Philips 2013 Annual Report Download - page 60

4 Group performance 4.2.10 - 4.2.10
60 Annual Report 2013
the Philips Supplier Sustainability Declaration, which
we include in all purchasing contracts. The Declaration
is based on the EICC code of conduct and we added
requirements on Freedom of Association and Collective
Bargaining. The topics covered in the Declaration are
listed below. We monitor supplier compliance with the
Declaration through a system of regular audits.
• Freely Chosen Employment
• Child Labor Prohibition
• Working Hours
• Wages and Benefits
• Humane Treatment
• Non-Discrimination
• Freedom of Association
• Occupational Safety
• Emergency Preparedness
• Occupational Injury and Illness
• Industrial Hygiene
• Physically Demanding Work
• Machine Safeguarding
• Sanitation, Food and Housing
Health and Safety
Environmental Ethics
• Environmental
Permits and Reporting
• Pollution Prevention and
Resource Reduction
• Hazardous Substances
• Wastewater and Solid Waste
• Air Emissions
• Product Content Restrictions
• Business Integrity
• No Improper Advantage
• Disclosure of Information
• Intellectual Property
• Fair Business,
Advertising
and Competition
• Protection of Identity
• Responsible Sourcing of
Minerals
• Privacy
• Non-Retaliation
• Company Commitment
• Risk Assessment and Risk
Management
• Management Accountability
and Responsibility
• Improvement Objectives
• Legal and Customer
Requirements
• Training
• Communication
• Corrective Action Process
• Worker Feedback and
Participation
• Documentation and Records
• Audits and Assessments
• Supplier Responsibility
Management system
Labor
2013 supplier audits in risk countries
In 2013, Philips conducted 200 full-scope audits,
including four joint audits conducted on behalf of
Philips and other EICC member companies.
Additionally, 59 audits of potential suppliers were
performed. Potential suppliers are audited as part of
the supplier approval process, and they need to close
any zero-tolerance issues before they can start
delivering to Philips. In our new audit approach, we
place more focus on capacity building programs to
realize structural improvements leading to better audit
results.
As in previous years, the majority of the audits in 2013
were done in China. The total number of full-scope
audits carried out since we started the program in 2005
is 2,162. This number includes repeated audits (131 in
2013), since we execute a full-scope audit at our risk
suppliers every three years. The audit program covers
90% of our spend with risk suppliers.
Accumulative number of initial and continual
conformance audits
2,500
2,000
1,500
1,000
500
0
150
2005
365
2006
166
2007
277
2008
360
2009
273
2010
212
2011
159
2012
200
2013
2,162
total
Distribution of supplier audits by country
China
139
India
27
Mexico
14
Brazil
10
Other
10
Audit findings
We believe it is important to be transparent about the
issues we observe during the audits. Therefore we have
published a detailed list of identified major non-
compliances in our annual report since 2010.
To track improvements Philips measures the
‘compliance rate’ for the identified risk suppliers, being
the percentage of risk suppliers that was audited within
the last 3 years, and do not have any - or have resolved
all major non compliances. During 2013 we achieved a
compliance rate of 77% (2012: 75%).
Please refer to sub-section 13.2.2, Supplier indicators,
of this Annual Report for the detailed findings of 2013.