Supply Chain Responsibility
As a large, global company, ITW recognizes that its impact extends far beyond its own walls and the company is committed to fostering responsibility across its supply chain. Under our strategic sourcing framework and working with our businesses around the world, we have focused on our supplier network, including opportunities to increase visibility within our network and to share common tools and approaches to key “80” areas of focus.
Leveraging our Supplier Code of Conduct
One important tool is our Supplier Code of Conduct, introduced in 2014. The Supplier Code of Conduct defines ITW’s commitment to operate with the highest levels of integrity and makes it clear that the company will hold its suppliers to the same high standards. Zero tolerance for child and forced labor, the right to freedom of association, anti-discrimination measures, rules to prevent improper gifts or payments, the protection of intellectual property rights, and confidentiality, are included in the Code.
Increasing efficiency in the supply chain
As part of our Strategic Sourcing effort and the Enterprise Strategy, ITW has been reviewing its supply network for opportunities to become more efficient. The goal is to identify the most efficient logistics’ routes, methods and warehousing strategies that also allow ITW to meet or exceed customers’ expectations.
Using a data-supported approach, ITW is working closely with its businesses to recommend changes to distribution and storage patterns. These changes typically remove total part miles traveled out of our logistics network, effectively reducing our environmental impact and making our operations more efficient, while supporting our customers’ business needs.
Utilizing a supplier sustainability index
ITW is committed to being around to serve our customers for many years to come; therefore, it’s important we partner with suppliers that are committed to performance and stability. To that end, we initiated a systematic review and rating of our suppliers to evaluate their long-term reliability and viability.
Our supplier sustainability index (SSI) measures ITW’s suppliers on a scale of 1-10 on a variety of factors, including safety and environmental measures as well as financial data, leadership changes and operational metrics. Once the score is calculated, we are able to assess if the supplier is already meeting or exceeding our criteria, if corrective action is needed, or, in some cases, if we need to take other actions. This tool strengthens ITW’s ability to manage its supply chain responsibly.
Partnering with suppliers for sustainable solutions
In 2014, ITW held one of its first supplier workshops in Danville, Kentucky. Twenty-five key suppliers to its Food Equipment business came together with ITW to consider and assess inputs in the warewash equipment business and brainstorm sustainable solutions.
In 2015, ITW expanded the workshops across several businesses, hosting a total of 14 events within this segment. Other business segments have also engaged suppliers in workshops to solicit ideas on how we may improve products and our approach to the products we make. These discussions have provided valuable opportunities to reevaluate some of the material inputs into our products and identify alternatives which might lead to more sustainable end products.
Driving responsibility throughout the value chain
ITW’s responsibility extends in both directions of its value chain – from the materials we source to the products we sell. While ensuring our products are safer and more sustainable across the entire value chain is the responsibility of each ITW division, it requires working together with both our suppliers and customers to develop new solutions that address our customers’ needs.
For example, recently ITW’s Baxter gas rack ovens earned Energy Star certification from the U.S. Environmental Protection Agency, a first in its product category. As Steve Woodward, engineering manager at Baxter explains, ITW worked closely with customers to identify and solve the key pain points of energy usage and cost. Suppliers were also involved in this process as we designed a solution that would meet the sustainable goals we established for this product.