia and Siemens were in a do or die situation. They merged to form a new company to compete with the emerging Chinese threat to the telecom equipment market and in so doing they have created an entity with an industry leading supply chain – it’s transformational.

They are really using their supply chain to create differentiation in the market place. With this model they are going to be a leader in the transformation of the industry – this company has taken a giant step forward. Nokia Siemens Networks operates in a highly competitive global market place where low-cost manufacturers from the Far East are driving western telecoms network equipment providers to consider significant and far reaching strategic change.

Appreciate the need for a customized supply chain while operating in different countries.

Understand the importance of efficient supply chain management practices in the success of any business.