Engaging with suppliers through the audit process provides extensive opportunities for ongoing improvement. We see a wide range of maturity levels in our audits, from companies that score under 100 (on a 0–200 scale) to companies that achieve perfect audit scores. Key factors influencing production supplier audit performance include the following.

Length and level of engagement - We see a strong correlation between length and level of engagement in our supply chain sustainability program and audit scores, including participation in our capability building programs. This reflects the benefit of close collaboration between suppliers and HP on identifying and resolving nonconformances and improving underlying systems. Engaging workers supports performance on supplier audits in areas such as freedom of association, worker participation, and training. See Capability building for more information about our programs and progress.

Supplier type - Final assembly suppliers (which often have long-standing relationships with HP and robust sustainability programs) typically score highly in audits. These suppliers accounted for 75% of scores above 160 in 2017, although they represented just 15% of initial audits and full re-audits. The remaining audits were of commodity suppliers, which vary widely in sustainability maturity.

Initial audits vs. full re-audits: Companies usually score lower on initial audits than they do on full re-audits, demonstrating the benefit of engagement with HP. As a result, average audit scores tend to be lower when the proportion of initial audits to total audits is high and vice-versa. We continually bring new suppliers into our audit program, as they represent the most significant risks

of nonconformance and opportunities for improvement. In 2017, initial production supplier audits represented 43% of initial and full re-audits, but 59% of audit scores under 160.

Raising the bar - Over the life of our supply chain sustainability program, we have continued to increase our expectations of suppliers, including through enhancements to the HP Supplier Code of Conduct. For example, version 6.0 of the RBA Code of Conduct, ratified in 2017 and launched in 2018, includes significant changes related to worker voice and training, pregnant and nursing women, process chemicals, and water management. As a result, maintaining a consistent audit score over multiple years requires ongoing improvement.

Follow-up audits, which are designed to confirm resolution of nonconformances, are not included in the data in this section (other than the summary table). However, suppliers have demonstrated substantial improvements through these audits. In 2016, we added to our audit program a new category of commodity suppliers that make mechanical parts. Although those suppliers performed relatively poorly in audits that year, they implemented various improvements and corrective action plans, and their average score in follow-up audits increased by more than 50 points.