Our global supply chain network makes a major contribution to value creation and innovative strength, and hence to the success of the BMW Group. Our suppliers therefore play a significant role in helping us to achieve our sustainability goals and in the contribution the BMW Group makes towards the sustainable development of society as a whole.
Our collaboration with our suppliers is based on common visions and convictions. This entails a mutual understanding of product and production quality, innovative strength, security of supply and competitive prices as well as the continuous integration of our sustainability goals into all production and business processes.
In times of complex global supply chains, involving a large number of suppliers and sub-suppliers, these goals present a considerable challenge but also a great opportunity.
Our procurement volume is distributed worldwide as follows:
Regional mix of BMW Group purchase volumes in 2014 in %, basis: production material
Regional mix of BMW Group purchase volumes in 2014 on %, basis: production material
In order to ensure sustainability and continuous improvement throughout the entire supplier network, we concentrate mainly on two areas:
MANAGING AND MINIMISING RISK.
Comprehensive risk management enables us to ensure that all BMW AG suppliers, both of direct and indirect goods and services, comply with sustainability standards.
In addition, we analyse specific, particularly relevant or critical raw and other materials along the supply chain. We have developed our own method of carrying out this comprehensive risk analysis of relevant supply chains: we model the supply chains, gather the data of the relevant suppliers and evaluate the sustainability of the suppliers right back to the raw material extraction stage. If we identify any issues, we define the appropriate countermeasures in collaboration with the supplier concerned. The results of the supply chain analyses are integrated into future product development; we also use them internally to fine-tune our sustainability, procurement and material strategies.
EXPLOITING OPPORTUNITIES AND LEVERAGING POTENTIAL.
Together with our suppliers, we are working towards ever-increasing efficiency in the way we use resources. We also focus on fostering innovation in the area of sustainable technologies and processes and provide training in sustainable operations both to our own employees as well as those of our suppliers. For example, the BMW Group has set itself the goal of significantly increasing transparency and resource efficiency in the supply chain by 2020. We measure our progress along concrete parameters such as our suppliers’ CO₂ emissions, water and energy consumption. In order to ensure transparency of resource consumption in the supplier network, BMW AG was the first German carmaker to join the CDP Supply Chain Programme.
INTEGRATION WITHIN THE ORGANISATION AND INTERNAL COOPERATION.
Within the company, three specialist divisions work closely together: Sustainability in the Purchasing and Supplier Network, Sustainability and Environmental Protection, and Raw Materials Management. They assume joint responsibility for ensuring sustainability in our supply chains.
DEFINING PRINCIPLES AND STANDARDS FOR SUPPLIERS.
For the BMW Group, it is essential that our business partners meet the same environmental and social standards we set for ourselves. The BMW Group Supplier Sustainability Standards are the foundation on which this process is based. The standards establish basic principles that are to be adhered to by all BMW Group suppliers. This includes compliance with all internationally recognised human rights as well as environmental, labour and social standards. The BMW Group Sustainability Standard is an integral part of the request for proposal documentation for new suppliers and is thus a key tool in the integration of sustainability aspects into the procurement process.
Each potential new supplier must take into consideration the BMW Group sustainability requirements when submitting a proposal. When the decision for a particular supplier is being made, a standard template provides the committees responsible with all relevant information. Sustainability is one of the decision-making criteria, alongside product and production quality, security of supply, innovative strength and competitive pricing.
ENGAGING WITH STAKEHOLDERS.
Engaging with our stakeholders is an additional important tool in our continuous efforts to improve our measures and activities and to identify and discuss external trends. It has become evident from our dialogue that stakeholders expect companies like the BMW Group to assume more responsibility along the supply chain. Key recommendations that resulted from a Stakeholder Dialogue 2013 included applying solutions from other industries to the automotive industry, and systematically focusing and prioritising the company’s own activities (for example with respect to certain raw materials or supply chains). In addition, the stakeholders advised industry-wide and cross-industry cooperation to develop joint approaches.
COLLABORATING IN INDUSTRY INITIATIVES AND NETWORKS.
Engagement in initiatives, networks and associations and the resulting dialogue beyond the boundaries of our company are essential for us to continuously improve our sustainability strategy.
At the European level, for example, we have been collaborating since 2012 with ten other carmakers in the European Automotive Working Group on Supply Chain Sustainability, which is coordinated by CSR Europe. Within this workgroup, we jointly develop measures to minimise risk and work on projects to increase sustainability in supply chains and to establish standard minimum requirements for suppliers. One result this group has produced is the first industry-wide Self-Assessment Questionnaire on CSR/Sustainability for Automotive Sector Suppliers, which was published in April 2014. In autumn 2014, the BMW Group started applying this questionnaire.
Furthermore, as a member of econsense, the Forum for Sustainable Development of German Business, we promote cross-industry auditing systems to evaluate sustainability at supplier companies. In addition, we participate in the development of cross-sector guidelines on sustainability for suppliers.
Integration of sustainability into the procurement process.
The BMW Group Supplier Sustainability Standard is an integral part of the documentation and the sustainability self-assessment questionnaire sent to potential new suppliers. This is an important cornerstone for us in the integration of sustainability aspects into the procurement process. Each potential new supplier must take into consideration the BMW Group sustainability requirements when submitting a proposal.
Sustainable material properties such as the use of secondary aluminium are also addressed in the request for proposal. After the proposal has been submitted, these details are included as key decision-making indicators in the procurement process. When the decision for a particular supplier is being made, a standard template provides the committees responsible with all relevant information. Sustainability is one of the decision-making criteria, alongside product and production quality, security of supply, innovative strength and price credibility.
Suppliers that do not meet the minimum requirements for sustainability at the time of awarding, may be nominated only when an action plan was passed, which provides the elimination of the sustainability deficits prior to start of production. The compliance with the decision criterion is ensured by setting a target in the Balanced Scorecard.
Measuring Sustainability, Making Progress.
Since 2009 we have been measuring different economic, societal as well as governance related sustainability performance indicators throughout the purchasing and distribution networks for the new BMW i brand. Based on our experience with the performance indicators used to measure the sustainability of BMW i suppliers as well as further analysis, we have developed a set of performance indicators that will gradually be applied to all of the BMW Group’s suppliers. These include, for example, the evaluation of the sustainability assessments.
Therein we differentiate between reporting indicators (monitoring figures), control indicators, and target indicators. The former are supported by concrete and quantifiable target values, while we use control variables for the control process. Reported indicators such as the proportion of suppliers with an environmental management system according to ISO 14001 or the number of supplier manufacturing sites which provide a self-assessment are used mainly to measure progress on our sustainability efforts. An example of target values would be the proportion of secondary aluminium or recycled plastics in automotive parts.
Different performance indicators have important implications at various levels of the BMW Group’s day-to-day work. Therefore our metrics are developed and anchored in the corresponding purchasing process and systems, so that the relevant employee has the optimal amount of information. As a result, management is provided with the aggregate metrics in a steering tool, while purchasers are provided with detailed information to be used for direct monitoring.
FORECAST.
Ensuring sustainability along the entire supply chain requires joint effort and long-term action. The BMW Group will therefore continue to expand its collaboration with other carmakers to promote sustainability in supply chains. We will also work even more closely with our suppliers in order to achieve greater transparency in the supply chain for critical components and raw materials. In addition to aluminium, we will be focusing on conflict minerals as well as selected renewable materials in 2015.