Taming supply chain risk: Deploying supplier CSR monitoring across a global purchasing organization

Terry Tilford

Group Procurement Excellence Manager

a new world class heating company

Andrew Dick

Program Manager

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Poll question

What are the priorities for your procurement/supply chain

organization?

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BDR Therma Footprint Worldwide

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2 Bn Euro turnover 70 countries, with 20,000 suppliers

and approx. 1,800 direct suppliers

Over 6000 employees Centralised Procurement function

Our Brands

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BDR Thermea boasts some of Europe’s best known and long standing heating and hot water brands.

Challenges: Company transformation

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✓ New Stakeholder expectations

✓ Group establishing policies, culture

• Core values

• CSR policy

✓ Creation of Group Procurement function

consolidate purchasing of:

• 35 Direct Categories

• 15 Indirect Categories

In 2009, merged to a Group entity facing more complex Supply Chain related

challenges:

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BDR CSR process

Better Products Better Supply Chain

Better People Better Company

“Better Together” strategy

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Our CSR goals are:

• Industry leading customer orientation and satisfaction

• Continuous improvement of products and services

• Europe's most user-friendly heating and coolingproducts

• Environmental standards regarding supply chaincompliance

• Highest standards of sustainable labour practices

• Compliance with sustainability reporting standards

Poll question

What are you doing today and planning to do about evaluating risks

in your supply chain?

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Better Supply Chain - Drivers

Our Key drivers are:

✓ Customer expectations

✓ Risk management approach:

• Financial

• General (e.g. Regulations)

• CSR risk

✓ Responsible corporation

✓ CSR Improvement in our

internal business units

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100% of preferred

suppliers and BDR businesses achieved specific

minimumEcovadis scores

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Integrating EcoVadis Assessment Cycle

Select supplier to beassessed

On-boarding + disscussionabout sustainaibility with

suppliers

Supppliercompletes

assessment?

Jointly work on CAP

Co

nti

nu

ou

sim

pro

vem

ent

Supppliera)ignore or b)refuses

assessment?

Yes

No

Yes a)

No a)&b)

BDR Thermea question the relationship with

supplier

Yes b)

Working with suppliers: How we engage Buyers

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*(Removed indirect suppliers and tail end, low spend suppliers)

Centralized Procurement organization were:

➢Commodity managers lead therelationship with preferred suppliers

➢Local site managers (when others)

➢Training and support from EcoVadisdedicated Program Manager

➢EcoVadis score reviewed and CAP

Working with suppliers: How we engage

Suppliers

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1. Letter from CPO and email to suppliers

2. Brochure to suppliers

3. Supplier Webinar + Introduction toEcoVadishttp://intro.supplier.ecovadis.com/

4. Making CSR criteria a mandatory process inbeing a preferred BDR supplier (EcoVadisassessment)

Poll question

Are you using or planning to use any external tool to assess the CSR

performance of your

supply chain?

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How we use the EcoVadis results

Our suppliers must meet our minimum standards of CSR and must achieve ourminimum required standard using the EcoVadis assessment.

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- Will continue the relationship but need to drive improvement

- Strengthen the relationship with suppliers

- Preferred suppliers (engage in New Product Development

- Need to question the relationship

✓ Improve our shared understanding of the issues and

our joint CSR performance with suppliers.

Supplier selection and management

BDR Thermea achieving the most relevant supply base

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Sup

plie

r p

erfo

rman

ce

ITEM* Criteria

Contracts Is a contract in place

RiskBDR thermea risk assessment score

Dunn & Bradstreet risk rating

Quality Supplier potential review score

CSR CSR audit results (EcoVadis)

supply chain

Delivery Performance (on time in full)

supple Methods (Kanban/VMI)

Supplier partnership

Level of collaboration

supports multisites

R&D New Development support

*The table is an example of BDR Thermea multicriteria scoring system

Sustainable Procurement moving forward

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Key Challenges:

✓ Understanding the carbon, energy and waste risks and impacts in BDR’s supply chain

✓ Getting suppliers engaged and on the right mind-set about sustainability

✓ Pushing internal buyer understanding of sustainability

And opportunities:

✓ Focusing on who the “best” suppliers are: ultimately this will also lead to cost reductions

✓ Making BDR more compliant

✓ Improving buyer-supplier relationships and driving better business.

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thank you for your attention