A proactive approach in relationships with suppliers and collaboration in sector-wide initiatives are tools that drive positive development across the whole value chain and minimise risk of environmental and human rights issues.
In an increasingly transparent marketplace, Scania’s suppliers must meet the same standards we demand of ourselves. With more than 1 000 direct and 10 000 indirect suppliers, robust and comprehensive management of sustainability risks is a challenge, but essential. Sustainability performance is not an add-on; it will influence sourcing decisions alongside technology, quality, delivery and cost.
Global supplier requirements
Scania is committed to upholding the United Nations Global Compact’s principles relating to labour practices, human rights, environment and anti-corruption in its own operations as well as in its supply chain. Scania Supplier Code of Conduct outlines our supplier expectations and requirements on labour and human rights, health and safety, environment, business ethics and management. With this as a starting point we work with those suppliers in our global supply chain who maintain fair conditions, and in return we strongly believe that we benefit from higher supplier quality and productivity, while minimising the negative impact during the lifecycle of our products.
Scania focuses the purchasing spend – some 90 percent for direct material – on Sweden, Germany and other EU countries. However, Scania is sourcing globally and many of our supplier are located in South America and Asia. Looking into TIER2, TIER3 and beyond an increasing amount of companies in Scania´s supply chain are located in countries with a high sustainability risk profile according to most according to Maplecroft risk indices or similar. Scania remains vigilant and has robust processes in place to handle the risks. We will continue to search for good performing suppliers all around the world that can live up to our high global demands.
Way of working – key elements
For Scania, a key element is to build capacity at the employees who are close to the processes where the risks and improvement potential appear, and hence can influence the most. This approach is reflected in the effort we put in education and training.
All purchasers and other employees within the whole global purchasing organisation receives a mandatory full day sustainability training. We also have persons within the line organisation that has the role of sustainability ambassadors. The purpose of the ambassador role is that the these employees acts as intermediators between the sustainability team and the line functions.
To have effect upstream the supply chain We are not only building capacity internally, focus is also put on providing sustainability training for our suppliers. Scania invites suppliers to participate in sustainability trainings and segment-specific workshops coordinated by DRIVE Sustainability in different countries around the globe. In addition to this we also conduct trainings in the Scania-specific demands by Scania staff.
Another key element is our monitoring and follow up processes. A Self-Assessment Questionnaire on Sustainability (SAQ) is the first step of assessing risk. The SAQ is complemented by an even more deep-diving monitoring tool, the sustainability audit. Depending on the circumstances the audits are either conducted by a third party or by our own SA8000 certified auditors.
In case of deviations between a supplier’s sustainability performance and our requirements, a corrective action plan is developed and followed up accordingly. The whole Volkswagen brand and regions network are used to gain efficiency in deviation handling. A characteristic of Scania’s way of working in regards to supplier sustainability is to develop suppliers and thereby also improve Scania’s sustainability performance.
Scania works in close collaboration with customers, suppliers and participates in both sector-wide and cross-sector initiatives on supply chain sustainability. Scania is a lead partner of DRIVE Sustainability which is a working group on supply chain sustainability within automotive industry. The Self-Assessment Questionnaire on Sustainability (SAQ), Guiding Principles and training concept are examples of standardized tools and processes applicable to the whole automotive industry that have been developed in by the members of DRIVE sustainability.
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 on certain topics, such as CO2 calculation, supplier development and segment specific requirements and approaches.
In December 2017, Scania arranged its first Supplier Sustainability Day. More than 140 people from 80 of Scania’s main suppliers came to Sweden to participate in sustainability training and discuss challenges in the supply chain. The participants were encouraged to share their challenges and to cooperate with both Scania and other participants on possible solutions. The workshop categories covered a broad range of procurement areas/commodities: steel, electronics, catalysts, textile/leather, rubber, plastic and logistics.