As the industry gains experience of supply chain engagement, we have learned that audits alone are often not sufficient. Suppliers can too easily make temporary improvements without the necessary management system changes needed to embed improved practices. This results in the same problems recurring later.
To achieve sustainable improvements, we are working with supplier companies to help build their capability and commitment. We are addressing this through our own programme and joint industry activities.
Our supplier assessment processes help build long-term commitment from suppliers to visibly improve standards. For example, two of our suppliers in China demonstrated tangible improvements in their CR management in 2007 as a result of corrective action plans agreed with Vodafone. One supplier abolished a recruitment requirement that discriminated against people shorter than 1.5 metres and introduced free annual medical check-ups for employees. The other supplier achieved certification to occupational health and safety management standard OHSAS 18001 with support from Vodafone. Both abolished the use of financial penalties as disciplinary measures against employees.
Influencing sub-tier suppliers
Our strategy is to engage directly with our first-tier suppliers (suppliers with whom we deal directly), emphasising the need to engage with their own suppliers in a similar way. Since we do not have a contractual relationship with sub-tier suppliers, we believe that engagement with these companies should be through our first-tier suppliers.
However, we recognise there may be risk of poor environmental or labour practices further down the supply chain and we are working to extend our influence. We encourage strategic suppliers – through our scorecard process – to put in place their own supplier engagement programmes. We have also conducted a number of site evaluations of sub-tier suppliers alongside our direct suppliers (see below).
Building capability in China
We have two CR-trained auditors in our recently established purchasing centres in Beijing and Hong Kong. Both have completed training on the Social Accountability International SA8000 supplier code of conduct and promote the joint industry supplier assessment tool, E-TASC.
In 2007/08, Vodafone worked in partnership with two strategic Chinese suppliers – Huawei and ZTE – to evaluate CR risk lower down the supply chain and to strengthen their programmes for managing their own suppliers. Huawei supplies radio equipment for our network and ZTE supplies Vodafone-branded handsets.
Vodafone, Huawei and ZTE conducted a joint exercise to compare and share best practices on policies, codes of conduct and procedures for assessing suppliers, including tools for identifying high-risk suppliers. ZTE and Huawei now have supplier codes of conduct in line with industry codes, and robust key performance indicators to measure suppliers’ performance. They also use the GeSI and EICC common ICT industry supplier assessment questionnaire as a standard part of their assessments. We also conducted 10 joint assessments of sub-tier suppliers (see performance 2007/08).
Huawei and ZTE have both published CR information for their suppliers on dedicated websites, and plan to produce their own CR reports. Vodafone will continue to work with them to identify areas for improvement as they extend the projects across other supplier categories. See the Huawei and ZTE corporate websites for more information on their ethical procurement programmes.
Vodafone Supplier CR Engagement Award
Vodafone introduced the Vodafone Supplier CR Engagement award in 2007 which aims to improve engagement on CR among our suppliers every year. The award recognises suppliers that demonstrate commitment to Vodafone's Code of Ethical Purchasing, engage with Vodafone on CR issues and make significant changes to improve the effectiveness of their own CR programme.
The first award went to Sun Microsystems in 2007. Sun collated all its CR-related activities and produced a company-wide Corporate Social Responsibility Report for the first time (see the website). This demonstrates its collaborative and transparent approach as a supplier to Vodafone. Sun has also established a programme to achieve the terms of Vodafone’s Code of Ethical Purchasing and signed up to the Global e-Sustainability Initiative and the Electronic Industry Code of Conduct.
The 2008 Vodafone Supplier CR Engagement award went to Capgemini Group, a computer services company that has continually demonstrated commitment to the ethical standards set out in our Code of Ethical Purchasing and has its own CR programme in place. Capgemini Group’s first corporate responsibility report, published in May 2008, outlines the progress it has made over a short period of time. The company has signed up to the UN Global Compact and translated these principles into clear strategic objectives to help direct its CR programme. For more information and to download a copy of Capgemini Group’s 2007 CR report, see their website.