A proactive approach in relationships with suppliers and collaboration in sector-wide initiatives are tools that drive sustainability across the whole value chain and minimise risks of environmental and human rights issues.
In an increasingly transparent marketplace, Scania suppliers must meet the same standards we demand of ourselves. With over 1,500 direct, and 10,000 indirect suppliers, robust and comprehensive management of all sustainability aspects including human rights is a challenge, but essential. Scania´s wants to challenge businesses throughout our global supply chain to develop and maintain fair conditions. In return, we strongly believe we benefit from higher supplier quality and productivity, as well as minimised negative impact during the life cycle of our products.
Scania focuses the purchasing spend – some 70 percent – on Sweden, Germany and other EU countries to keep quality high and business risk low. The proportion of spend in Asia, in for example China and India, is still small. Therefore the overall exposure to sustainability risks is low or medium by most measures, including Maplecroft’s Indexes. Scania remains vigilant focusing on robust, proactive and global processes to meet the coming challenges. Spend proportion will most likely change towards Asia/Pacific area during the coming years and Scania will not discriminate suppliers based on location as long as the supplier can live up to our demands. Sustainability performance is not an add-on; it will influence sourcing decisions alongside technology, quality, delivery and cost.
A collaborative approach
Scania works closely together with customers, suppliers and other automotive manufacturers, and finds that collaborating with a greater number of partners improves effectiveness. Through its membership in the CSR Europe Automotive Working Group (EAWG) Scania works with other automotive companies to improve sustainability throughout the value chain. One of its outcomes is a shared approach to supplier self-assessments, which Scania has used since 2014. Scania is addressing all our suppliers with this assessment. The tool is used to monitor our suppliers’ sustainability performance to find knowledge and process gaps. In 2016, this was a main focus of our sustainability work and the number of suppliers monitored by this tool increased significantly. Another common tool is supplier sustainability trainings, during 2016 common trainings were held in China, Germany and Czech Republic.
Without exception, all suppliers must agree to Scania’s Supply Chain Standard, which includes accepting and complying with the Global Compacts’ ten principles and ISO 14001 certification. Scania requires information on material composition to enable detailed tracking and due diligence. During 2016 a section on conflict free sourcing of minerals (3TG) were added to the requirements. A key element is that the suppliers are expected to communicate Scania’s standards to their own suppliers and subcontractors, which is followed up via the self-assessment questionnaire. Scania´s requirements are the same no matter where Scania or the supplier operates, though there is a need to handle different risk profiles depending on country, industry or general knowledge about the supplier. To meet the different risk profiles Scania uses regional setups in some cases. For example, Scania´s quality staff in India are working extra close with the local suppliers, meaning that all the suppliers gets several on-site evaluations every year and support on how to improve their performance, including sustainability.
Scania’s quality checks and supplier assessments have for a long time included a sustainability element. Since 2015, Scania further developed this by conducting third-party sustainability audits. Scania also has the capability to do social audits according to SA8000 by own personnel.
The business ethics e-learning ‘Doing things right’ is mandatory for all employees at Scania. During 2016 Scania complemented this by introducing a new full day course, specifically targeting buyers and supplier quality analysts. The purpose of this new course is that all purchasing employees should have the knowledge to do an initial screening of a potential or existing supplier and react on potential deviations so that Scania´s reactive processes gets triggered if needed.
Challenging business as usual
Scania has different initiatives to encourage employees and suppliers to challenge business as usual. An example of this is a recurring project where some purchasers gets the opportunity to discuss sustainability with experts and come up with new ideas based on some realistic cases.