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

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

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