Know your suppliers

Companies like Huhtamaki, who work with a network of suppliers, have to look at the big picture and keep track of sustainability throughout the value chain. Attention to traceability and careful risk management help ensure responsible sourcing.

Screening system verifies suppliers

Customer expectations for responsible supply chain management are growing more stringent. Managing the many aspects of supplier risk and due diligence can be time-consuming and take up resources. Using a third-party risk management system for screening suppliers is one way of managing these matters.

Requirements related to working with vendors, suppliers and third parties evolve, both locally and globally. Like any company, Huhtamaki also faces close scrutiny over supplier-related risks and their management. One way to achieve excellence in sourcing is to ensure suppliers operate in line with applicable laws, ethical guidelines and standards while complying with the Code of Conduct for suppliers. This calls for close cooperation between sourcing and supply chain organizations as well as other departments including corporate responsibility, compliance, risk management and human resources.

To minimize supplier risks, Huhtamaki’s North America segment uses a screening system that sends a questionnaire to selected suppliers, with a link to the company’s Code of Conduct and terms and conditions of procurement, and asks the supplier for a legally binding attestation. The system automatically conducts a basic screening against 400+ sanction lists, watch lists, Politically Exposed Persons (PEP) lists and more than 10,000 global publications for adverse media exposure. The results of the screening are shown as traffic lights.

Following the initial screening, the system conducts continuous monitoring. If a supplier profile changes, the platform automatically notifies the contact person in the sourcing organization with a “Reputational Risk” alert. This allows Huhtamaki to continually assess its suppliers and establish an audit trail.

Establishing the successful practice

In October 2015, the North America segment started a systematic supplier screening by conducting assessments on its top vendors, representing 75% of the segment’s total commodity spend. The results of the assessment were positive. Based on the Basic Screening module, 91% of the top suppliers were given a green traffic light rating and none of the vendors turned up as red. These top vendors will be continuously monitored.

Today, a basic screening takes place for any new vendor with an expected annual spend of more than USD 1,000,000. Furthermore, a customized questionnaire is sent to any new raw material, factored product or transportation vendor with more than USD 1,000,000 annual spend as part of the segment’s supplier due diligence program.