Supply chain responsibility continued
Activities in 2006
At the end of 2005, we adopted the Heineken Supplier Code, which is available on our corporate website. In line with the Code, we aim at sourcing products and services in a responsible manner by requiring our suppliers to operate in accordance with the principles as set out in our Supplier Code. In our previous Sustainability Report we stated our intention to start the implementation of the Supplier Code during 2006 with Group Purchasing, covering all contracts with group suppliers (i.e. all suppliers who supply goods to Group Purchasing).
During 2006, all group suppliers received our Supplier Code, along with a request to review their own practices against this Code and to explicitly indicate whether they were compliant. By the end of the year, 83 percent of all our group suppliers acknowledged their full compliance with the Code. Three suppliers have responded that they are unable to formally acknowledge their compliance due to legal constraints. Together with these suppliers we are investigating ways to achieve the same level of assurance without compromising their legal obligations.
During 2007, those companies that still have to respond will be contacted and will be asked to confirm their status. Our implementation process does not automatically mean that non-compliance will lead to the discontinuation of supplier status. Depending on the scale and nature of any failure to comply, suppliers may be given a set period (up to three years for minor areas of non-compliance) during which they can take the measures necessary to meet our standards.
All correspondence with suppliers, along with details of inquiries related to the Supplier Code, will be stored in a central Heineken database, which will be accessible to all buyers in Group Purchasing.
In order to help buyers in the department to incorporate discussion on the Supplier Code into their regular contacts with suppliers, a meeting was held in November 2006 to brief Group Purchasing managers and employees. The Code will become even more embedded into the normal practices of the department in 2007, when the Supplier Code will become part of the criteria used to assess all approved suppliers. Following this, the Code will be subject to all periodic quality audits.
In addition to quality audits, Group Purchasing is developing a vendor rating system, already operational for malt suppliers, which will regularly monitor a number of critical factors, including compliance with the Supplier Code.
During 2006 we also developed internal and external reporting indicators on supply chain responsibility. In the future, we will report on this on the basis of the following indicators:
- Total relevant purchasing spend covered by the Supplier Code – expressed as a percentage of purchasing spend
- The total percentage of suppliers who have responded to our compliance statement, indicating that they are compliant; the total percentage of suppliers who have responded to our compliance, indicating that they are not (yet) compliant; the total percentage of suppliers who have not responded to our compliance statement
- The number of audits completed during our reporting year, including results to date.
