The Group is continuously renewing its focus on supplier relations, thus constant engagement and communication are essential to helping the company to foster more positive, mutually beneficial relationships.
Quality of relations was improved and relationships with suppliers have been strengthened as demonstrated by the many long-standing company-supplier relationships, and also confirmed by the limited number of lawsuits in 2013.
Many process and system improvements have been executed to help suppliers work with the company more effectively. A continuous dialogue is encouraged with suppliers at all levels of management, including forums such as the regional Supplier Advisory Councils (SAC). These types of exchanges foster collaboration between the company and the supply base, and thereby improve partnership and enhance communication on initiatives, issues and opportunities. The SAC meets quarterly , and involves 15- 20 suppliers that facilitate supplier feedback on specific topics. The Group also uses a dedicated supplier internet portal to share information on technical requirements, supply planning, supplier quality and the results of compliance tests conducted on new components. Suppliers can use the portal to communicate with the company, enter details of contract bids, specify the origin of components and update their contact information. The NAFTA web-based Supplier Portal also includes a section dedicated to sustainability, including best practice articles highlighting supplier initiatives that provide inspiration to companies early in their own sustainability programs. This section also fosters recognition of suppliers willing to share their success stories with other companies. As in previous years, initiatives for the exchange of ideas and information continued, including local conferences and Technology Days (23 meetings in 2013), attracting an average of approximately 1,200 participants. At these events, leading suppliers in terms of innovation, technology, and quality address specific topics and share some of their latest technological developments. At Chrysler Group, regular Supplier Town Hall meetings, which are attended by an average of 500 suppliers either in person or via webcast, continued to be a major enabler of two-way communication.
Continuous improvement is also seen in World Class Manufacturing Purchasing, which, in collaboration with the World Class Manufacturing (WCM) team, continued providing its advice to suppliers intending to implement the WCM system. During the year, WCM was implemented at additional supplier plants, reaching a total of 300 supplier sites (of which 218 in EMEA, 70 in LATAM and 12 in NAFTA). This means they now apply what is considered to be one of the world’s leading manufacturing standards to their own operations. A total of five executive conventions have been held to examine the status of application of the program and the commitment of the senior management that fuels it. Such sharing of expertise translates into on-site training provided to each of the supplier plants involved, with the support of Fiat Group WCM specialists, and benchmarking through visits to Fiat Group facilities arranged to share best practices.
In the EMEA region, in supplier plants where the implementation of WCM is more mature, significant results have been achieved mainly in the model area. In terms of safety improvement there was a 100% reduction of injuries in the model area and there was a 78% reduction in the total frequency index (results from best chemical supplier plant). Moreover, in terms of efficiency improvement, there was a 16% reduction in HPV (Hour Per kit component of Vehicle) from our best chemical supplier plant and an 18% improvement in Overall Equipment Effectiveness (OEE) of the bottleneck machine from one of our best metal supplier plants. These results mean a better management of resources and, in the long run, increased business competitiveness. Furthermore, in EMEA by the end of 2013, a total of 88 WCM Audits were conducted at 59 supplier plant locations; of those 59 suppliers, 15 are located in Poland. The audit is a method that allows application of consistent criteria for evaluating the production systems in both our plants and the supply base.
In the LATAM region, 70 suppliers were checked for implementation level and commitment. By the end of 2013 the integrated activity between the WCM specialists in Purchasing and Manufacturing has expanded and supplier improvement is increasing. Furthermore, approximately 2000 kaizen improvement projects were initiated involving 44% of the suppliers' employees. The results indicate that four supplier plants have achieved “Green” status and are ready to receive their first WCM audit.
In the NAFTA region, 12 suppliers were involved in the WCM program by the end of 2013. Overall these suppliers are committed, motivated and are initiating many WCM projects for mutual benefits. For 2014, the Group has an aggressive goal to have 22 additional contracts signed in the NAFTA region. Together, plant manufacturing, the WCM Central team, and Supplier Quality are engaging and communicating with the supply base to help understand and support WCM in our plants. Also, approximately 500 supplier plants have participated in specialized training programs with the goal of extending the basic principles of WCM throughout the supply chain.
The Group works closely with many industry and supplier organizations to encourage dialogue. One such group is the Automotive Industry Action Group (AIAG), which Chrysler Group helped found in 1982. The AIAG is a cooperative forum for the auto industry focused on improving business processes and practices involving trading partners and peers throughout the supply chain. In addition to a leadership role on the Board of Directors and co-chairing the Corporate Responsibility Steering Committee, Chrysler Group employees are engaged in more than 40 work groups, many of which focus on sustainability issues within the supply chain, and on streamlining tools and metrics across the industry. Chrysler Group hosts Supplier Training Week three times per year covering numerous subjects, including sustainability-related topics such as responsible working conditions, environmental impact and ethics. Additional in-depth training on responsible working conditions is offered to suppliers in partnership with the Automotive Industry Action Group. This training was developed collaboratively with other automakers and is designed to help assure and protect the rights and dignity of the workers who make vehicle components. However, we are also committed to promoting entrepreneurial growth by providing entrepreneurs the practical capacity-building training they need, which enables subject matter experts to achieve a higher level of sustainability. With this aim, an on-site basic sustainability training course was delivered at Fiat headquarters to 13 select suppliers (17 individuals participated). The carbon emissions that resulted from travel to participate were entirely offset through the purchase of 15 equivalent credits under a forestry project in Italy (Po Delta Park).
To address existing and emerging sustainability issues, the Supplier Sustainability Panel was created. This stakeholder group represents a cross section of the supplier base with participants from companies of different sizes, footprints and commodities. Topics addressed include ways in which Fiat Group and its suppliers can work together on sustainability initiatives, gap assessment and resolution, benchmarking site visits, and training and communication throughout the supply chain.
In 2013, Fiat and Chrysler again honored top-performing suppliers during the NAFTA and EMEA Supplier Sustainability Award ceremonies, by recognizing their outstanding achievement in social and environmental responsibility performance. The top winners in 2013 were BASF for NAFTA and Brembo for EMEA. These companies, and others, were recognized for their commitment in sustainability and the breadth and depth of their related initiatives and programs. In the EMEA region, the QUALITAS event was ISO 20121 certified as a sustainable event, and all CO2 emissions generated from it were offset through the purchase of 181 equivalent credits under a forestry project in Italy (Po Delta Park).
Finally, the Group encourages supplier innovation through various initiatives to find ways to reduce costs. The Technical Cost Reduction SUPER (SUpplier Product Enhancement Reward) Program is aimed at encouraging a proactive approach with suppliers by the mutual sharing of the economic benefits generated by proposing and introducing innovative methods and technologies. In 2013, in the NAFTA and EMEA regions more than 350 ideas were implemented by suppliers, resulting in tangible cost reductions of about €39 million. Moreover, the Supplier Innovation Gateway, whose goal is to stimulate innovative ideas leading to benchmark systems, provides a streamlined process to review, investigate, and approve supplier innovations in the NAFTA region.
Dedicated email addresses (firstname.lastname@example.org and email@example.com) represent another method for suppliers to request information or report events or situations of non-compliance in the supply chain; in addition to the specific channels identified by the Group companies for reporting a violation (or suspected violation). In 2013, no violations or suspected violations were received about environmental, labor practices, human rights and society impacts (see also Labor practices and Human Rights).
Culture of sustainability
To ensure the awareness of sustainability and governance principles among employees who manage supplier relationships irrespective of their level or role, Group Purchasing’s Human Resources disseminate the Code of Conduct and the values of good governance through periodic training and other information channels. The online training program aimed at raising awareness about the Group’s Code of Conduct continued in 2013. It targeted Group buyers and Supplier Quality Engineers (SQE), involving 1,481 employees between 2009 and 2013. In 2013, the program was completed by all Group buyers and SQEs in LATAM and APAC, providing 381 hours of training to 381 individuals.
In 2013, a new training program on Health and Safety was launched in Italy involving all Fiat Group Purchasing employees to enhance their knowledge and strengthen their technical capabilities related to these issues: 9,128 hours of training were provided to 908 employees.
Further, with the aim of broadening accountability toward sustainability goals, these are incorporated on a yearly basis in performance management processes and systems for approximately 210 Supplier Quality Engineers and their teams. In so doing, we are able to measure their commitment and responsiveness toward supplier sustainability management.