Auditing suppliers in China
Alice Yang and Helen Qi are working for Axel Johnson International’s Ningbo office in China. Since February 2019, they perform sustainability audits onsite at our suppliers around China and Taiwan. Having local auditors is important for us to ensure compliance with our Code of Conduct, which demands responsible production and good working conditions in our supply chain.
China is classified as a high-risk country due to its social and environmental challenges. Our customers should feel confident that the group’s private label products are manufactured under responsible conditions. By performing audits, we aim to improve suppliers’ sustainability performance based on minimum standards outlined in our Code of Conduct. Alice and Helen especially look for the status within some main areas:
- Safety awareness
- 7th day rest
- Labour contract practice
- Occupational health & safety
- Insufficient payment
- Late payment/hold deposit
- Handling of wastewater
- Handling of air emissions
- Handling of chemicals
“We have seen different examples of violations from illegal discharge of wastewater, spilled chemicals in the factory and the workers having direct contact with the chemicals without wearing proper personal protection equipment, to blocked emergency exits or non-existing fire-fighting devices. Also, sometimes not paying the workers directly has been used as a means to retain skilled workers, or simply that the cashflow is not high enough,” Helen explains.
When suppliers have been audited, they are marked as high risk, medium risk or low risk supplier. The results from the audits 2020 shows that ten percent of the group’s Chinese suppliers are high risk and the most common misconducts are related to human rights issues such as overtime remuneration and hours of work.
They all get a feedback document together with a corrective action plan, which includes actions that need to be taken and a time schedule for the improvements. The corrective action plan must be agreed upon and then the supplier will be offered training and support in case of lack of awareness. A follow-up visit is performed within a certain time to see if the supplier has performed all the actions needed.
“We make suppliers fully aware of their existing or potential risks, increase supplier common sense by on-site audit and training, and deliver good management methods. This helps suppliers turn social responsibility into real competitiveness,” says Alice “If a supplier doesn’t act after our feedback and follow-up and fails to provide a safe and healthy workplace for its employees, then ultimately, we will end the cooperation”, says Helen.
Successful impact on suppliers
Providing training and information for suppliers has proved to have a positive effect. Many suppliers have improved their sustainability performance due to clearly communicated expectations, the audits, and the development programme. Out of those suppliers who have received follow-up audits, 93 percent have made clear improvements and many have moved to a lower risk category.
Actions that suppliers successfully have introduced after being audited ranges from introducing personal protection equipment, first-aid devices in connection to chemicals, unblocked emergency exits, anti-falling chains on gas cylinders as well as infrared sensors for machine safety to ensure no one gets stuck with their hands in the machine.
“We tend to talk about what kind of issues we find. There are however many good examples among our suppliers, where they handle the environmental related areas in a responsible way and with good status for the working conditions. Some even provide a day-care centre, recreational area, reading room or a fund for children’s education,” explains Alice.
“We make sure to stay up-to-date with the latest best practice and take refresh training on the latest legal updates, to make sure that we can at all times provide correct training to our suppliers,” Helen says. “Of course, it is also important that we understand our companies’ products to know what we should look for in terms of hazardous substances and so on,” adds Alice.
The audit process will continue and the Ningbo office will put even more focus on providing training and support. Having local auditors is unique and provides the group with a stronger relationship with suppliers as well as an increased loyalty towards customers.