Responsible sourcing for a global sustainable supply chain
Our suppliers have a significant impact on our performance, so it is important that we monitor and evaluate them too. In 2021 we introduced a new process that helps us monitor our supplier performance even better.
Our goal for 2030 is that our sourcing is fully aligned with our responsible sourcing strategy and that our partners in the upstream supply chain operate according to the same corporate social responsibility standards as Beckers. We improved our annual supplier performance evaluation system in 2021 and introduced a global tool and process that complements our Chain-Up! program. Our key suppliers will now receive an annual rating. So far, we have rated 96 suppliers that cover 71 percent of our total spend in 2020 and 80 percent of our total direct spend (raw materials and packaging). This gives us a global overview not only about supply quality but also about how those companies score regarding R&D and sustainability. Improvement potentials were highlighted for about half of the suppliers. The individual category managers followed up the individual action points and the suppliers will receive a new rating in 2022.
Chain-Up! – Responsible Sourcing Progress in 2021
We have made considerable progress in Steps 1 and 2 of our Chain-Up! program, however were not able to conduct on-site audits with high-risk suppliers in 2020 or 2021 due to the COVID-19 situation.
Supplier Code of Conduct Signatures
In 2021, 89 percent of our external global spending was covered by suppliers that have declared their adherence to our Supplier Code of Conduct. This code is a fundamental part of how we communicate and collaborate with our suppliers. We target to maintain this KPI at 90 percent.
Third-party assessments of key raw material suppliers
In 2021, our EcoVadis-assessed raw material suppliers covered 85 percent of our total raw material purchase value (up from 82 percent in 2020). Our approved suppliers' purchase value was XY percent (up from 75 percent in 2020). This is already a substantial improvement and well ahead of time: we had originally targeted 75 percent for 2024.
A US supplier who made major progress in this area was rewarded with our Supplier Award.
See also Supplier Award
We did not conduct in-house audits in 2021. Due to the pandemic, the audits scheduled for 2021 had to be postponed. Audits could not be carried out virtually as they involve on-site visits to inspect a supplier's process controls, quality, sustainability, and continuous improvement. Our target for 2022 and onwards remains carrying out two new audits per year to key suppliers with high supply chain risk.
Raw material crisis impacts supply
The year 2021 was unprecedented for Beckers and the industry in general. The raw material crisis is ultimately a crisis of the whole supply chain, affected by the pandemic and other events. It revealed the vulnerability of global markets and demonstrated that companies need to be able to react flexibly. After the industry decline in 2020, we saw strong demand globally in 2021 with construction rebounding as countries reopened. As a result, there's been unusual tension on the supply chain, with demand-supply imbalances, shortages of key raw materials, and an unprecedented raw material price escalation.
It is, however, critical to learn from this experience and to make Beckers’ supply chain more resilient for the future. With this in mind, we started working on new solutions for improving our procurement strategy long-term. We are focused on supply chain risk assessment, improved forecasting and complexity reduction within the supply chain as part of our procurement strategy.
“We need to advance sustainability along the entire value chain, from suppliers to customers. In our business, we have traditionally given warranties of 20 to 30 years on a product. Now we are facing a systemic change. During the last two years, we have lost the certainties of the past in terms of availability and cost of materials as well as global logistics. Going forward, we need to make our business model resilient with improved supply chain risk management and reduced supply complexity. This will get us closer to our goal of a sustainable supply chain.”
Thomas Lüder | Global Director Procurement