Electrolux’s promise is clear – we will ensure that all suppliers live up to our high expectations on labor and human rights and environmental management, no matter where they are located. The only way to achieve this is to continuously work together.
“We want suppliers to realize that being a good employer and protecting the environment is not primarily about compliance, but about running a sound, future-oriented business,” says Cecilia Nord, Group Sustainability Director Responsible Sourcing.
The Group’s supply chain monitoring focuses on direct suppliers of components, finished goods and licensed products and services. The Electrolux Code of Conduct is the backbone of the supply chain efforts, and the Responsible Sourcing Program makes the difference in the field.
The approach involves assessing risks, systematically monitoring suppliers and supporting suppliers’ improvement efforts. Electrolux conducts both country and supplier-by-supplier risk assessments, and these evaluations help our direct monitoring efforts. Potential suppliers are screened and critical existing suppliers are audited at least every second year.
In 2016, 471 audits were carried out to verify safety, labor and human rights, environmental management and governance among Electrolux suppliers around the world.
Jesus Garcia
Years with Electrolux: 6
28 years in manufacturing (the maquiladora industry in Ciudad Juarez)
Education: Industrial engineer, majored in total quality
Outside of work: Enjoys mountain biking
After a full-scope audit, where the Electrolux auditor reviews all relevant documents, for instance payroll information and environmental permits, she/he carries out a physical inspection of the site and interviews both management and workers. Depending on the size of the site and workforce, an audit can take between one and five days for an auditor to complete.
The findings are then shared with the supplier’s management and an action plan to remedy any non-compliances is drawn up. The auditor supports the supplier with this and verifies progress with follow-up audits. Many suppliers improve after just one follow-up audit, whereas other may require as many as four or five.
Beyond monitoring, specific efforts are made to improve sustainability performance among potential and existing suppliers. “We support and train suppliers to increase awareness and capabilities, especially when it comes to human resources and environmental management,” says Nord.
A total of 14 people are responsible for carrying out audits and supporting supplier improvements in the field, building close relationships with them at the same time. As part of the Group’s Sustainability Affairs, the team also works closely with the Electrolux purchasing teams in their respective markets to select the best suppliers.
Jesus Garcia represents the team in Mexico and Nesreen Mosallam works in Egypt. Both are convinced that building close and long-term relationships with suppliers is the best way to go.
“My work is really rewarding, especially when suppliers realize that our program is a way for them to develop,” says Garcia. “We have detected issues and managed to improve working conditions in many Mexican factories in recent years. Still, for many suppliers, the cooperation with Electrolux is their first contact with social compliance audits, and some companies have quite a long way to go.”
Mosallam adds: “Electrolux started working in Egypt only a few years ago, and our requirements are still quite unfamiliar here. At the same time, I think requirements like ours will become more commonplace as electronics brands and other multinationals establish here.”
“After the initial audit, our consulting work begins. Many manufacturers here face similar issues and therefore we are able to support suppliers with best practices to improve their operations,” says Garcia. “And to improve performance further, I believe that we need to be even more proactive.”
Nesreen Mosallam
Years with Electrolux: 6
Experience: Quality manager at the Electrolux cooker factory outside of Cairo
Education: Mechanical engineer
Favorite CoC section: Safety and environment
Latin America: 122
North America: 2
Europe, Middle East and Africa: 113
Asia Pacific: 234
In many cases, Electrolux has higher requirements than the local legislation and practices in place, which means that we raise the bar for suppliers when we start auditing them.
Latin America and North America: The number of findings per audit at suppliers decreased from 12.78 to 9.73 between 2015 and 2016. This makes this part of the world best in class. Mexico had only 6.27 findings per audit and the largest improvement (82%) between initial and follow-up audit in 2016, which is far above the global average of 57%. In Brazil, an increased incidence of certain kinds of findings, such as those relating to health and safety, can be partially explained by the economic downturn in the country.
Europe, the Middle East and Africa: EMEA has seen a significant drop in supplier findings per audit from, 12.2 in 2015 to 10.01 in 2016. All types of findings have decreased. The improvement rate between the initial and follow-up audit of 59% remains unchanged from last year.
Asia Pacific: The findings per audit have improved slightly, but there is an increase in the number of certain kind of findings – for instance regarding compensation violations, as well as environmental management. We expect the findings to continue in 2017, as we are increasing our focus on suppliers in South East Asia.
This case study is related to our promise Improve sustainability in the supply chain