Requirements along the Supply Chain

To strike a balance between economic, social, and ecological interests, Bosch must take its entire value-added chain into account. This is why the global provider of technology and services actively involves its suppliers in its sustainability activities, both in regulatory and operational terms. Together with its suppliers, the company aims for continuous improvement.

The Bosch Group is a global provider of technology and services. Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. With some 360,000 associates, Robert Bosch GmbH and its 440 subsidiaries and regional companies has locations in around 60 countries. If its sales and service partners are included, then Bosch is represented in roughly 150 countries. This worldwide development, manufacturing, and sales network is the foundation for further growth. In 2014, Bosch applied for some 4,600 patents worldwide.

Bosch sees sustainable business practice as an established part of its corporate strategy. The company’s values are deeply rooted: Over the course of its development, Bosch has stayed true to the ethical principles of its founder, Robert Bosch. Today, the company’s sustainability activities are focused in four main areas: environment, products, associates, and society. These activities include the value-added chain, which is why Bosch actively involves its customers and suppliers.

The importance of the supply chain

The Bosch Group’s strategic aim is to develop solutions for a connected life. With innovations as well as products and services that spark customer enthusiasm, Bosch helps improve quality of life around the world. These technically sophisticated products not only call for high-quality materials and components, they must also meet sustainability criteria. This is why the company makes such criteria mandatory for its suppliers. With a sales volume of almost €25 billion in 2014, some 300 million parts were delivered to 267 manufacturing and development locations around the world each day. To make sure that suppliers meet sustainability requirements, they are laid out in contracts and monitored through audits.

Contracts

The sustainability standards that Bosch expects its suppliers to meet are a firmly established part of the company’s purchasing conditions. They include respect for human rights, the right to wage negotiations, support for the abolition of forced or child labor, the avoidance of discrimination in hiring practices and the workplace, environmental responsibility, and the prevention of corruption. Compliance means, for instance, that “suppliers commit to meeting legal standards that apply to the treatment of employees, environmental protection, and occupational safety. They must also work on reducing the human and environmental impact of their activities.”

The Ten Principles of the UN Global Compact, which include International Labour Organization conventions and the corresponding quality assurance agreements, shape the foundation of the requirements that suppliers are expected to meet. Although Bosch contracts mean that the company has legal relationships only with Tier 1 suppliers, these companies are also encouraged to require that their own suppliers meet sustainability criteria.

Strategy and further development

At the operational level, the further development of Bosch’s strategy and the company’s cooperation with suppliers are strongly influenced by the sustainability topics that Bosch has defined and prioritized. Within and beyond the walls of the company, Bosch uses reporting and dialog platforms to ensure the constant flow of information on topics related to sustainability. In addition, Bosch associates are sensitized to sustainability with special training programs, which also aim to motivate.

Bosch works on the further development of its strategy and approaches in close cooperation with the relevant associations and academia. The company is actively involved in working groups and takes part in events on a broad range of sustainability-related topics. These activities are beneficial for all of the parties involved: Bosch can contribute its specialist knowledge, while at the same time gaining valuable insights from its partners for the company’s own development. Ultimately, this is also an asset in Bosch’s cooperation with its suppliers.

Cooperation and motivation

Bosch places a great deal of importance on management systems: All of the Bosch Group’s manufacturing and development locations have implemented OSHAS 18001 occupational safety management systems and ISO 14001 environmental management systems. In addition to this, the company requires its 500 preferred suppliers to receive ISO 14001 certification as proof that they have introduced environmental management systems. To receive “preferred supplier” status, suppliers must meet a number of criteria, for instance in the areas of technical expertise, product and logistics competence, and value for money. Preferred suppliers are involved in strategy and development projects at an early stage. This gives them the opportunity to better prepare for the future. In turn, this is one of the reasons why Bosch strives to establish and maintain lasting partnerships, which also enable suppliers to enhance their competitiveness.

Supplier assessments and audits

Audits are an integral part of supplier assessments. Bosch systematically conducts these audits using a prioritization system. The system is based on an approach that aims to take a comprehensive view of sustainability. Qualified experts can thus gain a big picture view of a supplier’s sustainability record. Bosch has set itself the target of conducting 1,000 supplier audits between 2011 and 2020. A good third have already been completed. Over the course of the audits, Bosch offers its suppliers support with implementing improvements.

Promoting resource efficiency

The ReQ project in China is a shining example of Bosch’s cooperation with its suppliers. Together with four other companies and the support of the German Federal Ministry for Education and Research, Bosch China launched the ResQ pilot project in April 2012. The initiative aims to improve suppliers’ use of resources. On the basis of detailed analyses, Chinese suppliers cooperate with Bosch specialists to develop measures to improve the efficiency of resource use. At the same time, the executives and employees of Chinese suppliers receive training on resource efficiency and occupational safety. Experiences to date have shown that the project is very promising.

Conclusion

Importantly, the audits have found a correlation between high product quality and supplier commitment to the topics discussed herein. This is one reason why sustainability topics are an integral part of Bosch procurement processes. To ensure a reliable supplier base, Bosch strives for relationships based on mutual trust and long-term cooperation. The company considers healthy supplier relationships to be a competitive advantage. Moreover, by demanding compliance with sustainability standards, Bosch contributes to the sustainable development of the countries in which its suppliers are located.