Driving CSR (Corporate Social Responsibility) Performance down the Supply Chain

[somashekar]

We are a leading OEM supplier, and on the behest of our customer we have done our bit to align with the Electronic Industry code of conduct (EICC) as a part of supplier sustainability drive.
see here about EICC
One of the requirement in the code is to get the next tier suppliers to acknowledge and implement the code.
Can some experts share ideas how we can get the next tier suppliers willingly take and adopt this drive ~~~

 

[Stijloor]

Re: Driving CSR Performance down the Supply Chain

We are a leading OEM supplier, and on the behest of our customer we have done our bit to align with the Electronic Industry code of conduct (EICC) as a part of supplier sustainability drive.
see here about EICC
One of the requirement in the code is to get the next tier suppliers to acknowledge and implement the code.
Can some experts share ideas how we can get the next tier suppliers willingly take and adopt this drive ~~~

Suggestions anyone?

Thank you!!

Stijloor.

 

[Ajit Basrur]

Re: Driving CSR Performance down the Supply Chain

Adopting CSR in emerging economies like China and India could be challenging !

 

[Jim Wynne]

Re: Driving CSR Performance down the Supply Chain

We are a leading OEM supplier, and on the behest of our customer we have done our bit to align with the Electronic Industry code of conduct (EICC) as a part of supplier sustainability drive.
see here about EICC
One of the requirement in the code is to get the next tier suppliers to acknowledge and implement the code.
Can some experts share ideas how we can get the next tier suppliers willingly take and adopt this drive ~~~

First, I was thrown by the "CSR" in the thread title. I see the automotive Customer-Specific Requirements when I see "CSR," but I think you're referring to Corporate Social Responsibility, no?

You're a supplier to a major OEM, and you've adopted this code at their "behest," which I take to mean "demand." Correct me if I'm wrong, but if I'm right, you should first try to reason with your suppliers, explaining the merits, and if that doesn't work, you should issue a "behest" as your customer did with you.

ETA: I see that a tag has been applied to this thread which indicates that "CSR" stands for "customer specific requirements" so I wasn't alone in my misapprehension.

 

[somashekar]

Re: Driving CSR Performance down the Supply Chain

First, I was thrown by the "CSR" in the thread title. I see the automotive Customer-Specific Requirements when I see "CSR," but I think you're referring to Corporate Social Responsibility, no?

You're a supplier to a major OEM, and you've adopted this code at their "behest," which I take to mean "demand." Correct me if I'm wrong, but if I'm right, you should first try to reason with your suppliers, explaining the merits, and if that doesn't work, you should issue a "behest" as your customer did with you.

ETA: I see that a tag has been applied to this thread which indicates that "CSR" stands for "customer specific requirements" so I wasn't alone in my misapprehension.

Yes Jim, its the corporate social responsibility. I have corrected the opening post subject line.
and Yes again. Here behest = DEMAND
But then the customer patronize the EICC and the code, and subject us to the 3rd party audit for which we have agreed vide a sustainability agreement which is again a basis for our continued business relationship. This 3rd party audit us and find that we have not done anything about driving the next tier suppliers to acknowledge and implement the code, and gives a finding to be corrected. Now the customer follows up for a timely action with us on this finding.
And think about it .... we even ended up paying for this audit to the 3rd party.
I have done the same 'behest' with some key suppliers and then its again open, as I have no idea how he will take it. No response or word of commitment I get back.
In the shadow of it being said as voluntary it seems to be pushed down upon us. If I ask more from my supplier for the same cost of parts supplied, he will tell me to take a hop...
So how does one work around this pseudo voluntary sustainability ~~~

 

[Sidney Vianna]

Re: Driving CSR Performance down the Supply Chain

So how does one work around this pseudo voluntary sustainability ~~~

I suspect that one of the first things you must do is to ask the (seemingly) resisting suppliers to explain what in The Code makes them concerned. It is totally possible that the suppliers see such requests as an additional cost without any potential gain for them. How exactly are you flowing it down? Have you tried to educate the suppliers on the potential benefits of complying with The Code? Many times the customer must clearly go through the risk/reward analysis with the suppliers so they understand the WIIIFM factor.

Furthermore, you said that you had to engage with a third-party (at your expense) to be assessed against The Code. So, the third-parties benefit financially from the assessments. Make them help you educating the suppliers. After all, this would be a great marketing opportunity for them. Why would you have to do all the work of "converting the skeptical" if others will financially benefit from it?

Just some thoughts.

 

[somashekar]

Re: Driving CSR Performance down the Supply Chain

I suspect that one of the first things you must do is to ask the (seemingly) resisting suppliers to explain what in The Code makes them concerned. It is totally possible that the suppliers see such requests as an additional cost without any potential gain for them. How exactly are you flowing it down? Have you tried to educate the suppliers on the potential benefits of complying with The Code? Many times the customer must clearly go through the risk/reward analysis with the suppliers so they understand the WIIIFM factor.

Furthermore, you said that you had to engage with a third-party (at your expense) to be assessed against The Code. So, the third-parties benefit financially from the assessments. Make them help you educating the suppliers. After all, this would be a great marketing opportunity for them. Why would you have to do all the work of "converting the skeptical" if others will financially benefit from it?

Just some thoughts.

While the agreement to be audited per the code is signed by us with the customer, the selection of the 3rd party is the customer's choice, and we paying for the audit is out of the agreement context. Our payment has been in protest. With the experience I had with the 3rd party auditor's, given my choice, I will not let them enter our premises again. The third party audit body and customer have global agreements to support each other. We have nothing with them and would not recommend them to anyone from what we know after our interactions.
I have taken your line in explaining this code to suppliers and opening up a dialogue with them to see and assess how much that are already aligned, and what they could plan around this going ahead. Hope it works.

 

[Dr. L. Ramakrishnan]

Re: Driving CSR Performance down the Supply Chain

Dear Somashekar,

I have experience of implementing and assessing EICC code in India, China and quite a few south east Asian countries. In each country we have certain issues which are understood by organizations as normal but do not meet the EICC code. If you are specifically interested in suppliers in India, first and foremost issues is "compliance" with environmental, labour (including child labour), health and Safety legislation. Other major issue is bribery and corruption (another issue, which you may come across rarely is the intellectual property rights). If your suppliers are large corporations, I do not know if they would like themselves to be subjected to EICC assessment unless you have a substantial business with them; even then I am doubtful if they would agree for an assessment. With the small scale industry you will have issues which are difficult, under the Indian conditions, to be solved. I suppose that you are not a signatory to EICC and that your customer is asking for the second tier supplier to meet EICC code. In that case it is better to define the scope (in your agreement with your customer) and restrict the EICC assessment to those suppliers on whom you have control and whom you can influence.

As for the preparedness, both your organization as well as the supplier organization have to be prepared for an assessment. This includes training, gap assessment, handholding, mock assessments and final assessment. It is also better to have a framework checklist for carrying out assessments; otherwise there is a possibility of subjectivity coming in.

I would be happy to assist you in case you have specific issues.

With kind regards,

Ramakrishnan

 

[Chennaiite]

Hi Somashekar,

Just thought of sharing my experience on the subject.
We, as a Auto OEM, conduct Sustainability Development Evaluation for all our Suppliers using a checklist of our own. End of it, we provide a Rank that would indicate the performance of a supplier in terms of Social Responsibility. We would not disturb the Suppliers who end up within Top 2 Ranks. For the third ranked suppliers we ask for the action plan and would conduct re-evaluation at appropriate stage. For the poorly ranked suppliers, we recommend third-party audit, of which the cost of their first visit will be borne by us (Customer). The Supplier bears the cost of subsequent visits, if any. This requirement of us is made explicitly in our RFQ (Request for Quotation) which is supposed to be taken into account by the Suppliers when they reply RFQ.

Most importantly, we make it clear with the Suppliers that, their failing to meet the Sustainability requirements will in no way harm the Business relationship between the two parties. The idea is not to strangulate the Suppliers, but to bring a positive change for the Society, however small it is, using our stature as a Customer.