Case stories / Supplier evaluations

Supplier evaluations

2012-05-28

After every supplier visit the Visit Report contains a standard question that needs to be answered: “Was there during your visit any violation of our Business Code of Practice?“ This constantly reminds purchasers of their responsibilities towards ‘their’ suppliers and makes purchasers proud of doing the right thing.

Mike Callens - Vice President Sourcing - Atlas Copco Airpower N.V. 2012

Mike Callens, Vice President Sourcing, Atlas Copco Airpower N.V.


In 2011 Atlas Copco adopted goals for sustainable, profitable development.  Many goals are related to our strategy, our employees and how we interact with customers. It is important to remember that suppliers also play a role in the achievement of our brand promise.
 
We have a goal to work with business partners committed to high ethical, environmental and social standards. We want to protect our reputation and believe that suppliers play a crucial role in this; any kind of violation of the Business Code of Practice (BCoP) can harm our relationship with customers, prospects and with stakeholders in general.
 
Atlas Copco has established new procedures regarding supplier evaluations that include Safety, Health and Environmental (SHE) aspects. Typically the purchasing department’s Supplier Quality Assurance  function evaluates and qualifies suppliers on not only quality, but on safety, social, environmental and ethical aspects as well. A checklist ensures the audit activity covers all departments, including Human Resources. During a factory tour and by asking specific questions the SHE aspects can be verified.

Stefan Herremans - Supplier Quality Assessment Team leader - Atlas Copco Airpower N.V. 2012

Stefan Herremans, Supplier Quality Assessment Team leader, Atlas Copco Airpower N.V.


What’s in it for purchasing?
  • We cover all SHE aspects during the supplier selection procedure because we are strongly convinced that suppliers who care about their employees and about the environment are committed to their customers as well.
  • Suppliers that have respect to for ethical standards have consistent pricing management.
  • Suppliers that have “Safety First” in mind have better delivery and quality  performance because sick leave is acceptable and resources are managed to ensure production runs smoothly.
 
What’s in it for suppliers?
  • An increased focus on corporate responsibility is all about long-term commitment and positively affects our partnerships with suppliers.
  • Social commitment increases employees’ motivation and involvement in having satisfied customers.
  • Reducing accidents by taking all appropriate safety measures will eventually increase the profitability of the supplier.
  • Taking care of hazardous substances and respecting local environmental legislation lowers the risk of pollution and ensures our products will be safe. It also reduces the risk of a local government needing to take punitive action or even close down the company.
  • An audit can only be successful if supported by the supplier’s management and if non-conformities or areas of improvement result in action and follow-up.
 
An extensive training has been organized on occupational health and safety to give those responsible for evaluations some background and real-life examples. The training enables them to see issues and areas of needed improvement during their visits to suppliers.  After every supplier visit the Visit Report contains a standard question that needs to be answered: “During the visit were any violations of the Business Code of Practice seen?“ This constantly reminds purchasers of their responsibilities towards ‘their’ suppliers and makes purchasers proud of doing the right thing.
 
Combining quality and SHE audits
We have a few suppliers in Asia and North America but the majority of suppliers are found in Europe. Every country or commodity has its own risks in specific domains. Every product company in the Group must report the number of audits they have performed during the year in their Sustainability Report.  Portable Energy has started to combine every quality audit with a SHE audit for every new supplier, as well as the audit for re-approvals (after five years).
Every Atlas Copco employee will experience more attention to the SHE aspects of our own and our suppliers’ operations, clearly supported – even driven by – top management. This enables us to do more, to take initiatives, without hesitation.

Some examples of how Atlas Copco works with suppliers on the safety, health and environmental aspects of their operations:

Leroy Somer (France) – Worldwide supplier of alternators.
  • Risk: The France factory is state of the art, but the products we buy are actually produced in Eastern Europe. We were curious about  whether the Czech Republic plant has the same high standards.
  • Result: The visit reminded us of how we handle local product companies: with respect for local people , local habits and legislation. French employees are responsible making sure the local operations also meet the France factory’s high standards.   
Intek CM (Turin, Italy) – Supplier of platework to Portable Energy.
  • Risk: Northern Italy suffers from a level of unemployment that can lead to reliance on unskilled workers, resulting in an unsafe working environment. The painting installation can also be a risk, as it can pollute the environment.
  • Result: Our audit showed that training was provided, but a training and skills matrix was absent. Now a clear overview is available of the company’s jobs, roles and responsibilities. The painting line itself is state of the art and recently upgraded with nanotechnology (demanding lower liquid temperatures and resulting in less energy loss).
P&V (Heusden, Netherlands) – Supplier of cubicles to Portable Energy.
  • Risk: The test procedure used in the assembly of electric parts could have a negative impact on the environment due to the release of carbon emissions. 
  • Result: After the audit the company decided to reconsider its test procedure. In the past every cubicle was tested by actually starting up an alternator that consumed diesel. Now the complete product range will be tested via a computer.


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