With the objective of optimizing goods and services procurement, thereby contributing in a decisive manner to the creation of competitive and differentiating advantages, Portugal Telecom has defined a Procurement Model that administrates all goods and services procurement for the various Group companies, in a joint and integrated manner.
Having achieved very positive results since its launch, the Group decided to evolve to a more advanced procurement function model, by adopting a Value Sourcing model in 2005, based on a more cooperative approach between users and buyers, focused on procurement category optimization and total cost-of-ownership reduction.
Therefore, it is intended for the Procurement Function to assume a wider vision of each procurement category, throughout the entire process, from strategic planning to contract monitoring and control, allowing an end-to-end vision of each category.
Value creation is also achieved through integrated and transversal management of relations with individual suppliers, as well as inclusion of specific know-how from procurement areas in strategic decisions influencing procurement.
The procurement model consists of three main stages – Planning, Competitive Tender and Management and Monitoring:
The Procurement Model follows several principles, in the sense of achieving increasingly better results for Portugal Telecom. In this way, teamwork, an attitude of continuous improvement, compliance with the ethical and transparency principles associated to the Procurement Function and respect for the environment and human rights constitute key Model guidelines.
This model is essential characterised by the wide scope of the Procurement Function and participation of various agents throughout the procurement process, which, despite having different functions and responsibilities, also share common goals. Within the scope of the Procurement Model, all business and selection decisions are taken unanimously by a Procurement Table. The Procurement Table is the structure supporting the decision-making process for Portugal Telecom Procurement, whereby all processes included within the scope of PT Compras are submitted to the Procurement Committee for appreciation. This Committee constitutes an analysis and decision forum where business process strategies and objectives are defined and tender selection decisions are made. Presently, Portugal Telecom procurement is managed by three different Procurement Tables: Lisbon, São Paulo (VIVO) and Casablanca (Médi Telecom). Participation of all procurement process elements in the VIVO and MédiTel Procurement Tables is achieved through a videoconferencing system allowing real-time decisions regarding strategies and tender selection processes for these companies.
Regarding the scope of the Procurement Model, it should be referred it includes all contracts entailing payment to third parties, following acquisition of particular goods or contracting of particular services, for each Portugal Telecom company. Negotiations with suppliers, which, although not entailing direct payment, precede future contract relations, such as RFIs, trials and pilot-projects, are also included within the scope of the procurement function. Within this context, the following are excluded from the scope of the present Model: contracting of juridical and fiscal services, insurance, financial products, legal accounts certification and audit, consultancy services relative to corporate strategy definition and corporate restructuring, buildings, companies and audiovisual contents. Traffic and interconnection agreements and sales network commissions are also excluded.