Ensuring that business partners abide by international human rights regulations and labor laws can be challenging in a complex supply chain.
Suppliers at every tier of the supply chain carry much of the management responsibility, but we are aware of the significant role we can play in preventing human rights violations and providing for sound working conditions. Our approach over the years has been built on systematic assessments and competency-building initiatives.
Self-assessment questionnaires used to verify the suppliers’ management system also address their performance and progress in guaranteeing basic human rights, health and safety in the workplace and fair working conditions. Suppliers are expected to comply with all applicable local laws but we also verify whether they have publicly endorsed international charters or guidelines (such as the Universal Declaration of Human Rights, the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, or the OECD Guidelines for Multinational Enterprises).
Similarly, other aspects explored through our assessment process encompass whether a supplier employs workers through a contract, if a process has been implemented within the organization to monitor labor standards and overtime hours, and whether minimum wage levels have been established.
Since one of the Group’s commitments is the ongoing development of its workforce, we also require feedback on how training and development activities are carried out within the supplier's organization.
In addition to all aspects mentioned above, our self-assessment tool also checks whether procedures exist to ensure that workers are not discriminated against and that harassment and intimidation are not tolerated in the workplace.
Suppliers are also expected to establish an occupational management system, systematically assess occupational health and safety risks; measure performance by key indicators; and extend their health and safety policies to their contractors.
Lastly, appropriate steps must be in place to prevent child labor and forced or compulsory labor, and to ensure freedom of association and collective bargaining rights.
If warned of potential or increased risks, we conduct thorough on-site audits aimed at providing insights into any concerns that may have arisen. Through the self-assessment questionnaire, 80 suppliers were identified in 2013 with either current or potential significant human rights and labor practices issues, specifically for the following areas: human rights and labor practices addressed through supplier code of conduct and monitoring of responsible working conditions; contractual requirement to their own suppliers for compliance with labor and human rights laws and regulations; and health and safety management. The findings also included one evidence of potential negative impact for child and forced labor due to the lack of a dedicated management procedure. Consequently, the supplier has been submitted to an audit and a targeted action plan has been implemented. No potential negative impact has been identified for the right to exercise freedom of association or collective bargaining.
In addition, after the audits performed following the 2012 self-assessment process, 58 action plans were implemented for 21 suppliers (about 45% of those audited) for labor practice issues (concerning evidence of workplace safety documentation, training activities, adoption of a dedicated management procedure for harassment, health and safety performance, overtime monitoring) and 32 action plans for 18 suppliers (roughly 38% of suppliers audited) were developed for human rights topics (additions to the code of conduct, ensuring freedom of association rights, adoption of a dedicated management procedure for child labor). No contracts were canceled (1).
Ensuring commitment and compliance to human rights and fair working conditions can be particularly challenging beyond the Tier 1 level due to reduced transparency and a lack of contractual relationships. Therefore, in 2013, the training course on working conditions that has been provided in recent years to Tier 1 suppliers has been extended to roughly 100 Tier 2 suppliers. We plan further deployment through our Tier 1 suppliers in 2014. These actions will help develop new approaches and further commitment throughout the multi-tier supply chain.
(1) The percentage is calculated based on the number of 47 suppliers audited. The analysis of the action plans for the remaining 25 suppliers audited will be completed in 2014. No significant issues have arisen during these audits.
The global challenges of today’s automotive supply chain encourage working with peers to address ethical and social sourcing risks arising from the multiple layers of suppliers over a global supply chain. In collaboration with the Automotive Industry Action Group (AIAG), the Group has developed strategies addressing Section 1502 of the Dodd-Frank Act, as well as subsequent rules promulgated by the US Securities and Exchange Commission, regarding conflict minerals. The rule requires companies to determine whether tin, tantalum, tungsten, or gold (3TG) in their supply chain originated from the Democratic Republic of the Congo (DRC) or surrounding countries, and if the sale of those minerals supported the armed conflict in the DRC. The Group has used a cross-industry reporting template to survey the supply base about the origin of 3TG used in their products.
In addition, the Group has supported AIAG in creating a common automotive process to obtain conflict minerals reporting information. Our streamlined approach includes common reporting using the iPoint Conflict Minerals Platform (iPCMP), a web-based data-management tool based on the Conflict Minerals Reporting Template. We ask suppliers to provide us with the smelter information for the tin, tantalum, tungsten, and gold in their products and ensure those minerals are not supporting the armed conflict in the Democratic Republic of the Congo. The Group is collaborating to create a single policy and will continue working together especially in light of likely future European regulations. Being subject to US Securities and Exchange Commission (SEC) regulation, Chrysler Group will be filing their conflict minerals report with the SEC in May, 2014. Fiat, however, will not be filing a report as it is not subject to the SEC rule.
The Group has adopted the iPoint Conflict Minerals Platform (iPCMP), a web-based data-management tool based on the EICC/GeSI reporting template. This tool has been launched, allowing streamlined reporting to multiple customers. The tool asks suppliers to provide smelter information for the 3TG used in their products. Smelter information can be used to determine whether the 3TG came from a conflict-free source. By determining this information, the Group fulfills its due diligence obligation under the SEC conflict minerals rule.
These steps are being pursued both in collaboration with AIAG and also with a Chrysler Group-specific targeted approach for maximum efficiency and effectiveness. The coordinated efforts will help promote responsible mineral sourcing practices. Part of that targeted approach includes guidance and training provided during Supplier Training Week (over 600 suppliers trained in the US and Mexico).
In 2013, Chrysler Group received the inaugural Company of the Year Innovation Award from the National Minority Supplier Development Council (NMSDC). The newly-created Innovation Award "recognizes a new corporate method, initiative or process to accelerate and positively impact minority supplier development in support of NMSDC’s vision, mission and core capabilities - certify, develop, connect and advocate - with particular emphasis on professional services and non-traditional categories."
Chrysler Group was selected to receive the award for the accomplishments of its High Focus Supplier program. Since 1983, Chrysler Group has purchased more than €38 billion from minority-owned suppliers. The High Focus Supplier Program is a best practice that creates a win-win for Chrysler and our suppliers, and serves as an example of supply chain innovation.
The High Focus program, established in 2011, focuses on suppliers with greater potential for diverse spend and equips them with the tools and support to achieve their diversity targets. The diversity spend status of each supplier is monitored monthly and reviewed quarterly with the supplier. Since the program’s inception, 143 suppliers have improved their minority purchasing by more than six times or €644 million. Chrysler Group is believed to be the only automaker to include diversity sourcing performance at Tier 2 level as a criterion on a supplier’s scorecard.
Another Chrysler Group innovation designed to expand opportunities for minority suppliers is its Matchmaker program. Having completed its 14th year, the annual Matchmaker event provides minority-owned, women-owned and veteran-owned businesses access to Chrysler Group's Tier 1 suppliers and to decision makers in the company's procurement and affiliated organizations. The program has generated more than €1.5 billion in new business opportunities for exhibitors since 2000. As the premier networking trade event in the automotive supplier community, the 2013 Matchmaker event attracted more than 3,000 participants. More than 270 minority-owned, women-owned and veteran-owned Chrysler Group suppliers participated in the day-long event.
Chrysler Group spent €3.9 billion with minority suppliers in 2013, representing 16.8% of its total annual purchasing value. Women-owned businesses, which are tracked separately, accounted for €358 million of the company's spending.
Chrysler Group continues to support several organizations that assist Tier 1 suppliers in achieving their minority-owned and women-owned sourcing goals. These organizations include the National Minority Supplier Development Council, the Canadian Aboriginal and Minority Supplier Council and the Women’s Business Enterprise National Council. In addition, Chrysler Group supports veteran-business ownership through membership with the National Veteran-Owned Business Association. In 2013, Chrysler Group's Chief Procurement Officer was the Chairman of the Board of Directors of the Michigan Minority Supplier Development Council.