Philips 2015 Annual Report Download - page 196

Sustainability statements 14.2.8
196 Annual Report 2015
Philips Supplier Sustainability Declaration
The Philips Supplier Sustainability Declaration is based
on the EICC Code of Conduct and in line with our
General Business Principles. The topics covered include
labor and human rights, worker health and safety,
environmental impact, ethics, and management
systems. We monitor supplier compliance to the
Declaration through a system of regular audits.
We rolled-out the Declaration via the purchasing
contracts signed with suppliers, and via all trainings and
audits.
The Declaration requires suppliers to cascade the EICC
Code down to their next-tier suppliers. Suppliers must
regard the Code as a total supply chain initiative and, at
a minimum, also require their next-tier suppliers to
acknowledge and implement the Code.
2015 supplier audits in risk countries
In 2015, we audited 195 of our current risk suppliers,
including 120 continued conformance audits with
suppliers that we had already audited in 2012. As in
previous years, the majority of the audits were done in
China. There were also audits performed in Brazil, India
and Mexico. A small number of audits took place in
Belarus, Dominican Republic, Indonesia, Philippines,
Russia and Ukraine. With these audits we directly or
indirectly impacted almost 116,000 workers employed
at the production sites that were audited.
On top of the audits with current risk suppliers, we also
audited 26 potential suppliers during the supplier
selection process. These potential suppliers need to
close any zero-tolerance issues before they can start
delivering to Philips.
To track improvements Philips measures the
‘compliance rate’ for the identied risk suppliers, being
the percentage of risk suppliers audited within the last
3 years and do not have - or have resolved all - major
NCs. During 2015 we achieved a compliance rate of 86%
(2014: 86%).
Philips Group
Number of initial and continual conformance audits
2015
4
2
Brazil
47
96
China
10
9
India
6
6
Mexico
8
Initial
7
Continued conformance
Others
Audit ndings
The table below shows the results of the full scope
audits done during 2015; potential suppliers are not
included. When the audit reveals areas of non-
compliance we request suppliers to implement
corrective actions and our sustainability experts and
independent third-party auditors monitor the
implementation during resolution audits. The results of
the resolution audits are not included in the table. Four
suppliers proved outstanding performance during their
initial audit, without NCs found.
To prevent audit fatigue and limit the burden of audit
preparation and follow-up at a single supplier site,
Philips has agreed with some of the other EICC
members to share audit results. This eliminates the
need for multiple audits and enables a stronger focus
on corrective actions and their follow-up.
Most frequent areas of non-compliance in 2015:
•Certied Management System (ISO9001, ISO14001,
and OHSAS18001)
• Emergency Preparedness
• Working Hours