Supply chain management
Procurement activities at Daimler are managed in three departments: Procurement Mercedes-Benz Cars and Vans, Procurement Daimler Trucks and Buses, and International Procurement Services — Non-Production Materials. Procurement is represented at more than 50 Daimler locations worldwide. The goal of procurement at Daimler is to create an effective global supplier network that contributes to the company’s business success.
Successful sustainability pilot training programs in the supply chain
In May 2010 we offered our first sustainability pilot training programs for suppliers in Turkey in cooperation with Ford, General Motors, Renault, and Toyota. The training sessions were organized by the Automotive Industry Action Group (AIAG), an American association that is dedicated to standardization activities in the automotive industry. The joint approach of various manufacturers and suppliers boosts efficiency and makes it clear to suppliers that automakers assign a high priority to this issue.
The training program in Turkey focused on working conditions, environmental standards, and the associated demands that are placed on management systems. A Turkish attorney provided information about the Turkish laws relevant to these areas. Approximately 140 suppliers participated in the training program, including 13 Daimler suppliers for Procurement Trucks and Buses (PTB) and International Procurement Services (IPS). “The participants were very interested and the response was positive across the board,” said Celil Kayserilioglu, head of Procurement Trucks & Buses Turkey.
All of the suppliers agreed that the results of the training program will impact the business operations of their companies and subcontractors. Sustainability thus also becomes an issue for smaller companies along the supply chain. The majority of the participants were in favor of regular training sessions so that sustainable activities can be jointly promoted. In response to the successful initiative in Turkey, Daimler cooperated with other automakers to also offer pilot training programs in Brazil in the fall of 2010. The approximately 500 participating companies included about 40 suppliers of Mercedes-Benz. Beginning in 2011, we plan to run such training courses specifically for suppliers in high-risk countries.
Our standards and requirements
We seek to achieve sustained and efficient cooperation with our suppliers in a system marked by agreement on mutual expectations and obligations. The aspects we consider important include:
- Clearly defined performance criteria (quality, technology, costs, delivery reliability);
- the values of fairness, reliability, and credibility;
- sustainability standards that we have formulated in our supplier guidelines.
The Daimler Supplier Network (DSN) has defined the Daimler procurement business philosophy as “Commitment to Excellence.” The main principles of this philosophy are performance and partnership. Supplier performance is measured with the help of the External Balanced Scorecard, which evaluates quality, technology, costs, and delivery reliability, while partnership is assessed in terms of fairness, reliability, and credibility.
Principle of sustainability. Our expectations regarding ecological, social, and business ethics issues are formulated in our Sustainability Guidelines for Suppliers. At the end of 2010, these guidelines were made a binding element of the Mercedes-Benz Special Terms and the General Conditions of Procurement that apply to the majority of our suppliers. Additional individual agreements are now being gradually adapted worldwide. Sustainability and compliance are also part of the compulsory program for new employees.
Consistent application of sustainability standards in the supply chain is also very important for maintaining our company’s reputation. For this reason, it’s also the subject of extensive discussions with our stakeholders at events like the Daimler Sustainability Dialogue. We maintain contact with our competitors as well in an effort to jointly promote the development of more uniform standards (see “Successful sustainability pilot training programs in the supply chain”).
We want to work together with our suppliers to ensure that sustainability standards are maintained along the entire supply chain. That is why our Sustainability Guidelines also contain stipulations for ensuring that our suppliers conduct business in a sustainable manner. The stipulations are aligned with international standards like the United Nations Global Compact and supplement existing Daimler regulations such as the Integrity Code, the Principles of Corporate Social Responsibility, and the Group’s Environmental Guidelines.
Since the end of 2010 the Sustainability Guidelines have been a binding part of the Mercedes-Benz Special Terms and the General Conditions of Procurement, which are valid for the majority of our suppliers. We are gradually adapting other contracts worldwide.
Key requirements of the guidelines:
Work conditions/human resources
Daimler is committed to, and actively supports, human rights. Wherever possible, we also support the spread of human rights on the part of our suppliers. When investigating any suspicion regarding human rights violations within our supplier chain, we closely cooperate with our World Employee Committee. Systematic investigation of such cases is ensured here by a jointly defined procedure.
Environmental standards
Daimler’s aim of making production operations as environmentally friendly as possible is not restricted to its own production facilities; it also applies to materials and components purchased from suppliers. The criteria for selecting materials and applying recycling standards are listed in the Mercedes-Benz Special Terms. With regard to these issues we conduct continuous discussions with our suppliers. Our suppliers comply with the ISO 14001 norm or are certified according to a comparable standard.
Integrity
It is crucial to us that corruption be rigorously combated. We have communicated our Daimler Integrity Code to all of our business partners. In addition, the themes of integrity and compliance are integral parts of our training programs for new procurement employees. Employees or suppliers who suspect any wrongdoing regarding compliance issues can address their concerns — also anonymously if they prefer — to the central Business Practices Office (BPO). Daimler also categorically rejects any form of discrimination, for example on the basis of race, gender, religion, age, or political beliefs.
Download Daimler’s sustainability guidelines for suppliers: PDF, 104 KB
We utilize a variety of instruments to support and monitor the implementation of our sustainability measures. These include training programs as well as dialogue and communication. In 2010 we introduced supplier sustainability self-assessments and training programs as pilot projects (see “Successful sustainability pilot training programs in the supply chain”). Both measures proved effective and will be launched as standard instruments in 2011.
Implementation and monitoring
We conducted country and product group-based risk analyses to ensure that our suppliers remain in compliance with our sustainability standards and that we can train them accordingly. Beginning in 2011, suppliers identified in our risk analyses will be required to fill out an online questionnaire that provides information on how well they meet our sustainability requirements. An audit or training measure can then be implemented, depending on the results of the sustainability self-assessment. We also reserve the right to take further measures if serious violations occur.
