Our suppliers & partners
Future Homes Goal: to work with our suppliers, governments and other stakeholders to make sustainability easy and to find solutions to common sustainability problems
We work with a range of partners to promote sustainability across our supply chain.
Suppliers: Highlights
760
individuals in our supply chain attended ethical / environmental training sessions in 2009/10
541
ethical audits conducted by the Kingfisher Sourcing Organisation in 2009/10 (including all new factories)
Our approach to ethical sourcing
Customers want quality, innovative products at affordable prices, but not at the expense of the welfare of workers or the environment. We are committed to working with suppliers to improve labour and environmental conditions in our supply chain.
In 2009, we conducted a strategic review of our approach to ethical sourcing and identified three key focus areas: managing risk, building capacity and preparing for the future. We recognise that supplier ethical assessments are an important tool for managing risk in our supply chain, but we need to go beyond this to achieve real change. We are working to build capacity in our supply chain by developing knowledge and skills among our vendors and factories. We also seek to prepare for the future by taking a more holistic approach to environmental and social supply chain issues.
Following the review, a new 'at-a-glance' guide was produced which sets out the main actions to be taken in each key area. In addition, Kingfisher's Supply Chain Guidelines provide more detailed guidance and a range of tools such as a supplier prioritisation methodology and templates for conducting desktop assessments and on-site factory audits.
In order to achieve change, we need to ensure that our own commercial teams understand the risks and issues. We have set a target for all commercial teams to receive training on factory working issues by the end of January 2011. We have developed a training package for buyers, which was circulated to our businesses during 2009. Four of our nine businesses (B&Q China, B&Q UK, Brico Dépôt France and Castorama France) have put in place training programmes for commercial teams on factory-specific ethical and environmental issues.
Managing risk – supplier ethical assessments
Kingfisher's Code of Conduct for Factory Working Conditions PDF (705Kb) sets out standards on labour and environmental conditions in factories. The Code identifies nine minimum requirements (referred to as critical failure points) that factories must comply with. It also sets out additional standards that suppliers are expected to meet over time.
With a complex supply chain, comprising thousands of suppliers, we take a risk-based approach to assessing compliance with our Code of Conduct for Factory Working Conditions. We take into account a number of factors including the country risk, the product risk and sourcing relationships. Our high-risk product categories include:
- iron, brass and aluminium casting
- quarried products
- horticulture products
- leather tanning
- hand-made rugs and textile products or trinkets that require any hand painting, stitching, embroidery or embellishment.
In early 2010, we signed up to a human rights risk mapping tool which helps our businesses identify high-risk countries and regions.
A key priority has been to develop a robust ethical sourcing strategy for the Kingfisher Sourcing Organisation (KSO) which buys products directly from factories via an extensive sourcing network that covers South-East Asia, India, South America and Eastern Europe. In 2009/10, the KSO procured 12% of products sold across the Group, including own-brand and exclusive-brand products. The KSO has had a long-standing commitment to driving improvement in ethical standards across its supply base, introducing a revised ethical assessment programme in 2004 (see details below).
In addition, our operating companies source products through suppliers (agents or manufacturers) – some of which also have their own complex supply chains. Our approach is therefore to engage with our direct suppliers to check they have their own robust processes for managing ethical and environmental risks associated with the products they source (see details below).
Over the next two years, we plan to work on incorporating a supplier ethical assessment module into the Kingfisher quality management tool. This is an online tool which is used to screen products to ensure they meet Kingfisher standards and is being progressively rolled out across the Group. The development of a new Group-wide tool for managing information on supplier ethical assessments will help to promote a consistent approach across our operating companies. It will also avoid duplication of audits where the same product is sold across more than one business.
Supplier ethical assessment: Kingfisher Sourcing Organisation (KSO) All new factories that supply the KSO are audited against the Kingfisher Code of Conduct for Factory Working Conditions and all critical failure points must be resolved before any orders can be placed. All factories are reassessed on a regular basis (at least once every three years). Factories must agree action plans if improvements are required and the plans must be implemented within specified time-frames. A five-tier grading system is used to encourage factories to progressively adopt higher standards over time.
In 2009/10, 541 factories that supplied products to the KSO were audited – these included first-time audits for all new factories used by the KSO and repeat audits for 44% of existing factories (in line with the two- to three-year re-audit cycle). The other existing factories will be reassessed within the next two years. 78% of the 541 factories that were audited were required to make improvements. A corrective action and improvement plan is required which must be implemented within an agreed time-frame. Following implementation of action plans in 2009/10, there was a significant improvement in grades – the proportion of factories achieving grades 1-4 (out of the factories that implemented their action plans) increased from 28% to 100%. A new factory cannot be activated (i.e. an order cannot be placed) until the corrective action and improvement plan is implemented and signed off. In 2009/10, 37 factories were not accepted as suppliers following audits (24 of these were due to failure to meet ethical or environmental standards).
Factory action plans following audit by the Kingfisher Sourcing Organisation 2009/10 (% of factories assessed)
See suppliers data for explanatory notes to this chart.
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Supplier ethical assessment: Kingfisher operating companies In 2009/10, a total of 895 supplier / factory assessments were conducted. These included 646 on-site assessments and 249 desktop assessments (note – the number of desktop assessments excludes any suppliers / factories that received an initial desktop assessment prior to an onsite assessment). The data includes assessments conducted by B&Q China, B&Q UK, Brico Dépôt Spain, Castorama France, Castorama Poland, Koçtaş and Screwfix. Action plans on supplier ethical assessment have been developed at Brico Dépôt France and Castorama Russia.
Most of our assessments are of first-tier suppliers / factories (i.e. those who we directly source from). However, in some cases, we will also assess second-tier suppliers / factories where there is a risk of non-compliance with our standards.
Over the next two years, our work to incorporate a new supplier ethical assessment module into the Kingfisher quality management tool will provide an opportunity for us to review and improve our data collection processes and analyse data within the context of our overall supply base.
At B&Q UK, the key focus over the past year has been to audit suppliers of its One Planet Home® products. B&Q UK is a member of Sedex (Supplier Ethical Data Exchange), a web-based database which enables companies to store and share data on ethical audits. Over 140 suppliers are now linked to B&Q UK on Sedex.
Building capacity – training and partnership projects
We recognise that auditing compliance with our standards is only the first step towards improving conditions in our supply chain. We therefore also seek to engage more closely with suppliers through training and partnership projects.
Over the past few years, the KSO has focused on developing closer relationships with factories through a series of ethical sourcing workshops in China and India. We are pleased to report an increase in the number of factory managers attending ethical workshops run by the KSO – from 472 in 2008/09 to 651 in 2009/10. Kingfisher's Information Pack for Factory Managers is distributed at the workshops and includes a handbook, a series of CR fact sheets and guidance on workplace laws in China and India. Across the Group, a total of 760 individuals in our supply chain attended training sessions on supplier ethical and environmental issues.
The KSO also participates in partnership projects to deliver improvements in factories. During 2009, the sourcing office in Asia took part in the Hong Kong-Guangdong Cleaner Production Partnership Programme, a government-backed initiative to reduce energy use and emissions in factories.
The KSO nominated three factories to be involved in the project and received a commendation from the Environment Bureau of the Hong Kong Special Administrative Region and the Economic and Trade Commission of Guangdong Province for its efforts to encourage suppliers to adopt cleaner production. The KSO in Asia also worked with a factory on another environmental project organised by the Federation of Hong Kong Industries. The sourcing office in India has also helped finance environmental initiatives at a number of factories, including Forest Stewardship Council chain-of-custody certification and Oeko-Tex certificates for chemicals.
We recognise that there are some ethical and environmental issues associated with the sourcing of certain high-risk products which we cannot solve on our own. We therefore need to work in partnership with others in an effort to improve standards in these industries as a whole. For example, B&Q UK has continued to participate in the Quarry Working Group project run by Business Trading Ethically to develop labour and environmental standards for quarries.
Kingfisher is a member of the Local Resources Network (LRN), a group of companies and non-governmental organisations (NGOs) committed to working with locally based organisations to improve working conditions in factories and workplaces. It aims to capture and share expertise and to enable the transfer of good global practices among participants.
Preparing for the future
We seek to keep up to date with new developments and understanding on ethical sourcing issues and to regularly review our strategy in the light of the evolving agenda. During 2009, we started to research issues in our supply chain for which we do not currently have Group policies, including new and emerging topics. The research covers a range of issues including palm oil, peat and animal welfare and will lead to the development of responses on these subjects. We have also set up a working group (with representatives from Kingfisher, B&Q UK and the KSO) to conduct a research project during 2010 into wages and overtime in our supply chain.
B&Q UK has also committed to working in partnership with key direct/domestic suppliers to set new standards on supplier engagement by 2012. It is developing these standards through two projects with suppliers – one sector-specific project which aims to identify ways to improve factory working conditions in a challenging sector, and one cross-sector project which aims to identify best practice on key supplier ethical and environmental issues.
We are also working to extend our strategy to cover other issues, including carbon emissions in our supply chain (see carbon footprint), water footprinting and eco-design (see product design).
Supplier relations
Kingfisher aims to work in partnership with suppliers to deliver long-term mutual growth. Kingfisher's Code of Conduct PDF (705Kb) provides guidance for employees on supplier relationships and sets out the Group's commitment to treat suppliers with respect at all times.
We do not impose standard payment terms on suppliers but agree specific terms with each of them, and then pay in accordance with those terms. Kingfisher is a holding company and therefore has no trade creditors. On average, the Group's suppliers are paid within 45 days.
B&Q UK has committed to the Prompt Payment Code devised by the government Department for Business, Innovation and Skills (BIS) and the Institute of Credit Management (ICM). It is aimed at supporting small businesses and is intended to prevent unfair alteration of terms and late payments, particularly in the current economic climate.
B&Q UK has a stated corporate objective to improve working capital, and payment terms make a key contribution to this. The company aims to work with vendors to agree payment terms that achieve the corporate objectives of both parties. B&Q UK also seeks to work collaboratively with suppliers that come under financial difficulties to resolve any issues and to ensure continuity of supply.
During 2009, B&Q UK introduced a number of new initiatives to improve communication and collaboration with vendors. These include:
- The Key Partner Forum – the Chief Executives of a group of B&Q's top vendors are invited to a meeting twice a year at B&Q, attended by the B&Q Board. The company shares its strategy on the direction of the business and responds openly in a question and answer session.
- The Quarterly Business Review programme – business review meetings are held quarterly with the most significant vendors, across all product categories. The meetings are attended by senior commercial management and vendors have the opportunity to raise issues and agree plans to resolve them.
- The V12 Vendor engagement survey – the 'Let's Talk' survey is sent to the top 100 vendors by spend. Vendors respond anonymously to questions. The survey was conducted twice during 2009 (April and September) and the process is managed by a third party.
Analysis of the supplier survey results from 2009 show that vendor engagement increased by 4.5% during the year. Feedback was received on a range of issues such as long-term planning and communication.
Data assurance
The data presented in the chart on this page and the explanatory notes relating to this data have been reviewed by Ernst & Young LLP. May 2010.
For more details see the Ernst & Young Assurance Statement
- Page last updated 31 May 2010.
- The Group data and progress against targets within the Group CR performance section is updated annually. The latest Group CR data covers the Kingfisher financial year ending 30 January 2010 (referred to as 2009/10). The text is updated on an ongoing basis to reflect new developments.
