4 SUSTAINABLE PURCHASING POLICIES FOR THE ENTIRE SUPPLY CHAIN 4.1. sustainable purchasing as a key element of group performance p Financial sustainability risk Since the economic and financial crisis of 2008, which heavily impacted suppliers, the Group has tracked suppliers even more closely. The financial results of all suppliers are analysed, which prevents new contracts from being awarded to suppliers in difficulty and identifies all suppliers at significant risk of default (financial health, shareholder morality, etc.). A status report on suppliers with a significant default risk is presented each month to the Purchasing Department Committee. This authorises action plans and may recommend either cash flow support (one-time reduction in payment terms) or back-up measures (duplicating production, search for successors or investors, etc.). PSA has put in place an adaptive organisation and processes to ensure that it meets the contractual payment deadlines agreed with its suppliers. An action plan is in place to tackle late payments made to suppliers. This will identify any reasons for recurring delays and provide the necessary structural solutions. In 2015, the curative monitoring of suppliers with a high risk of failure based on financial criteria covered 42 companies representing approximately 7.2% of the purchasing costs. Based on this strategy, the Group did not have to halt production in 2015 following supplier failures. p Country risk As a result of the geopolitical crises in some North African and Middle Eastern countries in 2011 and 2012, the Group decided to step up its risk prevention. It has created an intelligence network comprising representatives from quality, sales, suppliers and Internet networks. The aim of the network is to identify countries with a potential risk and offer a joint vision on the political, economic and social risks in these countries. Monthly monitoring is carried out for countries identified as being at critical risk: Argentina, Israel, South Africa, Tunisia, Morocco, Turkey, Iran, Russia, China, Ukraine and Brazil. For Russia, the Group decided to maintain its presence there, despite a critical economic and political situation, and to encourage its suppliers to remain there also. p Critical suppliers A critical supplier is a supplier whose default could lead to production stoppages at the plants or delay the sales launch of new vehicles. We can identify four categories of supplier: p suppliers who partner PSA in innovation projects; p suppliers who are the only source of a product or component; p suppliers for whom PSA purchases represent over 30% of their annual revenue; p suppliers whose failure to adhere to a CSR policy could p Supplier industrial risk Since 2012, PSA has had a specific policy for the prevention of industrial risks by learning lessons from past events (the Jasmine Revolution in Tunisia, tsunami in Japan, etc.). This policy allows the buyer to spot PSA’s exposure to the risks associated with each supplier production site using a matrix that takes into account criteria such as: geographical location (risk of natural disaster), PSA’s share of the site’s output, the specificity of the technology used by the supplier, the number of PSA vehicles concerned by production at the site, etc. This evaluation is routinely carried out for each call for tender and the result is taken into account when selecting the supplier. damage PSA’s reputation were they to have a substantial negative impact on the environment, employment, human rights or society (particularly through unethical conduct). Critical suppliers account for 50% of the Group’s total suppliers. To carry on its business and manage the risks identified above, the Group has an organisation that governs the relationship with its suppliers. Details of this can be found in section 4.2. The measures taken to control CSR risks are described in section 4.3. 138 PSA GROUP - CORPORATE SOCIAL RESPONSIBILITY - Strategic Guidelines, Commitments and Indicators 2015
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