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Supplier Sustainability Initiatives at Philips Electronics

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Presentation on theme: "Supplier Sustainability Initiatives at Philips Electronics"— Presentation transcript:

1 Supplier Sustainability Initiatives at Philips Electronics
Author : Dr. L. Ramakrishnan, FIEMA, C.Env. Division: Philips Lighting, Asia Pacific Region Project Description : Green Business Summit, CII, New Delhi 14 October 2008

2 In this presentation……..
Introduction to Philips Electronics Philips and Sustainability Supplier Sustainability in Philips - milestones Supplier Sustainability Programme EICC and EICC Audits Audit findings Further Actions

3 Royal Philips Electronics
Founded in 1891 Headquarters: Amsterdam, The Netherlands A global diversified Health and Well-being company with sales in 2007 of EUR 26,793 million Multinational workforce of 133,000 employees (July 2008) Manufacturing sites in 28 countries, sales outlets in 150 countries R&D expenditures EUR 1,629 mln (2007) Number 1 in global lighting Number 1 in medical patient monitoring and number 3 in diagnostic imaging A market leader in lifestyle products for personal well-being and pleasure One of the largest multinationals in China The owner of 60,000 patents Number 43 of the world’s most valuable brands Philips is represented all over the world. The foundations for what was to become one of the world's biggest electronics companies were laid in 1891 when Gerard Philips established a company in Eindhoven, the Netherlands, to 'manufacture incandescent lamps and other electrical products. By 1910, with 2,000 employees, Philips was the largest single employer in The Netherlands. In 1896, Philips produced its first X-ray tube for medical applications, while in the 1920s and 1930s the company diversified further towards radio and television Philips has always been an innovation power house. It’s the inventor of the rotary shaver, the compact audio tape cassette and the Compact Disc, to name just a few. Today we are a global Health and Well-being company with almost 27 billion EUR sales and a workforce of over 134,000, working in the areas of healthcare, lifestyle and lighting. In 2007 our comparable sales growth was 5% compared to 2006 We have a global presence with manufacturing sites and sales in all continents. Our innovative character is underlined by our EUR 1.6 billion (around 6% of our sales) investment in R&D

4 Sustainability is not new to Philips
Anton and Gerard Philips … … innovators and entrepeneurs who succeeded in business while improving the lives of customers and employees. Their founding belief was that by daring to make choices that inprove the lives of people both inside and outside the company, they would be successful not by coincidence but by design.

5 Mission: Improve the quality of people’s lives through timely introduction of meaningful innovations Philips is a top player in most of the markets it serves, as highlighted in this slide We’re a top innovator, illustrated by our inventions like the CD and the rotary shaver, as well as our portfolio of 60,000 patents Philips is close to the consumer. We are known and trusted as one of the 100 top brands, ranking number 42 (2007 study of Business Week and Interbrand), and we have excellent understanding of how consumers interact with technology and what they want from it. Finally, at Philips sustainability is our way of doing business. It offers us a world of opportunities, opportunities we believe we can best exploit by embedding true sustainability throughout the organization. Therefore it’s an integral part of our strategic thinking and acting. Vision: In a world where complexity increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to people

6 Responsible Business is Good Business
Philips expects its business partners to be committed to Sustainable Development

7 Sustainability Initiatives include:
Resource Management Emissions, discharges and wastes Eco-Design/ Green products Code of Conduct - Ethics Occupational Health & Safety Management Eco-Efficiency / Resource Productivity Sustainable New Business Initiatives Employee engagement Sustainability Social Accountability Stakeholder engagement Global Compact Human Rights Social Programmes Supply Chain Risk Management Corporate Philanthropy Wages, dividends, Taxes, Value of Purchases, Profits

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9 1980-1990s - Product Specification to supplier
The journey so far…… s - Product Specification to supplier (Ban of Cadmium, PCB/PCT, PBE/PBB) Philips Green Purchasing Maturity Grid Supplier Sustainability Declaration - Banned Substances Declaration Supplier Sustainability Audits (China) Modified Supplier sustainability Declaration Supplier Sustainability Audits (Philips) - EICC Training and EICC Audits by SGS - Actions on Audit / Resolving issues We are everywhere you go on the planet. Philips is among the top two companies in the medical systems market. Philips is a world leading supplier of imaging systems, ultrasound, monitoring, healthcare information technologies and related healthcare services in more than 100 countries. Our advanced solutions span the entire scope of healthcare and cover every stage of the care cycle – from early detection to preventative pre-screening for diseases like cancer or heart disease; diagnosis and treatment of patients while in hospital; providing technologies for both the sick and the healthy to monitor and manage their health at home; or simply technologies to help people maintain a healthy and active lifestyle. For 115 years, Philips has interacted with consumers in their homes. Each day more than a million of our consumer products are purchased. We are known and trusted as one of the 50 top global brands, Its ranking in the Interbrand list of the world’s most valuable brands increased to 42nd spot with an estimated brand value of USD6.7 billion. And we have unparalleled understanding of how consumers interact with technology and what they want from it. Philips is number one in the market for electric shavers and electric male grooming. The Philips vision for products like the Moisturizing Shaving System is driven by market demand and the changing face of male grooming behavior. Currently, electric grooming products for men are growing at twice the market rate. Philips is an innovator in offering differentiating lifestyle experiences. Examples of differentiating consumer propositions are e.g. the Senseo coffee pod system (meeting consumer demand for individual coffee-drinking moments and an individual choice of tastes), Bodygroom (The first all-in-one, all over body shaver & trimmer for men), Wardrobe care (integrated ironing system comprising a heated board, a high-pressure steam iron, a steamer and a refresher), Aurea TV (immersive home cinema experience) Philips is number one in the global lighting market. We light 65% of world’s top airports, 30% of hospitals, 35% of all cars on the road, and 30% of offices, landmarks such as the Eiffel Tower, the Sydney Opera House, Big Ben and the Great Pyramids, Beijing Chang’an Street, Shanghai International Circuit (Formula 1). These projects can result in significant energy savings such as a 30% reduction for the Eiffel Tower. Philips light 55% of the world’s major football stadiums. Philips lighted 8 of the 12 stadiums in Germany, for the 2006 World Cup finals. At the 2004 Olympics in Athens, there were 33 venues where permanent lighting was required. Philips lit 29 of them. Philips Automotive Lighting is the world’s largest suppliers of lamps to the automotive industry and aftermarket. One of three cars worldwide includes Philips automotive lighting. Philips is the world number one supplier of Xenon car lamps to the automotive industry.

10 Green Purchasing Survey Tool
No or little evidence of any requirements for environmental issues in purchasing procedures. 1 Some evidence exists, e.g. the purchasing and/or supply chain management policy addresses some of the environmental aspects 2 Guidelines and requirements on hazardous substances exist in purchasing and/or supply chain management procedures. 3 Procedures for checking the requirements on hazardous substances are in place and used. 4 All suppliers comply with the hazardous substances requirements. Suppliers guarantee that incoming materials are free of banned substances 5 A system of categories of suppliers exists (key suppliers and co-developers are defined). 10% of key suppliers are ISO certified. 6 Environmental requirements (i.e. focal areas) exist for finished products and parts. In case of co-development Ecodesign arrangements exist between Philips and co-developer. 25% of key suppliers are ISO certified. 7 Procedures for checking the environmental requirements (i.e. focal areas) for finished products and parts are in place and used. The existing Ecodesign arrangements between Philips and co-developer are checked. 50% of key suppliers are ISO certified. 8 In all purchasing contracts on finished products and parts environmental requirements (i.e., focal areas) are included. In all purchasing contracts on co-development Ecodesign arrangements are included. 75% of key suppliers are ISO certified. 9 The organisation is the benchmark (top 5) for environmental issues in purchasing procedures. The top 5 is confirmed by external reports, activities, prizes obtained etc. The organization knows what steps have to be taken to reach the top position among competitors. Plans are ready and in place to reach that. 85% of key suppliers are ISO certified. 10 The organisation is considered the Benchmark for comparable organisations. Recognition by others for best practices. Self-learning organization focused on sustained business excellence, fully integrated with partners. We are everywhere you go on the planet. Philips is among the top two companies in the medical systems market. Philips is a world leading supplier of imaging systems, ultrasound, monitoring, healthcare information technologies and related healthcare services in more than 100 countries. Our advanced solutions span the entire scope of healthcare and cover every stage of the care cycle – from early detection to preventative pre-screening for diseases like cancer or heart disease; diagnosis and treatment of patients while in hospital; providing technologies for both the sick and the healthy to monitor and manage their health at home; or simply technologies to help people maintain a healthy and active lifestyle. For 115 years, Philips has interacted with consumers in their homes. Each day more than a million of our consumer products are purchased. We are known and trusted as one of the 50 top global brands, Its ranking in the Interbrand list of the world’s most valuable brands increased to 42nd spot with an estimated brand value of USD6.7 billion. And we have unparalleled understanding of how consumers interact with technology and what they want from it. Philips is number one in the market for electric shavers and electric male grooming. The Philips vision for products like the Moisturizing Shaving System is driven by market demand and the changing face of male grooming behavior. Currently, electric grooming products for men are growing at twice the market rate. Philips is an innovator in offering differentiating lifestyle experiences. Examples of differentiating consumer propositions are e.g. the Senseo coffee pod system (meeting consumer demand for individual coffee-drinking moments and an individual choice of tastes), Bodygroom (The first all-in-one, all over body shaver & trimmer for men), Wardrobe care (integrated ironing system comprising a heated board, a high-pressure steam iron, a steamer and a refresher), Aurea TV (immersive home cinema experience) Philips is number one in the global lighting market. We light 65% of world’s top airports, 30% of hospitals, 35% of all cars on the road, and 30% of offices, landmarks such as the Eiffel Tower, the Sydney Opera House, Big Ben and the Great Pyramids, Beijing Chang’an Street, Shanghai International Circuit (Formula 1). These projects can result in significant energy savings such as a 30% reduction for the Eiffel Tower. Philips light 55% of the world’s major football stadiums. Philips lighted 8 of the 12 stadiums in Germany, for the 2006 World Cup finals. At the 2004 Olympics in Athens, there were 33 venues where permanent lighting was required. Philips lit 29 of them. Philips Automotive Lighting is the world’s largest suppliers of lamps to the automotive industry and aftermarket. One of three cars worldwide includes Philips automotive lighting. Philips is the world number one supplier of Xenon car lamps to the automotive industry. Target for 2004

11 Supplier Sustainability Initiatives - Responsibilities
Philips Sustainability Board Direction Supply Management Leadership Board Approach Supply Sustainability Platform Programme Supply Managers Deployment Lead Buyers Support

12 Philips Supplier Base Down from (2003) to (2007) 80 % of BOM by 300 suppliers NPR suppliers about 800

13 Supplier Sustainability Programme elements
Setting out the requirements Building Understanding & agreement Monitoring Suppliers Resolving Issues Stakeholder engagement

14 Setting out the requirements
Risk related to spend – More than EU /Year Risk related to country of Production – China, India, Thailand, Brazil, Vietnam, Indonesia, Pakistan, Philippines, Mexico Business Risk – Based on Self-assessment by supplier Type of supplier relationship – Key suppliers

15 Electronics Industry Code of Conduct (EICC)
Labour Health & Safety Environment Management System Ethics

16 Electronics Industry Code of Conduct
Labour Freely chosen employment Child Labour Avoidance Working Hours Wages and Benefits Humane Treatment Non-discrimination Freedom of Association B. Health & Safety Occupational Safety Emergency Preparedness Occupational Injury & Illness Industrial Hygiene Physically demanding work Machine Safeguarding Dormitory & Canteen

17 Electronics Industry Code of Conduct
C. Environmental Environmental Permits & Reporting Pollution Prevention and Resource reduction Hazardous Substances Waste Water & Solid Waste Air Emissions Product content Restrictions

18 Electronics Industry Code of Conduct
Training Communication Worker Feedback & participation Audits and Assessments Corrective Action Process Documents and Records D. Management System Company commitment Management Accountability & Responsibility Legal & customer requirements Risk Assessment & Risk Management Performance Objectives with implementation plans and measures

19 Electronics Industry Code of Conduct
E. Ethics Business Integrity No improper advantage Disclosure of information Intellectual Property Fair Business, Advertising & Competition Protection of Identity Community Engagement

20 Audit non-conformance Categories
Zero Tolerance - Child Labour, Work-weeks, life-threatening situations, slave labour conditions, banned substances Limited Tolerance 3. Minor

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23 Most frequent non-compliances
Audit Findings (2006) Most frequent non-compliances Working Hours – China & Thailand Emergency Preparedness OH & S – PPE, Fire EMS Certification Audit Findings (2007) – more non-conformances BOM: 50 % Labour related –(a) Working hours (17 % of the suppliers with this non-compliance being phased out) (b) Wages and benefits 25 % OH & S – PPE, Open electrical contacts, Fire 25 % Environmental – 45 % to get EMS certification NPR – Temporary Workers, OH & S > Labour

24 Audit Findings (2007)

25 The Way forward Resolve all Zero tolerance issues within specified time-frame Conduct additional surprise audits for selected topics Continue to strengthen the Supplier Sustainability Programme Embed Supplier Sustainability Programme throughout the Supply Management Organization EICC score in Business Balance Score Card within Supply Management Working with suppliers to improve their energy efficiency and reduce their carbon foot-print Align the suppliers in the implementation of the REACH regulations

26 Thank You


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