“IBM’s SCSR program has enabled significant improvements in our sourcing model and solidified accountability in our supply chain practices.” —Louis Ferretti, project executive and organizational owner
Supply Chain Social Responsibility
Initiative extends social responsibility mandates to suppliers and beyond
At IBM, social and environmental leadership is not a new concept or a passing fad. In fact, Thomas Watson Jr., IBM’s former chairman and CEO, established the company’s first environmental objective 40 years ago. Today, IBM chooses to do business with socially and environmentally responsible suppliers and has established a Supply Chain Social Responsibility (SCSR) program to support this goal.
The SCSR program, which began in 2004, is led by an independent SCSR core team that works with the company’s production, procurement, and sourcing staff; the team uses IBM’s well-established Supplier Conduct Principles and a third-party audit process. These principles address working hours, wages and benefits, employee health and safety, non-discrimination, communications, the environment, and ethics.
The audit process identifies areas of compliance and noncompliance, and requires that suppliers develop substantive improvement plans so they can demonstrate full compliance when re-audited.
“While conforming to IBM’s Supplier Conduct Principles is a requirement for all suppliers, the focus of our third-party audits has been, and is, on growth market countries, where management systems to oversee the deployment of such principles are somewhat less developed,” says Louis Ferretti, project executive and organizational owner of the SCSR program. For example, IBM has been engaging potential suppliers in Sub-Saharan Africa to work with the company in terms of agreeing to be audited before business is awarded. This enables these suppliers to have an advanced view of what IBM will expect should a business relationship develop.
With an annual spend for parts and services exceeding $30 billion, IBM can have a far-reaching impact on supplier behavior. IBM’s SCSR program includes production suppliers and suppliers from its large indirect spend.
Another aspect of IBM’s leadership in this area is its participation as a founding member of the Electronics Industry Citizenship Coalition (EICC) and work on the development of the group’s Code of Conduct. In fact, IBM adopted the EICC Code of Conduct and its Validated Audit Process for all manufacturing suppliers in 2010.
As Ferretti puts it, “IBM’s Supply Chain Social Responsibility program has enabled significant improvements in our sourcing model and solidified accountability in our supply chain practices to achieve measurable results."