Sustainability report 2020 FINAL - Flipbook - Page 90
Supply security & sustainability
Many of the required raw materials can only be manufactured using hazardous substances and methods
that pose a high risk for human and environmental health. Welcome advances in regional and local
environmental protection have increased scrutiny at some vendors, resulting in manufacturer closures
and consequently supply shortages. To avoid supply interruptions, we closely monitor our vendors to give
early warnings in the case of a potential raw material shortage. To limit our exposure we have created
teams of global category procurement managers to monitor and ensure supply and to work closely with
our internal product management, innovation and manufacturing teams to secure supply and develop
alternative strategies for single sourced raw materials. Projects are in place to identify replacement
substances for raw materials that are, for example, no longer available, require a higher specification,
or to offer more economic alternatives. In addition to this, mechanisms are in place to ensure that the
products specific to our system packages can be manufactured and are aligned to the business needs.
However, for some highly specific raw materials we currently have only one approved vendor. We source
more than 50% of direct and indirect goods and materials from suppliers located in the same country
as the respective Archroma manufacturing plant. This mitigates risk in the supply chain, for example
lead-times and also supports the local industry.
Archroma assures not to engage in business dealings either directly or indirectly with suppliers from regions
with reported high risk of unfair labor practices.
Vendors with insufficient audit results are approached for corrective action.
Due to the nature of the specialty chemicals that we manufacture, a significant part of our feedstocks are
sourced from within India and China. Due to this high regional exposure, dedicated sourcing teams have
been set up in Thane, India, and Tianjin, China, respectively. This increases the diligence in those markets
to supplement the Global Procurement Category Managers.
Vendor selection and management at Archroma is a systematic approach based upon compliance to our
Suppliers Code of Conduct (https://www.archroma.com/compliance).
The historical and anticipated performance, the experience as a vendor and the financial stability of the
vendor are regularly assessed to determine compliance to the Supplier Code of Conduct. In addition,
all vendors are monitored on a monthly basis using “on time in full” metrics for supply performance
measurement. Vendor risk assessment may introduce additional measurement criteria to mitigate supply
risk, such as the vendor safety infrastructure and dangerous goods managing capabilities.
Archroma communicates to, and expects its vendors to share its commitment towards ethical business
practices, human rights and labor standards, anti-corruption and not to allow modern slavery and child
labor. All suppliers have been screened qualitatively and excluded from business relation in case of
Furthermore, Archroma requests all material suppliers to present valid certification from EcoVadis,
the partner of choice of the “Together for Sustainability” initiative. The EcoVadis methodology follows
recognized international sustainability standards.
In addition, the Archroma procurement team goes beyond EcoVadis certification by performing its own
research, market intelligence and supplier audits, in order to derive the Archroma Sustainable Sourcing
Rating (ASSR) as risk assessment for each supplier. Having started the roll-out of the ASSR program in FY2018,
Archroma has already achieved a coverage of more than 70% of its material spend with valid ratings during
the reported period. A coverage of more than 90% is the objective of FY2021. The Archroma procurement
team works closely with all suppliers to onboard to EcoVadis, to Archroma on-site audit program, or to the
screening by the Institute of Public and Environmental Affairs, and to achieve continuous improvement.
A dedicated, full-time Sustainable Sourcing Manager is driving the program and supporting vendors and