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 without ethical incidents.
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 used to insulate and jacket our wire and cable (such as PVC, XLPE, rubber and CPE). Most of these materials are sourced from suppliers in North America, South America and China.
Mitigating our negative impacts and maximizing our positive impacts extends beyond Southwire’s direct operations. We influence the sustainable business practices of our suppliers so that every input to Southwire products is made with similar values on which we built our family-owned business.
Southwire’s executive vice president of distribution, sourcing and manufacturing strategy 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 practicable, we strategically source raw materials closer to the appropriate manufacturing plant to limit distance traveled, and we use intermodal transport whenever possible.
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 based on 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 suppliers based on volume of spend, criticality and risk. Located in North America (22 suppliers) and China (4 suppliers), these suppliers accounted for 58 percent of raw material spend (excluding metals) and 22 percent of trading goods spend in 2016.
To further enhance and develop our sustainability program, we identified an additional 23 raw material key suppliers scheduled for audit in 2017–18. These Phase II suppliers, along with the original raw material suppliers, account for a total of 80 percent of the raw material spend (excluding metals).
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 details our expectations with respect to quality, environmental, social and governance practices in our supply chain. Since the program’s inception, 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. To communicate further our commitment to responsible procurement, as part of the Southwire Sustainability Program, Southwire completed a Supplier Code of Conduct, which is provided as part of the program.
Several years ago, Southwire set a goal to deploy the Southwire Supplier Sustainability Manual throughout the supply chain with on-site audits and performance monitoring in place for 100 percent of key suppliers by year-end 2016, which we successfully accomplished. We are now increasing our reach to an additional 23 suppliers, with a stated goal of Phase II audit completion by the end of calendar year 2018. We report our progress on this goal and other metrics below.
Human Rights Policies
Southwire’s human trafficking and conflict mineral policies align 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.
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 businesses and those 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 practicable.
Through the Georgia Minority Supplier Development Council (GMSDC), Southwire has access to the national database of certified minority suppliers. In addition to being a member of the GMSDC, Southwire will become a Corporate Member of the Greater Women’s Business Council, which is the regional affiliate of the Women’s Business Enterprise National Council (WBENC). Our affiliation with these diverse business groups will help us encourage and support our current qualified suppliers to obtain their minority certifications.
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. 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 and highlight our diverse business partners.
To enhance our focus on supplier diversity within the Strategic Sourcing department, we actively promoted the capabilities of diverse suppliers. We created an internal database organized by product category, and encouraged buyers to include these suppliers in their Request for Quotes regardless of the dollar value. Through this effort, we added 73 diverse businesses to our list of approved suppliers in 2016. We will track the volume of requests from buyers to identify the category of diverse business needed. We will also review bids submitted to diverse suppliers and the results to determine areas where these suppliers provide the most value.
We identified three internal supplier diversity champions, one within Sourcing and two in other functional areas of the organization, who excelled in their efforts to engage diverse business owners. Including personnel in other business groups expands the ownership of reaching diversity targets beyond the Strategic Sourcing group.
To increase our presence in an underserved business category, Southwire was featured on a panel at a procurement event aimed at LGBT (lesbian, gay, bisexual and transgender) business owners. Through collaboration with our customers, Southwire partnered with a small business for an installation project. As a result, we increased spend with certified HUB-Zone (Historically Underutilized Business Zones) businesses by $1 million over 2015.
By the end of 2016, Southwire completed audits at 100 percent of our 22 key raw material suppliers. The new target is to audit 100 percent of the suppliers identified for the second tier of the Sustainability Program by the end of 2018.
Freight Spend With Smart Way Carriers
Supplier Sustainability Program Audits Completed
|Metric||2017||2018 Completion Target|
|Supplier Sustainability Program audits completed Phase II Suppliers||50%||100%|
|Average dollars spent on diverse suppliers (millions)||$94||$129||$137||$135.5|
|Increase dollars spent on diverse suppliers by 5% year over year||37% YOY increase||6% YOY increase||6% YOY increase|
|Diverse businesses as percent of supplier base||10%||11%||12%|
|Freight Spend with Smart Way Carriers||60%||64%||76%||73%||80%|