Philips 2008 Annual Report Download - page 41

Supplier sustainability
We believe achieving a sustainable supply base is
a matter of taking care of workers’ lives and the
environment. As a member company of the
Electronic Industry Citizenship Coalition (EICC)
we share the organization’s goal to improve
conditions in the electronics supply chain.
Our approach
The Philips Supplier Sustainability Program is built on
fi ve pillars. We clearly set out our requirements, build
understanding and agreement, and monitor identifi ed
risk suppliers through audits, nearly 60% of which
are now conducted by specialized external auditing
bodies. We work with suppliers to resolve issues
quickly and engage stakeholders in the chain.
We seek constructive dialogue and the
opportunity to engage in specifi c projects
with all relevant stakeholders in the chain.
To determine where to focus our efforts, we have
developed an approach based on a risk profi le related
to spend, country of production, business risk and type
of
supplier relationship. In 2008, the integration of new
acquisitions included training their Supply Management
staff and then analyzing their supply bases with regard
to sustainability risk. Where risk has been identifi ed
we conduct awareness training with suppliers to
prepare for third-party audits.
Resolving issues quickly is a key component of
our approach. Corrective action plans are agreed
upon within one month of an audit. One of our
sustainability offi cers follows up monthly and will
escalate the issue to the responsible purchasing
manager as necessary to ensure zero-tolerance issues
are resolved within three months. In this way all
zero-tolerances from 2007 and those from the fi rst
three quarters of 2008 have been resolved.
With three years of audit experience we have
developed a list of topics that need to be addressed
with our suppliers. Continual conformance audits
show that a multi-year approach to training and
auditing is essential to engrain sustainability in the
supply chain.
Sustainable NPR procurement and supply
As part of our ongoing efforts to minimize our
environmental impacts, as well as meet our EcoVision4
targets, our commodity teams have a number of
projects under way. These projects include the
previously mentioned Green Supply Chain initiative,
as well as continuing sustainable procurement in
marketing and sales.
Working with stakeholders
We seek constructive dialogue and the opportunity
to engage in specifi c projects with all relevant
stakeholders in the chain. Much of this work is done
via the EICC and bilateral meetings with investors and
NGOs. One example is a project in Dongguan, China,
focusing on working hours, which is the most frequent
labor issue found during audits. We believe that
cooperation with the EICC and local
governments is
the only way to truly achieve sustainable change.
Philips is also an active member of other EICC
working groups to resolve specifi c issues at industry
level, including the Global e-Sustainability Initiative on
the health and well-being of people working in the
mining industry.
Philips Annual Report 2008 41
122
Performance statements
114
Supervisory Board report
110
Our leadership
94
Risk management
70
Our sector performance