Supplier Relationships

Supplier truck deposits load at Rotterdam factory
We developed a companywide Supplier Code of Conduct in 2009 to capture the spirit of the way we do business and set globally aligned standards for all our suppliers

Our suppliers range from small farming cooperatives to multinational corporations. We consider factors such as capacity, quality and cost when selecting companies to buy from. In addition, we seek only to work with suppliers that can consistently meet our standards and specifications and are committed to standards of conduct compatible with our Five Principles.

Our global Responsible Sourcing strategy comprises consistent sourcing standards for all business segments. This framework ensures a globally aligned approach to how we assess, monitor and train our supply chain partners.

Supplier Code of Conduct

Our companywide Supplier Code of Conduct captures the spirit of the way we do business and sets globally aligned standards for all our suppliers. These include 10 workplace standards that meet or exceed International Labour Organization guidelines. The Supplier Code of Conduct is fully aligned with the requirements of the U.K. Bribery Act, U.S. Foreign and Corrupt Practices Act and the California Supply Chain Transparency Act.

We require compliance with these standards and encourage suppliers to exceed them. All suppliers must sign the Code or demonstrate that existing policies cover all aspects of the Code. All Mars business segments have adopted the Code, and it is being rolled out to all operations and purchasing teams worldwide.

Selecting our suppliers

When selecting new suppliers, we incorporate responsible sourcing criteria at every stage of the process, from analyzing the location of the supplier and associated risks to inclusion of responsible sourcing metrics in commodity scorecards. These scorecards provide an upfront, strategic evaluation of the sourcing landscape for key commodities. They are increasingly used to build responsible sourcing factors into the decision-making process, before individual suppliers are even considered.

Suppliers must demonstrate compliance with specific expectations and labor codes in order to be ‘Responsible Sourcing Qualified’. These vary depending on the results of a third-party supplier risk assessment and can include: alignment with the Mars Supplier Code of Conduct, registration on the Sedex information management system, completion of site-specific self-assessment questionnaires, and completion of an initial responsible sourcing audit.

Precarious workers are those who fill permanent job needs but are denied permanent employee rights1 . We require our suppliers not use subcontractors or assign to any other party its contractual obligations to Mars, without prior written approval by Mars or its subsidiaries. Prior written acceptance of our Code by the approved subcontractor or assignee is required before production begins.

Each supplier is assigned a score from 0-100; suppliers with a score of 100 are considered fully Responsible Sourcing Qualified. At a minimum, all new suppliers must sign the Mars Supplier Code of Conduct or share their policies and practices to demonstrate alignment with Mars’ expectations.

Compliance with our standards

Our program to ensure compliance with our Supplier Code of Conduct evaluates the inherent risks associated with operating in different geographies and purchasing the commodities and services central to our business. We increasingly evaluate and work with suppliers to assess and improve how well they manage these risks and comply with the code.

In some areas of the business, compliance with all responsible sourcing expectations is becoming mandatory for continuing business with Mars. For example, suppliers of branded promotional items must complete all responsible sourcing expectations before any orders can be placed. Suppliers in these areas are informed directly of their requirements by the responsible buyer. However, our philosophy is the same regardless of the area or commodity: if suppliers choose not to comply by repeatedly failing audits and not committing to improve, we replace the supplier.

Mars tracks the number of workers in Tier 1 of its supply chains. When Mars is informed of violations of our Code or any other grievances, the Responsible Sourcing team addresses these at the supplier factory level. We recognise the need for workers to be able to access international complaints processes if local resolutions fail.

The key components of our compliance program are:

  • Risk assessment - we use independent country, commodity and product risk data provided by Verisk Maplecroft (a global risk advisory business) to score, rank and assess the ethical, social and environmental risks associated with what we buy and where we buy it. The results help us decide whether suppliers should complete a self-assessment or whether an independent audit is warranted. Additional in-depth country and risk analysis is also used in our commodity/category buying strategies.

  • Self-assessment - we use the Supplier Ethical Data Exchange (Sedex), a secure database where suppliers can record their ability to manage ethical, social and environmental risks. Suppliers that may pose a risk are required to complete a self-assessment, and the results help us evaluate whether an independent audit is needed. Suppliers may be selected for auditing because of their strategic significance to our business, or because they use practices that may cause concern, such as temporary labor.

  • Auditing - we appoint independent auditors to visit our suppliers and evaluate working conditions and other ethical, social and environmental issues. Trained and accredited auditors use their experience and knowledge of national and local law and culture to gauge whether our Code of Conduct is being implemented and check for further legal or high-risk issues. We develop and track corrective action plans wherever audits suggest that a supplier is not achieving our standards.

All three stages involve independent third-parties. All raw material and packaging suppliers to Mars Chocolate and Wrigley have been risk-assessed using this system. The results are used to inform which suppliers require self-assessment, which should be audited, and which need hands-on support to meet our requirements. They are also used by our purchasing and Responsible Sourcing teams in their performance discussions with suppliers. We continue to roll out the methodology across all business segments. An additional component of our responsible sourcing program is our engagement with AIM-PROGRESS. This is an industry forum of consumer goods manufacturers and suppliers assembled to enable and promote responsible sourcing practices and sustainable production systems. Mars participates on both the Leadership and Advisory Boards.

Suppliers with outstanding responsible sourcing performance and notable accomplishments are recognized through awards and acknowledged at regular supplier events hosted by Mars. We expect our own factories to live up to the same standards. We recognize internal teams with outstanding contributions to responsible sourcing programs. We choose to pursue business relationships with suppliers that demonstrate Mutuality by embracing their role in responsible sourcing.

Building internal accountability

Supplier codes and standards provide little assurance unless they are integrated into day-to-day supply chain management. Our purchasing teams are supported by a global responsible sourcing Center of Excellence with representatives in each key buying geography: Africa, Asia Pacific, Europe and the Americas. Associates on this team work alongside buyers and suppliers to ensure a consistent and centralized approach to responsible sourcing across Mars.

We train buyers in responsible sourcing and build related criteria into their personal development plans. Each purchasing organization in every Mars business and every region has established annual targets regarding completion of responsible sourcing activities by suppliers. Purchasing teams are held accountable to established targets through regular reporting at all levels of the organization, including providing updates to Mars’ senior leaders. In many cases, these targets are part of buyers’ annual accountabilities.

The Center of Excellence works with our internal Sustainability Working Group and other teams to identify and address emerging supply chain risks and opportunities in existing and new markets. This work helps us plan for future trends and respond quickly to political and environmental events. The Center is also assessing the need for additional measures to address the root causes of supplier non-compliances. These measures may include providing nutritional supplements, education or related opportunities to children or vulnerable groups that might otherwise be pushed into inappropriate labor activities. This work is taking place in partnership with industry and civil society organizations.

Mars University has developed several responsible sourcing courses that Associates in relevant roles are required to take. These include robust training for Associates who will implement the program, as well as simpler training for Associates who need to be aware of it. A “buyers’ toolkit” explains the role of the Center of Excellence and the tools available to help buyers make the best possible sourcing decisions. These tools include tailored software provided by Maplecroft, which provides risk analysis by geography.

1 http://www.laborrights.org/issues/precarious-work

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