Adapting to drive positive change in the supply chain
We have several mechanisms in place to ensure that our suppliers understand and adhere to the behaviors and business practices we expect. The most fundamental of these is that we ask all our suppliers to sign our Supplier Code of Conduct. This is based on our own Code of Conduct and the UN Global Compact’s ten principles in the areas of human rights, labor, environment, and anti-corruption. If suppliers adhere to it, then we’re happy that they’re behaving in a way that does meet our exacting standards.
Audits to improve business processes
But signing the Code of Conduct is one thing; consistently meeting its requirements is another thing altogether. And that’s not to say that suppliers purposefully fail to meet the requirements. Sometimes, they simply don’t understand how they might need to change or alter their business practices to adhere to the Code of Conduct.
This is where another critical process comes into play: our supplier audits. These are undertaken annually for our key suppliers and contract manufacturers and, despite the perception of an audit being an onerous test, ours are designed to be highly collaborative, and focused on helping the supplier improve their business processes. But that’s not to say they aren’t also incredibly detailed – whether conducted on-site, online or as a hybrid audit.
Sharing best practices
It’s a rigorous process, but one that’s essential if Axis is to continue to meet its stringent standards for sustainability, CSR, and business ethics. But it’s one that suppliers see positively, as Ausra Reinap, Senior Environmental Engineer at Axis, and a member of the company’s Environmental Council explains: “The vast majority of our suppliers welcome the audits. In many ways, we can act as consultants to them, sharing best practice from other suppliers, providing training and support, and increasing understanding."
It genuinely feels like we’re making a real difference to their businesses, which in turn makes a significant difference to ours.
Remote or hybrid audits
With travel and face-to-face contact restricted during the pandemic, on-site supplier audits were difficult to conduct. Cancelling audits would have hindered our ability to ensure suppliers are adhering to our Code of Conduct, so we revamped our supplier audit process instead. Now we can run audits online, on-site, or in a hybrid manner to ensure our exacting standards are being met.
While we prefer an on-site audit with new suppliers, remote or hybrid audits are ideal for situations where we have existing supplier relationships. For example, the process of reviewing a supplier’s documentation is as comprehensive when done virtually as it is on-site, but it optimizes resources, saves time, and reduces our carbon footprint.
It's important that both parties understand the limitations of a virtual process. For instance, it’s not ideal for a walk through of the factory floor to see the production process. Looking through a webcam is restrictive; you don’t have the ability to explore the surroundings. It also makes it challenging to understand the layout of the factory and all the processes taking place on that site.
Similarly, communication can be more difficult when discussions happen remotely. When we need to discuss wages, working hours, health & safety or other issues relating to human rights, it is better to have those conversations in person and avoid any miscommunication.
Supplier audits are a critical process, and we need to be sure our high standards are met. To do this, we run thorough risk evaluations to identify where online and hybrid audits can be conducted. We reserve this approach for existing suppliers only, as it’s best suited for situations where we already have a trusted relationship and a good understanding of a supplier’s business.
Two-day audit on-site
When auditing a new supplier or running an on-site visit as part of a hybrid audit with an existing supplier, our team typically spend at least two days on site. Suppliers receive a detailed agenda of what we want to run through as well as a request to complete a self-assessment form ahead of the scheduled audit. During the audit itself, we’ll meet key personnel from the Health and Safety, Management, Human Resources, Quality Control, and Environmental teams, in addition to undertaking a tour of any manufacturing facilities.
Ausra Reinap explains how a typical on-site audit works: “We begin with training on our requirements based on the Axis Supplier Code of Conduct. Afterwards we take a factory tour where we focus on environment, occupational health, and safety by looking at various processes within production, specifically where hazardous chemicals are used. We visit chemical storage as well as hazardous waste storage. We look at water treatment processes as well as how emissions to air are controlled.”
She continues: “To verify compliance with our requirements regarding working hours, health examination, health and safety training, etc. we review documentation on randomly selected employees. We go through documentation such as environmental aspect list and targets, risk evaluation of occupational hazards, etc.”
Following every audit, we produce a report of our findings and any actions we need to see taken to improve those areas highlighted as not meeting the standard. These need to be achieved within six months of the audit, which we assess though a follow-up audit.
Through long-term collaboration and close interaction with our suppliers, distributors, and partners, we aim to boost transparency and encourage ethical business behavior throughout our entire value chain. This is a key element of our focus on responsible business conduct. At Axis, we actively engage in maintaining strong ethical standards – taking action to make sure business is conducted in a responsible, transparent, credible, and consistent way.