WHY MANAGING IT MATTERS

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Focusing on sustainable supply chain management aligns with our ethical values and business goals. Additionally, customers look favorably upon companies with supply chains that are transparent, well managed and without ethical incidents. Southwire’s approach to responsible procurement practices and supply chain management focuses on our Tier 1 suppliers. By maintaining a sustainable supply chain and procurement practices, we ensure longevity for our company.

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As one of North America’s largest wire and cable producers, 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 we source include metals, such as copper and aluminum, and a wide array of compounds, chemical additives and fillers used to insulate, jacket and construct our wire and cable products. Southwire sources most of these materials from suppliers that mine or manufacture basic feedstocks (e.g., copper cathode or PVC resin) for Southwire’s downstream conversion into raw materials such as copper rod and PVC compounds.

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Mitigating our negative impacts and maximizing our positive impacts extends beyond Southwire’s direct operations. We collaborate and share sustainable business best practices with our key suppliers—large suppliers with whom we have longstanding relationships and/or supply important raw materials—so that every input to Southwire products is made with similar values to those on which we built our family-owned business.

Governance

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, evaluating indicators such as quality, on-time delivery, cost containment and customer satisfaction. We continue to set goals, expand the reach of current and future audits and drive sourcing behaviors based on performance expectations.

Strategic Sourcing & Procurement

Logistics are the most complex and extensive aspect of Southwire’s 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. The Energy & Air Emissions section provides details about our carrier contractors’ participation in the EPA’s Smart Way Program.

We select our suppliers based on their reputation and demonstrated quality, service, innovative technology, price and diversity considerations. To demonstrate our commitment to responsible procurement practices, Southwire’s Global Supplier Sustainability Manual section 11.2 outlines our expectations regarding suppliers’ business conduct. All suppliers in Southwire’s Supplier Sustainability Program return the authorized document to Southwire.

In 2018, we included a human rights clause into every contract that outlines Southwire’s expectation of suppliers.

Southwire is committed to avoiding slave labor, child labor and human trafficking. Southwire’s values establish respect for human rights as a fundamental company principal, one that both Southwire employees and suppliers are expected to honor.

Supplier Diversity

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.

Southwire is an active corporate member of the Georgia Minority Supplier Development Council (GMSDC) and the Greater Women’s Business Council (GWBC), which is the regional affiliate of the Women’s Business Enterprise National Council (WBENC). Our affiliation with these diverse business groups allows us an opportunity to network and benchmark best practices of organizations in the southeast region. Southwire also provides a direct connection for any of our qualified suppliers interested in obtaining minority certifications.

In 2018, Southwire participated in one-on-one meetings with potential suppliers at the Edison Electric Institute (EEI) Business Diversity Conference in Fort Worth, Texas, and the Veterans Business Conference in Detroit, Michigan. We will continue to support and attend similar events in 2019 to identify additional quality suppliers for our internal database.

Strategic Sourcing makes concerted efforts to include diverse suppliers in new bids and has contacted existing suppliers to determine whether they qualify as minority owned. Through these efforts, Southwire added 167 new small or diverse businesses to the list of approved suppliers, and diverse businesses represent 16 percent of Southwire’s supplier base.

Southwire’s spend with small and minority-owned businesses reached record levels in 2018, surpassing $350 million—a 71 percent increase over 2017 levels. Our goal for 2019 is to continue to increase spend and promote the success of the program. Southwire continues to support the supplier diversity goals of utility customers by reporting our expenditures monthly or quarterly to our top utility customers.

Spend on Diverse Suppliers (Millions of Dollars)
Target
500

400

300

200

100

0

$94

 

$129

 

$137

 

$205

 

$352

 
20142015201620172018

 

Diverse Suppliers (Percentage of Supplier Base)
Target
25%
20%
15%
10%
5%
0%

10%

 

11%

 

12%

 

15%

 

16%

 
20142015201620172018

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.

Supplier Relations

Southwire recognizes the critical role suppliers play in our ability to deliver reliable value to customers. To ensure our operations proceed without disruption, we work to uphold our 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 expanded to include 31 critical—high-volume and critical component—suppliers. Through this program, we:

  • Distribute Southwire’s Global Supplier Sustainability Manual;
  • 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

Through 2018, Southwire has audited 82 percent of the suppliers in our expanded Sustainability Program.

Global Supplier Sustainability Manual

Southwire’s Global 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 have 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.

Supplier Sustainability Survey

As a signatory to the United Nations Global Compact, we demonstrate our commitment to Principles 1 through 6, which support human rights and labor standards. Southwire began the process of updating our supplier sustainability survey to verify no use of forced or child labor or other human rights or labor violations within our supply chain.

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On-Site Audits

Southwire developed a phased approach to our Supplier Sustainability Program audits. After successfully accomplishing our goal to conduct on-site audits and put in place performance monitoring for critical suppliers in Phase I, Southwire increased our reach to an additional 23 suppliers as a part of Phase II. The suppliers covered in Phase I and II of this program account for a total of 80 percent of Southwire’s raw material spend (excluding metals). Southwire was unable to meet our goal to complete 100 percent of Phase II audits by the end of 2018 due to scheduling conflicts with four suppliers, but these remaining audits are scheduled for completion in 2019.

  Phase I Phase II
Metric 2014 2015 2016 2017 2018  2019 Target
Supplier Sustainability Program audits completed – Phase I Suppliers 20% 65% 100% Goal
Complete
Goal
Complete
Goal
Complete
Supplier Sustainability Program audits completed – Phase II Suppliers N/A N/A N/A 50% 82% 100%
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The suppliers in our Supplier Sustainability Program are large, multinational corporations with established supply chain programs. Through our audits of these suppliers, Southwire has not uncovered negative environmental or social impacts.

Metals Suppliers

Southwire’s metal suppliers belong to the International Council on Mining & Metals (ICMM). The ten principles of the ICMM align with Southwire’s Global Supplier Sustainability Manual. The ICMM encourages dialogue between its stakeholders—governments, international organizations, local communities and others in the supply chain—to ensure adherence to various environmental and social regulations. Additionally, the same suppliers follow the principles of the UN Global Compact, which establishes a culture of integrity and helps guide the companies to uphold basic responsibilities to people and the environment. Southwire identified one domestic aluminum supplier that is not a member of ICMM; that supplier is included in our list of sustainability audits for completion in Q3 2019.

Human Rights Policies

Southwire updated our human trafficking and conflict mineral policies to align with our focus on supply chain sustainability. Our updated policies now explicitly address labor and human rights considerations and demonstrate to our stakeholders that we actively address these pressing social issues. Southwire requires all suppliers to complete a self-assessment outlining whether their materials comply with laws associated with the aforementioned social concerns. Legal experts review these assessments to ensure compliance.