Supplier assessments
Our Business Partner Code is based on our Code of Business Principles, outlining our expectations of suppliers on health and safety at work, business integrity, labour standards, consumer safety and the environment.
By the end of 2006, we completed the process of communicating the Code's requirements to our first-tier suppliers of 'production items' (see pie chart) and began analysing the responses. The process included seeking evidence of management processes and adherence to external social, environmental and labour standards such as ISO 14001 and SA 8000.
First tier suppliers of raw materials & packaging 2006
These 8 430 suppliers of raw materials and packaging represent 55.5% of the €28.2 billion we spent on brought-in goods and services. They are our 'first-tier' suppliers of 'production items' and include third parties who undertake about 15% of our total production.
All regions have been covered and details of the suppliers' responses collated into a central database. Most suppliers have responded positively, expressing support for the initiative. However, about 15% did not provide any details of policies or standards which would provide positive assurance towards our Code.
These suppliers will be prioritised for the level of risk they represent. We will engage with them further to understand their management practices. Where we continue to have concerns, we will follow up with site audits.
This process will continue throughout 2007 and beyond. We will also be looking to embed the procedures into routine supplier management processes and develop more experience of helping poorly performing suppliers to meet our requirements.
This is a complex task, though one of increasing concern to consumers, retailers and many of our competitors. We are working with our industry peers to establish a joint approach as suppliers of all types are encountering difficulties with the multiplicity of information requests from customers like us. During 2006, Unilever and a group of peer companies set up a forum aimed at sharing a common approach and system to evaluate the social, economic and environmental performance of suppliers across common types of goods and services. The forum is still in its early stages and is considering the best options.
Extending the approach
Unilever is increasingly buying in goods and services, such as plant and equipment, human resources, finance and IT support. This supply base for 'non-production items' is large, often highly localised and complex. The priority segments within this supplier base have now been identified and we will conduct assessments on them during 2007.
