Our supply chain stretches to numerous countries around the globe. Therefore, sourcing plays a key role in our sustainability work. One focal way to ensure that we work with sustainable partners is visiting and auditing the suppliers in our origin countries. Sourcing Development Manager Marika Korpilaakso conducts audits in our origin countries regularly.
We require all of our suppliers to sign the Paulig Code of Conduct. However, we want to see in practice how our suppliers respond to our requirements and ensure that we have sustainable partners.
- We want to build long-term relationships and cooperation with our strategic suppliers. It is very important that we have a shared understanding of sustainability and a common commitment to tackling challenges, as we cannot solve the challenges related with sustainability on our own, describes Korpilaakso.
An audit is an evaluation process in order to determine where the supplier is in terms of the requirements set in the Paulig Code of Conduct for Suppliers. At Paulig, approximately 30 suppliers are audited each year.
What happens during an audit?
The main focus area of Marika’s work is in developing the sourcing processes from the sustainability perspective. She conducts about ten audits per year. In 2018, Marika conducted audits both for existing and potential suppliers in the areas of traded goods, packaging and raw materials in Mexico, Sri Lanka, Turkey, Peru and Chile.
A full-scale audit usually takes two days and it is a dialogue between the supplier and us. From Paulig, usually the sourcing manager responsible for the sourcing of the particular raw material or product and an auditor participate in the audit.
- If talking about a processing site, this kind of audit has four elements, the first being the evaluation of the production and how it meets the requirements in terms of workplace safety and environmental issues. As a second element we want to see what kind of policies and guidelines the supplier has for equal treatment, discipline, fair remuneration and safety, to mention a few, Korpilaakso explains.
- Going through records such as working hours, wages and trainings is an important part of the evaluation. This is obviously something that needs to be done with a great sensitivity. We also interview the management and the employees and always use a third-party interpreter to ensure impartiality.
Each country has its own characteristic features that we need to pay more attention to. Marika mentions Thailand as an example.
- There are many migrant workers in Thailand, from where Paulig sources traded goods like chili and fish sauce. Keeping this is mind, when conducting an audit in Thailand; we need to address these characteristics properly in order to ensure that migrant workers have fair treatment and the same rights and benefits as the local employees.
What if there is something that needs to be corrected?
When non-compliances are detected during the audits it means that there is evidence of a specific breach of the Code of Conduct for Suppliers. The non-compliances may be minor (lack of oversight on some matter) or major (e.g. a systematic violation of law).
- If a non-compliance is detected, the supplier is required to submit a detailed corrective action plan in which they tell how and when the issue is going to be corrected. Depending on the case, we conduct physical follow-up audits to check if the issues have been corrected, explainsMarika.
For Paulig, it is very important that we leave a good taste behind of everything we do.
- We expect a high level of sustainability from our suppliers. If the supplier doesn’t reach our requirements or if we are unable to cooperate on these matters, there is a need to re-evaluate the business relationship.
What can we learn from audits?
One of the key things in auditing is building the trust and developing the relationship with the supplier.
- Both parties - the supplier and us - can learn a lot during an audit. The sourcing managers can also see a new side from the suppliers when the focus is not on prices, contracts and other aspects of sourcing.
Visiting the origin countries has made a lasting impact on Marika.
- I feel privileged to have the opportunity to visit many different kind of suppliers in various parts of the globe. When thinking about the harvesting and processing of some particular raw material and having seen on how much hard work and dedication it requires, you will have a completely different appreciation on the food and drink in your everyday lives.