Supply chain

 
 

Regional ethical procurement in the
manufacturing supply chain

Fuji Xerox ethical procurement program workshop

The Fuji Xerox Group ethical procurement program is focused on parts suppliers to our manufacturing operations. It is intended to evaluate suppliers’ performance on environmental and social criteria and, through a partnership approach, help them improve.

The approach covers environment, human and labour rights and business ethics issues which are particularly relevant in the context of Chinese and other Asian suppliers and manufacturing plants.

Our parent company has been carefully honing its policies and practices in ethical procurement for the past three years, guided by our commitments through the UN Global Compact and the industry-wide Electronic Industry Code of Conduct (EICC) standards. In 07/08, Fuji Xerox launched management guidelines and distributed a checklist for our major manufacturing suppliers. Compliance with 57 core items on the checklist is required of all suppliers — failure to comply could lead to serious business, human rights and environmental risks.

In 09/10 our parent company introduced a second tier to their compliance requirements. Companies that reach full compliance with the 57 core items on the checklist are now challenged to meet compliance with an additional 75 items. Support for suppliers is provided by Fuji Xerox in the form of supplier education workshops and feedback from site visits.

In 10/11 there was a decline in the percentage of suppliers who met 90 percent or more of the 57 core items on the self-checklist. This was due to a number of new suppliers coming on board who were not fully prepared for the level of compliance required by Fuji Xerox.

Ethical procurement questionnaire

Fuji Xerox promotes ethical procurement with suppliers through an annual ethical procurement questionnaire. Based on the findings, meetings are held with suppliers to formulate improvement plans and support supplier improvement initiatives.

The questionnaire is a checklist composed of 263 items in three categories: 73 environment items, 148 human rights and labour items and 42 business ethics items. These cover:

  • prevention of forced and child labour
  • prevention of unfair discrimination and privacy infringement
  • prevention of violence, sexual abuse, sexual harassment and excessive punishment
  • provision of appropriate wages and leave
  • guarantee of the right to collective bargaining*
  • safety from workplace injuries and maintenance of health
  • promotion of human resource development and third party certification.

* We acknowledge that freedom to associate in the interest of collective bargaining is not possible in the Chinese political context.

To address this issue and help new suppliers understand their compliance responsibilities, Fuji Xerox conducted Supplier Executive Seminars in Tokyo, Shanghai and Shenzen. In addition, a cross-functional Fuji Xerox ethical procurement team (including HR, Legal, Procurement and CSR team members) visited suppliers in Japan who have demonstrated strong performance on the self-checklist with the aim of studying their best practise approaches and creating case studies that can be shared with new suppliers or suppliers struggling to meet compliance requirements.

In 11/12 the ethical procurement team will strengthen its ‘visit-and-check’ program, focusing on the Japanese suppliers’ operations in China, and will establish a best practise scheme (based on case studies of Japanese based suppliers collected in 10/11) to share with factories in China. They will also roll out the self-checklist to first-tier overseas logistics suppliers to begin to assess their current compliance.

The results of supplier participation and compliance from the first four years of the questionnaire are outlined below.

Ethical procurement performance

Improving sustainable outcomes with suppliers

Shing Jie Plastics Products (Shenzen) Co. Ltd. manufactures machine parts for Fuji Xerox. When the company had its first labour dispute in 2008 it found that the Fuji Xerox management guidelines and the self-audit helped it address working conditions and improve labour relations.

Until then the firm has concentrated on improving quality, cost and delivery time. The deputy General Manager at the time felt that if the changes had been made a year earlier, the dispute might have been avoided.

“Some of our clients only send out questions”, he said “Fuji Xerox provides full guidelines and feedback… I wish other electronic equipments firms would follow Fuji Xerox and lighten our burden of responding to questions.”