Indosat relies on third-party vendors and suppliers who supplied a variety of goods and services needed for us to conduct our business and operational activities. These vendors and suppliers are our strategic partners, in that they help us to achieve our business goals and objectives. As such, Indosat is interested in strengthening and improving relationships with these
Using Modern Technology
Since 2005, Indosat has implemented an E-Procurement system towards a secure and transparent administration process in the procurement of goods and services. In addition, the E-Procurement system also provides equal opportunities for any qualified vendors and suppliers to become our partners. Procurement processes at Indosat follow a series of strict administration procedures designed to ensure compliance with a variety of internal as well as external requirements. These procedures have been streamlined using the latest System Application Process (SAP) and Oracle Enterprise Management software to simplify and expedite the various processes.
Leveraging on Volume Orders
In connection with our long-term cellular network modernization program, Indosat in 2010 made the decision to reduce the number of suppliers for the needed new radio equipment intended to replace the various makes of legacy equipment of the older technology. With fewer short-listed suppliers, we can leverage on volume orders to obtain better terms on the purchases, quite aside from the obvious economic benefits that Indosat stands to gain. For example, we could enforce higher standards of Health, Security, Safety and Environment (HSSE) in regards the equipment supplied. We can also negotiate with these suppliers to provide more skill transfer to local subcontractors and more use of local contents.
Promoting Local Resources
As a matter of formal company policy, Indosat opts for the use of local resources in its development projects or routine operational activities whenever possible. For instance, we encourage local businesses to bid on our telecommunications tower construction projects, which are further facilitated by the use of the E-Procurement system. We provide local businesses with work reference and recommendation to become sub-contractors to our appointed primary vendors, which are usually international companies. Conversely, our work agreement with these international suppliers may contain specific provisions for the use of certain amounts of locally procured resources, including materials as well as skills.
A fine example of this approach is those related to our commercial introduction of zinc-air batteries as a standby power source in our BTS installations. We successfully negotiated with the chosen supplier of this relatively advanced technology equipment to manufacture the zinc-air batteries here in Indonesia using local labor and materials. As it happens, almost all of the components can be locally manufactured, except for certain key parts that used high precision and advanced manufacturing technologies currently unavailable in Indonesia. However, our purchase agreement with this particular supplier also contains provisions for the eventual transfer of this technology to local manufacturers. In this way, Indosat is actively helping to build the capacity local industries to match those of global players.
Educating Business Partners
Business interactions between suppliers/vendors and Indosat provide an excellent opportunity for us to help educate, in the broadest terms, these business partners and especially in helping them to raise their standards of operations and of conducting business in general. This is especially true with regards to local and smaller suppliers. For example, a work contract with a local construction firm to build a BTS tower facility contain specific requirements with regards to material specifications, work safety, disposal of waste materials, quality of end products, and other such criteria, as well as strict penalties for non-observance of these requirements. We often provide free training and even formal certification in project management to suppliers engaged in our projects. In complying with our strict business standards, our supplier/vendor partners benefit from exposure to best practice in doing business.
In addition, as part of our commitment towards the practice of Good Corporate Governance, we also formally require our vendors and suppliers to abide by Indosat’s Code of Ethics. This document also contains provisions related to vendor/supplier relationship, such as those governing the acceptance of gratuities by our employees. Periodically, information regarding our Code of Ethics is disseminated to the public in some national print mass media as well as in our official website at www.indosat.com.