Extensive vertical integration of our supply chain limits complexity and helps us guarantee a stable and steady source of inputs for our operations. Additionally, this enables Southwire to apply our sustainable business practices directly to processes that might otherwise fall outside our sphere of immediate influence.
Southwire relies on three main groups for a strong, adaptable supply chain: raw materials providers, logistics and contractors. The primary raw materials in our supply chain include metals, such as copper and aluminum, and a wide array of compounds and plasticizers used to coat our wire and cable (such as PVC, XLPE, rubber and CPE). Most of these materials come from suppliers in North America, South America and China.
Focusing on sustainable supply chain management aligns with our ethical values and business goals. Additionally, customers look favorably upon supply chains that are transparent, well managed and devoid of ethical incidents.
Southwire manages supply chain sustainability through:
- Strategic sourcing
- Supplier relations
- The Southwire Supplier Sustainability Program
- Human rights policies
- Supplier diversity
Southwire’s executive vice president of strategic sourcing, logistics and energy manufacturing oversees our supply chain sustainability. Southwire also evaluates our Strategic Sourcing Department on the sustainability of our supply chain.
Strategic Sourcing and Logistics
Logistics are the most complex and extensive aspect of our supply chain. Effectively managing this complexity drives down costs for our customers and reduces our environmental impact. To the extent practical, we strategically source raw materials closer to the appropriate manufacturing plant to limit distance traveled, and we use intermodal transport whenever possible. Historically, we have sourced approximately 95% of aluminum from the United States to reduce freight costs, which in turn decreases our carbon footprint.
We encourage our carrier contractors to participate in the EPA’s Smart Way Program in alignment with our fuel efficiency expectations. This program creates a win-win-win outcome: our carriers save on fuel costs, our logistics expenditure declines and the environment benefits from diminished carbon intensity. Carrier membership is dependent upon improvement from baseline statistics in various categories. To see our performance on the topic, see G4-EN19 below.
Southwire recognizes the critical role suppliers play in our ability to deliver reliable value to customers. We select our suppliers according to their reputation and demonstrated service, quality, innovative technology and price. To ensure our operations proceed without disruption, we work to uphold preferred status with our suppliers by maintaining steady demand.
We collaborate extensively with the suppliers of our most significant inputs—copper and aluminum—to identify potential risks and opportunities. For example, we participate in the Copper Club, hold a series of meetings with the American Copper Council, attend the Center for Copper and Mining Studies (CESCO) annual conference and meet with metals suppliers throughout the year.
Supplier Sustainability Program
Along with our supplier relations initiatives, we actively manage our Supplier Sustainability Program, which includes 26 critical raw material (excluding metals) suppliers based on volume of spend, criticality and risk. These suppliers account for 68 percent of raw material spend (excluding metals) and are located in North America (22 suppliers) and China (4 suppliers).
Through Our Supplier Sustainability Program, we:
- Request participants submit environmental, social and governance information annually;
- Ensure all participants complete an annual sustainability survey; and
- Conduct an on-site audit of participants’ environmental, social, governance and quality management systems.
The Southwire Supplier Sustainability Manual, updated in 2014, details our expectations with respect to quality, environmental, social and governance practices in our supply chain. In both 2014 and 2015, we distributed the manual to 100 percent of suppliers in the Supplier Sustainability Program. Companies acknowledge they have read the manual prior to or concurrent with Southwire’s on-site audits.
Human Rights Policies
Southwire released our human trafficking and conflict mineral policies in 2015, a development that aligns with our focus on supply chain sustainability. These policies demonstrate to our stakeholders that we actively address these pressing social issues, and we associate with organizations that share our concern. Southwire also requires all suppliers to complete a self-assessment outlining whether their materials comply with human trafficking laws and conflict minerals reporting templates, if applicable.
To communicate further our commitment to responsible procurement, Southwire completed a draft of its Supplier Code of Conduct in 2015 and rolled it out to our suppliers in January 2016.
We consider supplier diversity an important aspect of a sustainable supply chain. Operating under Southwire’s Strategic Sourcing department, our Supplier Diversity program ensures that Southwire identifies:
- Qualified small business and businesses owned and operated by minorities, females or veterans in our strategic sourcing and procurement processes; and
- Opportunities to foster the development and advancement of diverse businesses, when and where practical.
Southwire joined the Georgia Minority Supplier Development Council (GMSDC), through which we have access to the national database of certified minority suppliers.
Some of our larger customers, particularly utilities, have their own supplier diversity goals. To help them attain those goals, we commit to collaborating with diverse businesses and continually assess our progress. To that end, we report our expenditures monthly or quarterly to our top utility customers. In addition, Southwire is developing a Supplier Diversity webpage that will include quarterly spend results.
To enhance our focus on supplier diversity in 2015, we held training sessions for our buyers and propose to provide similar training for our sales and operational personnel in the future. We identified internal supplier diversity champions and plan to recognize them for their efforts.
Looking forward, we plan to create sourcing requirements for all purchases of products or services valued over $10,000 that are not covered under contractual obligations. Under the new guidelines, and wherever feasible, our buyers must obtain three quotes, one of which must come from a diverse supplier.
To increase supplier diversity presence in underdeveloped business categories, we intend to create strategies to engage LGBT (lesbian, gay, bisexual and transgender), veteran-owned and HUBZone (Historically Underutilized Business Zones) businesses.
Supplier Sustainability Program
By the end of 2015, Southwire completed audits at 65 percent (17 of 26) of our key suppliers, nearly achieving our goal of auditing 70 percent of our suppliers a year early. This puts us on track to meet our ultimate goal to audit 100 percent of our key suppliers by the end of 2016.
|Year||Freight Spend with Smart Way Carriers|
|Increase dollars spent with diverse suppliers by 5% year-over-year||37%|
Other metrics that we track with respect to supplier diversity:
|Average dollars spent on diverse supplier (millions)||$94||$129|
|Diverse businesses as percent of supplier base||10%||11%|