Supply chain responsibility
Our objectives
Simply put, we want to ensure the sustainability of
our business and our business model. Our ultimate
objective is therefore to reflect our own sustainable
ambitions throughout our entire supply chain via
companies that act in accordance with our own
business principles.
In our 2006 Sustainability Report, we set the
following targets based on this objective:
Achieve a 100 per cent response rate from
all suppliers that were contacted by Group
Purchasing in 2006
Integrate supply chain responsibility in the
periodic quality audits and subject at least 20
per cent of Group suppliers to a quality audit
Further integrate supply chain responsibility in
the supplier assessment process
Start the expansion of the Supplier Code
to local contracts for raw material, packaging,
promotional materials and investment goods
from operating companies in our regions of
Western Europe, Central Eastern Europe and
Africa Middle East (to be completed in 2008)
Define a process for integrating the Supplier
Code in goods and services other than those
mentioned above (for example, utilities,
advertising, maintenance and repair work).
Our strategy
We have adopted a gradual introduction
of the Supplier Code in order to provide clarity
to our Suppliers and the opportunity to become
compliant where this is necessary. We adopted the
Supplier Code at the end of 2005, beginning with
central implementation in Group Supply Chain for
those purchases made centrally on behalf of the
Group. The Code is now in the process of being
rolled out within our Operating Companies.
Ultimately, we believe that all activities related
to the Supplier Code should be integrated into
the supplier selection, appointment and audit
processes. In our approach we aim to include the
Supplier Code in all contracts with suppliers that
require a preferred supplier status and all other
major contracts. At a local market level, a risk
analysis of locally purchased goods is undertaken
and, on the basis of this, the Supplier Code is
implemented with appropriate actions and
discussions with suppliers where relevant.
Activities in 2007
In order to support the local introduction and roll
out of the Supplier Code, we organised a series of
workshops regarding responsible purchasing for
all purchasers in Austria, Greece and Poland.
Based on these workshops, the local purchasing
departments started to roll out the Supplier
Code to all relevant local suppliers of goods
and services.
We adapted our audit checklists to include the
Supplier Code for raw material suppliers and
started the process of adjusting the checklist
for packaging suppliers as well. If any supplier fails
to comply with our standards, they will not be
approved and will lose the approved supplier status.
Performance in 2007
By the end of 2007, 74.4 per cent of our
worldwide spend on raw materials and packaging
had been covered by the Supplier Code. This
figure represents the value of goods that were
purchased on a central level. Over time, as the
implementation process continues and local
buying activities are aligned with the requirements
of the Supplier Code, this figure will rise. For goods
other than raw materials and packaging we do not
at present have data that are sufficiently reliable
for publication. We will continue to work on data
reliability and will publish figures on this over time.
Ninety-seven per cent of Group suppliers have
responded that they meet our requirements.
This figure is not the desired 100 per cent
for two reasons. First, when we acquire new
breweries, we automatically inherit existing
purchasing agreements. It takes some time to
finalise the procedures that are in place to grant
these new suppliers a preferred supplier status.
Secondly, a small number of suppliers for legal
reasons have indicated that they cannot issue a
formal compliance statement. Flowever, no single
supplier has indicated that it fails to meet our
requirements. The 40 audits (representing 15.8
per cent of the Group supplier base) that we
performed among Group suppliers in 2007,
confirmed this statement.
What we will do in 2008
Begin the introduction of the Supplier Code
to the local suppliers in our current operations
in Western Europe (to be completed in 2009)
Roll out to the local suppliers in Flungary,
Bulgaria, Croatia and Macedonia
Run a pilot in the Africa Middle East and the
Asia Pacific regions
Continue our regular supplier audits with
inclusion of the requirements of the Supplier
Code, auditing at least 20 per cent of our
suppliers base on an annual basis.
Heineken N.V. Sustainability Report 2007
