GRI-G4  DMA, EN32, EN33, HR10, HR11, HR4, HR5, HR6, LA14, LA15, SO10, SO9
This content was subject to assurance by SGS Italia S.p.A. (14 March 2014).

Supplier assessment process

We aim to prevent or mitigate any adverse environmental or social impacts that are directly linked to our business operations, or by products or services from a business partner.

Suppliers play a key role in our business continuity, and can significantly impact public opinion of how responsible the company is in the social and environmental spheres. We recognize that any adverse events within the supply chain can have a direct, material impact on production and economic performance - both for the company and the supplier - and may affect our collective reputation. In order to prevent or mitigate  environmental or social impacts, we seek to preemptively leverage our long-standing and cooperative supplier relationships.

Responsibility for supplier assessments is assigned to the Supplier Quality department and at the operational level to Supplier Quality Engineers.

In order to preempt any sourcing risks, we developed a risk map to identify critical suppliers whose compliance with sustainability criteria must be monitored. The four primary risk drivers used to create this map were:

  • supplier amount of business
  • country risk associated with the supplier’s location, with particular emphasis on poor human rights records
  • supplier financial risk
  • sustainability history

Manufacturing locations and commodities are also considered in the analysis. The risk map, which covers all suppliers with annual purchase volume, classifies suppliers as high-, medium- or low-risk. A score between one and three is assigned to each driver. The final score is a weighted average of the risk drivers and defines the overall level of supplier risk.

The Group then assesses supplier compliance with sustainability criteria through self-assessment questionnaires. In 2013, Chrysler Group teamed up with AIAG, other OEMs and several suppliers to create an industry standard tool, the Supplier Sustainability Self-assessment (SSSA). This tool has a three-fold purpose: to communicate our expectations of suppliers, to determine the level of sustainability activity within the supply base, and to create an efficient and effective tool that reduces the burden of multiple and similar information requests received by suppliers. Chrysler Group was the first company to launch the SSSA, with other companies following their own internal timelines. A Tier 2 pilot began in the fourth quarter will be expanded in 2014 to better understand and respond to needs within that level of the supply chain. Overall, this systematic screening through questionnaires covers supplier operations based on environmental, labor practice, human rights and social criteria. In 2013, about 1,200 suppliers completed the self-assessment questionnaire, representing approximately 43% of total purchase value for the year. Suppliers that completed the questionnaire scored 79/100 on average. We conduct audits if the outcome of self-assessment questionnaires requires further investigation.

Building on last year’s self-assessment questionnaires, 72 audits were performed in the EMEA, NAFTA and APAC regions (of which 38 were conducted by Group Supplier Quality Engineers and 34 by a third party auditor). These audits did not reveal any particularly critical situations; no contracts were suspended or canceled, and no suppliers were placed on probation. However, corrective action plans for certain areas in need of improvement were developed in collaboration with suppliers. Specifically, in 2013, approximately 143 joint action plans were initiated for about 28 suppliersas a result of the audits. The analysis of the action plans was performed on 47 audits, while for the remaining 25 audits this will be completed in 2014. No significant issues have arisen during these audits.

To verify performance and progress, action plans are monitored regularly. All audits are announced and coordinated with suppliers. The Supplier Sustainability Committee established within Group Purchasing is also involved in the development of these plans. The Committee defines remedial actions, taking into consideration the impact of such actions on the workers, the community, and more generally, on the supplier's stakeholders. In the event of extreme cases of non-compliance, the business relationship with the supplier may be terminated.

Suppliers’ levels of compliance and required action plans are reported in the Supply Quality Performance (SQP) system. The SQP system records the outcomes of self-assessment questionnaires and on-site audits, and divides suppliers into three groups: compliant (green code); compliant with identified area of improvement (yellow code); and non-compliant (red code). Results can be viewed monthly by all employees responsible for supplier management. The SQP system updates the Bid List which indicates the quality and sustainability rating of suppliers eligible to be quoted for a business opportunity. Bid List data are processed in the Summary By Plan document, which gathers detailed information on quality, financial risk and sustainability, as well as an index of World Class Manufacturing application levels for each supplier. Final ratings are a determining factor in awarding business and can be viewed by all Group employees responsible for supplier management.

Self-assessment questionnaires

Group Purchasing worldwide

  201320122011(1)
Suppliers sent self-assessment questionnaires (no.) 2,051 1,522 1,924
Suppliers responding to questionnaire (%) 59 71 64
Average score 79/100 85/100 87/100
Purchases(2) by value covered by questionnaires (%) 43 55 37

(1) Data includes Chrysler Group for the full year.
(2) Value of direct material purchases managed by Group Purchasing.

Any significant actual or potential negative impacts requiring investigation, based on the outcome of the 2013 self-assessment questionnaires, will be managed in 2014 through on-site audits.

Audits

Group Purchasing worldwide

 201320122011(1)
Sustainability audits (no.) 72 89 51
performed by Group personnel (Supplier Quality Engineers) 38 42 37
performed by a third party 34 47 14
Purchases(2) by value covered by audits (%) 5 7 1

(1) Data includes Chrysler Group for the full year.
(2) Value of direct material purchases managed by Group Purchasing.