CNH Industrial purchases materials, parts, and components from third-party suppliers. The Group had approximately 6.150 global direct suppliers to its manufacturing facilities at December 31, 2013. The Group’s focus on quality improvement, cost reduction, product innovation and production flexibility requires it to rely upon suppliers with a focus on quality and the ability to provide cost reductions.
CNH Industrial views its relationships with suppliers as partnerships, and in recent years, it has established closer ties with a significantly reduced number of suppliers, selecting those that enjoy a leading position in the relevant markets.
CNH Industrial relies on numerous suppliers. The sudden or unexpected interruption in the availability of certain of its suppliers’ raw materials, parts and components could result in delays or in increases in the costs of production. In order to avoid these issues, CNH Industrial’s standards of environmental and social sustainability have been fully integrated into its supply chain management. The supplier selection process looks not only at the quality and competitiveness of a supplier’s products and services, but also adherence to the Group’s social, ethical and environmental principles.
Group companies use the International Material Data System (IMDS) – an online database of source and content of products from suppliers – to monitor and optimize the recyclability and recoverability of the vehicles and components produced. Through the IMDS, Group companies are able to guarantee customers that products are environmentally- compatible and conform to EC Regulation 1907/2006 (REACH) on management of hazardous chemicals and associated risks, as well as EC Directive 2000/53/EC on waste from end-of-life vehicles and EC Directive 2005/64/EC on vehicle reuse, recycling and recovery.
In order to better develop specialist products with high quality, CNH Industrial has built long-term relations with single suppliers for certain components.
CNH Industrial has various initiatives in place to incentivize supplier innovation. Through the Supplier Performance (Su.Per) program, in particular, it encourages suppliers to be proactive by sharing the economic benefits generated by innovative methods and technologies that they have proposed. In 2013, six suppliers benefited from this program and six supplier proposals were implemented, generating economic benefits in favour of suppliers valued at €400 thousand.
Continuous improvement is also seen in World Class Manufacturing Purchasing, which, in collaboration with the World Class Manufacturing (WCM) team, has continued providing its advice to suppliers intending to implement the WCM system. During the year, WCM was implemented at additional supplier plants, reaching a total of 98 supplier sites. This means they now apply what is considered to be one of the world’s leading set of manufacturing standards.
In addition, in order to promote good practice within the supply chain, a selected number of suppliers (45) has been involved for the first time in 2013 in responding to the Carbon Disclosure Project questionnaire to assess the strategies adopted to fight climate change and the initiatives already in place or to be implemented to reduce CO2 emissions.
Furthermore, in order to assess whether suppliers meet the sustainability standards set by CNH Industrial and, where necessary, take steps towards improvement and realignment, a monitoring process has been designed and implemented. It is based on two main tools (self-assessment questionnaires and follow-up audits on-site) mainly focused on the following issues: human rights, environment, health and safety, ethics and anti-corruption, and personnel training and development. In 2013, 32 suppliers were assessed through the questionnaire and 62 audit were performed in China, India and Europe.