Applying good standards in the supply chain is important to the Volvo Group to ensure that unethical values are not built into the Group’s products.
Responsible supply chain management enables the Volvo Group to meet growing customer expectations, reduce risk of incidents that may damage the Group brand or interrupt the supply flow.
The Volvo Group’s suppliers can be divided into two groups:
suppliers of automotive products
suppliers of indirect products and services.
Automotive products are materials used in products such as trucks, buses and construction equipment. Indirect products and services include any products or services that are not used in the automotive products. This encompasses everything from cleaning services to office furniture, travel, education or training, communication services and corporate merchandise.
As a rule of thumb, sales to the Volvo Group should account for less than 30 percent of a supplier’s turnover to decrease a supplier’s exposure when delivering to a cyclical industry.
In 2012 more than 36,000 suppliers delivered products and services to the Volvo Group and approximately 6,000 of them supplied automotive products. This number is based on site level data, meaning that one company delivering to the Volvo Group can deliver from several sites, and therefore be counted more than once.
The Volvo Group generally sources close to its production sites to ensure efficient flow of supplies. This means that most suppliers are located in Europe and North America. At the same time, the Group’s expansion in Asia has led to an increased number of new suppliers located in Asia.
Approximately eight percent of the automotive products suppliers are located in countries assessed as ‘high risk’. Risk assessments are based on analyses conducted by internationally recognized institutions and include factors such as human rights, labor standards and perceived corruption.
For indirect products and services, the Volvo Group also takes into account the risk level of each product or service segment. For instance, merchandise, personal safety equipment, construction work and waste management are associated with high risks.