SERIOUS SUPPLY CHAIN
Once a nice-to-have extra, the effective management of supply chain sustainability is now fundamental to the running of a business. New policies, laws and technologies mean that companies are increasingly engaged in tackling the sustainability issues that can arise within their supply chains. CNH Industrial is among those leading the way by establishing new and sustainable working methods with its own suppliers.
As part of a continuing dialogue with its suppliers, initiatives are arranged on a regional and global basis and tools are in place, such as the web based Supplier Portal, which provide a platform for sharing information, objectives, results, and highlight key projects and best practice.
The UN's Sustainable Development Goals, agreed at an historic summit at the United Nations in New York, came into force in 2015. It saw the creation of the 2030 Agenda for Sustainable Development, which contains the 17 agreed Sustainable Development Goals encompassing issues such as poverty, gender equality, sustainable communities and clean energy.
SDG 12 focuses on 'sustainable consumption and production patterns' and states that there "should be a systematic approach and cooperation among actors operating in the supply chain, from producer to final consumer." CNH Industrial has adopted the following two targets which demonstrate its commitment in this area:
However, there is far more to selecting a supplier than simply approving the quality and competitiveness of its products; CNH Industrial insists its suppliers must comply with a comprehensive list of social, ethical and environmental requirements.
When asked who was responsible for sustainability at CNH Industrial, many senior managers replied: “Everyone!” You don’t become recognized as one of the world’s leading sustainable companies without an integrated and committed approach across the business. Sustainability is very much part of the culture at CNH Industrial and extends into the Company’s relationships with suppliers – those vital links in the supply chain. As such there is effectively no difference between how the multinational works with colleagues and how it does so with partners.
New supplier relationships
The scale of the industrial supply chain makes managing relationships with partner organizations tremendously complex. In order to start supplier relationships, a rigorous process is implemented to evaluate potential suppliers based on a specific tool, the PSA - Potential Supplier Assessment.
The PSA identifies strengths and weaknesses, looks at key sustainability factors – specifically health and safety and environmental management – and is carried out before a company can submit to a tender.
Furthermore, it stipulates that all new suppliers complete a commitment declaration, which is based on the CNH Industrial Supplier Code of Conduct. This declaration requests that they demonstrate a commitment to fighting corruption, protecting the environment, promoting health and safety at work, ensuring non-discrimination, prohibiting forced and child labor, and recognizing freedom of association.
Monitoring existing suppliers
The Company monitors its existing suppliers through a specific Assessment Process based on self-evaluations and audits. This activity is performed annually involving a group of chosen suppliers with the aim of gradually increasing the number of participating companies year-on-year. The supplier’s risk classification, deriving from previous assessments, is the trigger for eventual follow up sustainability audits. Potential improvements and implementation activities are identified in the form of specific Action Plans which are developed together with suppliers.
Supplier Sustainability Self Assessment (SSSA) is not only a tool for monitoring performance but it is also a way of promoting continuous improvement and encouraging good sustainability practices.
In 2017, for example, 75 audits were carried out and 28 suppliers were involved in nearly 210 Action Plans for improvement. The audits focused on four key areas – environment, labor practices, human rights and impact on society. CNH Industrial strives to enhance overall performance by identifying specific supplier needs using training, communications and emergency planning.
In terms of environmental impact, suppliers are invited to optimize their use of resources and minimize polluting emissions and greenhouse gases. They're encouraged to exercise the proper management of waste treatment and disposal, as well as to adopt appropriate methods of logistics management and water management.
Building ongoing relationships
CNH Industrial organizes a number of initiatives aimed at fostering relationships with suppliers. One such example is its Technology Days which offer opportunities for suppliers to showcase innovation and cutting-edge products. Another is the "Come to our Plant" initiative where main suppliers are invited to visit the Company's plants and specific product lines, and finally the regular Supplier Advisory Council (SAC) meetings designed to foster an exchange of information and opinions.
CNH Industrial's network of suppliers is crucial to securing continuity, but it also influences how public opinion reacts to the company's social and environmental stance. Which is why CNH Industrial works so hard to reinforce its values and strengthen its links with partners in the supply chain.
Sustainability Assessment Training
In order to underline the importance of the Supplier Sustainability Self Assessment (SSSA) tool, CNH Industrial invited two groups of suppliers to attend training sessions in Turin, Italy. The training was managed together by Sustainability Planning and Reporting, Supplier Relations and Supplier Quality functions.
First, the Sustainability function gave suppliers an overview of CNH Industrial's already implemented Sustainability model which has led to the Company's inclusion as one of the Industry Leaders in the prestigious Dow Jones Indices, as well as an overview of the Company's sustainable approach to supply chain management. Supplier Relations then demonstrated how the Supplier Portal works as both an SSSA access tool and as an interactive platform for two-way communication with suppliers. The Supplier Quality Department presented the Assessment Tool, followed by an open question and answer session.
CNH Industrial is planning to continue these training activities involving an even greater number of suppliers both face-to-face and through the Supplier Portal.