MegaFon’s procurement management system fully covers every phase of the Company’s procurement process, from planning to fulfilment, to meet our needs for goods, works and services, and is based on a competitive approach to selecting suppliers, collective decision-making with suppliers, and transparent supplier relations.

MegaFon’s procurement focuses on achieving the best value for money and time. We are striving to maximise the automation and transparency of our procurement processes. Procurement at MegaFon is done through a competitive tendering process, including an e-marketplace that ensures the transparency of the process and enables us to negotiate the best value for money. Small and medium-sized businesses are also invited to participate in procurement procedures.

The Company evaluates suppliers on an ongoing basis, taking into account objective operational performance indicators and subjective assessments by employees who communicate directly with suppliers. Following an evaluation, strategic suppliers for MegaFon are identified, and are engaged in developing and implementing activities to improve the efficiency of interaction. The evaluation results are also used in competitive procedures to help select the winners.

The Company’s procurement procedure is outlined in its internal documents detailing all phases of the procurement process, areas of responsibility and controls. Our Procurement and Logistics function is responsible for organising and monitoring procurement procedures, procurement methodology, contracting, warehouse and transport logistics, and inventory management.

In 2020, the Procurement and Logistics function initiated the spin-off of the procurement division and the division responsible for supporting transport logistics processes into a separate service company, LLC Procurement Alliance. The new service company will provide services related to procurement procedures and selection of suppliers and contractors in the sphere of transport logistics to meet the needs of USM Group companies. The transformation process is scheduled for completion in 2021.

In 2020, MegaFon continued to develop its categorybased approach to procurement management and worked out 13 new category strategies. In addition, during the year, 17 existing strategies progressed to implementation and generated significant budget savings.

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