Volvo 2012 Annual Report Download - page 39
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RESPONSIBLE SOURCING
Continuously increasing demands
Responsible sourcing is about managing risk, promoting responsible behaviour and building
long-term relationships with suppliers to improve social, environ mental and business ethics
in the supply chain.
nsuring good standards in the sup-
ply chain is important to the Volvo
Group and its stakeholders. The
Group wants to ensure that unethi-
cal values are not built into the Group's products
and services. Since 1996 the Volvo Group has
gradually increased requirements for suppliers
regarding environmental, business ethics and
social responsibility aspects. The requirements
placed on suppliers are based on the principles
contained in the Volvo Group's Code of Conduct
and international norms of behaviour.
Sourcing and risk assessments
In 2012, more than 36,000 suppliers delivered
products and services to the Volvo Group. Approx-
imately 6,000 are suppliers of direct material
used in automotive products. 8% of these suppli-
ers are located in countries assessed as ‘high risk’
identified in the Volvo Group's risk model. The risk
assessments are based on analyses conducted
by internationally recognized institutions and
include factors such as human rights, labour
standards and incidence of corruption.
Results from the assessments in 2012
In 2012, 66% (60) of Volvo Group purchasing
spend for direct material derived from suppliers
of that during 2010 to 2012 had completed a
self-assessment based on the Volvo Group's
CSR requirements (CSR – Corporate Social
Responsibility).
Of the 66% of the suppliers that completed
the self-assessment 80% passed. Almost
exclusively, the main reason for failing to comply
with the assessment is a lack of adequate sys-
tems to pass on the requirements to their suppli-
ers, which is one of the requirements. The rest
failed beacuse of a lack of other processes to
comply with the requirements. Suppliers that do
not pass are asked to draw up an action plan.
Of the suppliers in high-risk countries from a
CSR perspecitve 64% completed the test. In
terms of volume the share was 84%. Of the sup-
pliers in high -risk countries that completed the
assessment 74% passed.
In 2013, the Group will continue to focus on
assessing suppliers in identified high- and
medium risk countries from a CSR perspective
and to work with the non-approved suppliers to
ensure that the Group's requirements are met.
The Volvo Group has a process for the evaluation of its suppliers, based on the prin-
ciples in the Volvo Group Code of Conduct.
E
66%
of the purchased direct material,
measured in cost, came from
suppliers that have undergone CSR
evaluation during 2010 to 2012.
35