Yes. HP measures supplier performance in order to understand issues at the supplier level and identify trends across our supplier base. We track supplier issues and trends through our assurance program, which includes both comprehensive audits using HP’s Supplier Code of Conduct and focused assessments in specific high-risk areas such as the use of foreign migrant workers. We also collect specific metrics around working hours, day of rest, student workers, and other labor indicators with key suppliers in our KPI (Key Performance Indicator) program.
Our supplier audit process is an essential component of our risk assessment framework and a key mechanism for improvement with our suppliers. Supplier audits measure conformance with all provisions of the HP Supplier Code of Conduct in the areas of labor, health and safety, environmental, ethics, and management systems.
Supplier audits are an essential component of our risk assessment framework. Audits measure conformance with the HP Supplier Code of Conduct and help drive ongoing improvements in our suppliers’ social and environmental performance.
Every year, we evaluate a list of suppliers that make up 95% of HP’s production supplier spend. We then look at geography, type of manufacturing, and external information sources such as news and NGO reports to determine which suppliers require an on-site audit. The audit format follows the Validated Audit Process (VAP), a collaborative approach that reduces the burden on our suppliers by avoiding multiple audits. The VAP meets the need for a high-quality, consistent, and cost-effective standard industry assessment of labor, health and safety, environmental, and ethics practices based on the Responsible Business Alliance (RBA) Code of Conduct and relevant laws and regulations.
In 2019, we will work with our final assembly suppliers to confirm they are auditing companies in their own supply chains that represent approximately 80% of their spend, based on the RBA Code of Conduct. We will review summary findings of those audits, which will further strengthen our understanding of performance deeper in our supplier base.
In 2018, we completed 117 audits and 43 other assessments of production, nonproduction, and product transportation suppliers. During the year, 86% of production supplier audits were third-party certified RBA VAP audits. We see a wide range of maturity levels in our audits, which are scored on a scale of 0-200. In the RBA Factory LEAD Certification Program, suppliers with scores from 160–180 are eligible for a Silver certification, and scores above 180 for a Gold certification.
From 2016 to 2018, the percentage of production supplier initial audits and full re- audits that scored above 160 increased from 43% to 48%. The average score during that period rose from 125 to 142. Twelve of those audits were of final assembly supplier sites. Of these, 42% scored over 160, 42% scored between 100–160, and 16% scored under 100. The other 53 audits were of commodity supplier sites. In 2018, 49% of commodity suppliers scored over 160, 32% scored between 100–160, and 19% under 100.
We periodically increase our expectations of suppliers, so suppliers must continually improve to maintain a consistent audit score. For example, in 2018 we adopted version 6.0 of the RBA Code of Conduct, which includes requirements related to worker voice and training, pregnant and nursing women, process chemicals, and water management.
In addition to the audit process, we engage with suppliers through coaching, specialized training, and ongoing data collection and conversations that help suppliers develop robust management systems to address root causes. We summarize supplier performance across multiple dimensions (including audits) using our Sustainability Scorecard.
The RBA considers scores above 160 to be in near full conformance with the RBA code. In the newly developed RBA Factory LEAD Certification Program, suppliers with scores from 160 to 180 are eligible for a Silver certification, and scores above 180 for a Gold certification.
RBA Online is an online sustainability data management system designed to help RBA members and their suppliers manage and share sustainability data, including from audits and self-assessment questionnaires that assess risk at the corporate, facility and supplier level.
Please see the Code of Conduct and RBA Validated Audit Program (VAP) Operations Manual.
In addition to comprehensive audits, we conduct targeted assessments to supplement our comprehensive audits, focusing on specific risk areas including:
- Vulnerable workers, such as student, dispatch, and foreign migrant workers
- Health and safety, including fire safety and emergency preparedness
- Supplier sustainability management system maturity
- Supplier environmental performance
Through our Key Performance Indicator (KPI) program, we require our high-risk suppliers to provide data on working hours, vulnerable workers, and other labor metrics weekly. We share this information with supply chain executives and procurement managers for quick identification and correction of issues as needed. Finally, we view input from external stakeholders as a valuable additional source of information.
For more information about progress achieved in our supply chain please see our Sustainable Impact Report and website at: http://www8.hp.com/us/en/hp-information/global-citizenship/index.html