Supply chain news
Mar 25, 2021 Outokumpu to develop its supplier monitoring and transparency in sourcing
Mar 12, 2021 Supplier Assessment Questionnaire published
Mar 2, 2021 Sustainability Review 2020 published
Feb 23, 2021 Outokumpu's response to Finnwatch report
Feb 23, 2021 Press release: Outokumpu expects its suppliers to act responsibly
Global operations, local suppliers
- Over 9,000 suppliers globally. Clear majority of suppliers are located in those countries in Europe, USA, and Mexico, where we have our production units.
- Local suppliers account for about 80-90% of purchases (excluding raw materials).
- Outokumpu’s top 20 raw material suppliers cover 80% of the total direct material spending.
- In 2020, six raw material suppliers were identified to be located in countries with environmental, social and corporate governance (ESG) risks.
Outokumpu supplier countries with purchases of more than 50,000 euros
Requirements on our suppliers
As our customers require a lot from us as a supplier, we place the most stringent requirements on ourselves, and require the same from our suppliers.
Our supply chain activities are guided by our Code of Conduct, Supplier Requirements and our Corporate Responsibility Policy. Outokumpu is also committed to the Modern Slavery Act.
All Outokumpu suppliers will have to commit and comply with following requirements:
- Code of Conduct: All suppliers and subcontractors are expected to comply with our Code of Conduct or similar standards. Outokumpu's Code of Conduct covers the following topics: Ethical principles, Health and safety, Sustainability and environment, Fair employment practices, Compliance with the law, Corporate governance, Protection of company assets and information, Sales and marketing practices, Purchasing practice and Financial integrity.
- Supplier requirements: Suppliers need to act according to the applicable laws and regulations. Outokumpu Supplier Requirements sets forth the minimum criteria regarding Sustainability and Ethical Standards, Safety, Environmental Considerations, Quality Management, Supply and Production Control, Product Liability, Financial Statement, Intellectual Property Rights, Confidentiality and Security, Audits, and Business Contacts.
- Quality management system: Suppliers need to maintain a quality management system
- Outokumpu’s general terms and conditions
- Supply and production control: Suppliers need to clearly define, document and share their processes including material traceability
We take into account the OECD Due Diligence Guidance for Responsible Supply Chain. We have also started to implement the UN Guiding Principles on Business and Human Rights into our operations and supply chain.
Suppliers are monitored for sustainability
Outokumpu monitors its suppliers through self-assessment, screenings and audits. Most of suppliers are also going through a monthly compliance screening for sanctions. The self-assessments and audits are based on Outokumpu’s supplier requirements and focused on evaluating the suppliers’ social and environmental responsibility and quality management.
In the supplier performance assessment questionnaire, suppliers are assessed using the following criteria: technology, quality, supply, cost, safety, environment and financial risk. As a result of the assessments, improvement opportunities and requirements can be identified and agreed with the suppliers. If the situation continues without progress, Outokumpu will discontinue purchasing from the supplier.
Auditing
Due to the COVID-19 pandemic, no on-site audits were conducted during 2020 for general procurement suppliers. However, a supplier performance assessment was conducted for 103 of Outokumpu's key suppliers in 2020, covering almost 60% of key suppliers.
In raw material procurement, only one site was audited due to travel restrictions but 23 suppliers were assessed under the ESG criteria resulting in some development discussion and tracking procedures.
Countries with high ESG risks
In 2019, our direct material suppliers were screened on the environmental, social, and governance (ESG) risks in countries of origin. The ESG country risk assessment was based on the following seven criteria: regulatory quality, rule of law and corruption from the World Bank, Environmental Performance Index, conflict minerals, child labor, and forced labor.
Six suppliers out of our top 20 raw material suppliers are located in countries with high ESG risks. In 2019, those suppliers were requested for a self-assessment and all of the requested companies replied. Analysis of self-assessments showed that no ESG risks came up in the answers.
Top 20 supplier audits under ESG criteria were planned for 2020, but only one site was audited due to COVID-19 travel restrictions.
Supply chain grievances
Finnwatch, a Finnish NGO, published in February 2021 a report on Outokumpu's supply chain in Brazil. Outokumpu recognizes the report and will further investigate the case. Read our response.
The Brazilian company mentioned in the Finnwatch report supplies ferronickel, which is a necessary alloying element for manufacturing certain grades of stainless steel. Ferronickel, that Outokumpu is purchasing externally, makes up a part of nickel in the production of stainless steel. The use of ferronickel is being reduced by increasing the amount of recycled metal. Recycled metal makes up already more than 90% (2020: 92.5%) of Outokumpu’s stainless steel production.
Updates on the case will be published on this page.
Sustainability contacts
Juha Erkkilä
VP – Sustainability, Excellence and Reliability
j.erkkila@outokumpu.com
Reporting channel
Outokumpu has a reporting channel for all kind of misconduct. Our SpeakUp channel covers also our suppliers’ activities.