Our record of achievement inspires us to continue our efforts to drive supplier sustainability

The overview below summarizes the progress we are making toward our supplier sustainability goals, as outlined in our latest Annual Report.
Supplier Sustainability Audit Program

Most frequent areas of non-compliance (NC) in 2014

  • Certified Management System (ISO9001, ISO14001, and OHSAS18001)
  • Emergency Preparedness
  • Working Hours

Positive trends compared to last year
 

  • Working Hours (10% fewer NCs)
  • EICC Code: understanding of and commitment to Code and requirements (5% fewer NCs)
  • Wages and Benefits (5% fewer NCs)

Negative trends compared to last year
 

We see a 5% increase in NCs in the following areas:

  • Protection of Identity
  • Food, Sanitation and Housing
  • Occupational Injury and Illness
Audit progress and targets

2014 Goals
 

75% of corrective actions implemented within 90 days (for major NCs found in 2014 audits)

Progress
 

Average NC closure time was around 6 months, mainly due to longer resolution times for working hours issues. Before closing working hours NCs, Philips requires at least 3 months’ time records.

2015 Goals
 

Improve Health & Safety performance of suppliers by 10%

Supplier training and capacity building

2014 Goal
 

Roll-out best practices and learnings from IDH Electronics Program to Chinese suppliers included in audit program


Start dedicated 3-year program to improve Health & Safety conditions in supplier factories. Start roll-out to 20% of Chinese suppliers in 2014.

Progress

During the supplier classroom trainings we included insights from the IDH Program. We paid special attention to the relationship between worker satisfaction and worker turnover rates, and how factory management can improve these by establishing a communication bridge with workers.


57 out of 410 Chinese suppliers now in the program (14%)

2015 Goals

Train 150 suppliers during at least eight two-day sustainability training sessions to address top sustainability issues from 2014 audits


Implement corrective actions to close all major NCs identified at supplier sites during 2014. Provide tailor-made and on-site capacity building for 90% of related suppliers in China.

IDH Electronics Program

2014 Goals

Increase number of participating suppliers to 20


All participating suppliers identify their top 3 improvement actions and develop work plans


70% of all identified top 3 improvement actions implemented by end 2014

Progress

21 Philips suppliers are now participating


Completed for all 21 suppliers


90% implemented by year-end 2014

2015 Goals

Three out of four top improvement actions identified for each IDH supplier implemented by end of 2015
Conflict Minerals program

2014 Goals

Publish a Philips Conflict Minerals Report validated by external auditors


Implement augmented expectations for supply chain investigations, including stricter criteria for data collection from priority suppliers


Collect Conflict Minerals Reporting Templates from at least 80% of priority suppliers, applying stricter criteria on data quality and completeness than in previous year


Conflict-Free Tin Initiative: include DRC tin in mainstream solder supply (move from pilot to normal business)

Progress

 

First Conflict Minerals Report was published, and Philips was one of only four companies that had their report audited.


In 2014 we worked with suppliers to implement and roll-out a Conflict Minerals policy, collect more information from their next-tier suppliers, and disclose additional smelters.


98% of priority suppliers filled out the template questionnaire. 86% were meeting or exceeding Philips’ minimum criteria.


CFTI tin is now part of the regular supply of solder and used in different Philips products.

2015 Goals

Request direct suppliers to start steering their supply chain towards using only smelters verified as conflict-free by third-party auditors


Confirm that all active, identified tantalum smelters in our supply chain are verified as conflict-free by third-party auditors

 

Initiate a project together with our industry peers to help small and medium-size companies from our supply chain with their due diligence and supply chain investigations

Carbon footprint of our supply chain

Extend CDP Supply Chain invitations to cover top 80% spend from manufacturing and transportation suppliers

 

Based on CDP Supply Chain results, offer CDP Action Exchange to top 100 suppliers with highest CO2 reduction potential

 

Circular procurement

Start two circular procurement projects

 

Train 40% of procurement commodity teams on circular procurement

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