Sep 17, 2020 Corporate blog

Roadmap navigates us toward more responsible procurement

Harald Huppe
Harald Huppe
Senior Manager, Responsible Supply Chain
Responsible procurement is one of the key sustainability areas on Metso Outotec’s sustainability agenda. Recently, we defined a Responsible Procurement roadmap that outlines a strategic plan, including long-term targets and actions, for supplier sustainability development.
Responsible procurement
Responsible procurement is one of the key sustainability areas in Metso Outotec.

Our goal is to integrate sustainability into all our procurement processes. Our vision is that our sustainable supply chain differentiates us from our competitors and gives us a competitive advantage. For this, we must know if our suppliers meet our requirements and take action if some areas are lacking.

We created a roadmap that ensures that we have ambitious targets and actions, everyone is aligned, and we have a clear plan to continuously integrate sustainability in all our procurement processes.

The development of the roadmap

A benchmark study was one of the first steps in developing the roadmap. We reviewed trends, customer requirements and competitors’ actions in relation to the development of a sustainable supply chain. Climate change, collaboration, capacity building, transparency and traceability were the identified trends. In general, we found that increased transparency in the supply chain and increased supplier collaboration to jointly improve sustainability practices and processes were increasing. To improve transparency, we need to continuously develop our tools and processes related to supplier selection, supplier assessments and supplier onboarding, for example.

Stakeholder engagement played an essential role in the roadmap work. Understanding our customer requirements is essential for developing our supply chain. In the past, we collaborated in a joint supplier sustainability audit at one of our suppliers in China, for example. We maintain an active dialogue with our suppliers concerning Metso Outotec’s supplier sustainability expectations. For example, CO2 emissions in the supply chain have increasingly been on the agenda.

To understand the risks and opportunities related to supplier sustainability management, we also conduct discussions with our investors. For instance, they want to see solid tools and processes on how we assess, audit and develop our suppliers in relation to sustainability. Supplier sustainability risk assessments, supplier audits and corrective action plans are all examples of the daily interaction between our procurement and supplier quality organizations and suppliers.

When outlining the roadmap, we examined several strategic topics such as supplier relationship management and new ways of collaboration, enhanced tools and processes, supplier sustainability development, improved supply chain efficiency and increased transparency. For the strategic topics, we defined an action plan and set short- and long-term targets.

Once we were ready, we organized a procurement strategy day to elaborate the drafted roadmap, action plans and targets. This gave the local procurement managers the opportunity to review and discuss the roadmap and give feedback. Once finalized, the roadmap was presented to the top management, and after approval, it was time to start the implementation. 

In our Responsible Procurement roadmap, we have set long-term targets as follows:

We expect our suppliers to comply with the Metso Outotec Supplier Code of Conduct. This is the starting point of any new or existing business relationship. We want to ensure that our suppliers comply with our sustainability and quality requirements, and we have developed processes covering the entire supplier network. Our supply chain management monitors compliance with the standards.

In addition to compliance, we focus on supplier sustainability performance improvement. This is a priority for us, but stakeholders like customers and investors are also increasingly interested in how companies assess and audit suppliers in terms of sustainability.

To ensure that we achieve our targets, we conduct supplier audits and monitor corrective actions. In 2019, we conducted 123 supplier sustainability audits, exceeding our target of 65 audits, and we identified a total of 648 risks (529 risks mitigated). We develop corrective action plans with our suppliers, and 82% of the corrective actions in last year’s findings were implemented, which is well above our target of 70% implemented corrective actions.

Graph showing supplier sustainability audits, identified risks and closed actions.

We have also developed a supplier sustainability scorecard that allows close tracking of suppliers’ sustainability performance. For instance, regarding our third-party supplier sustainability audits, the breakdown of audit findings was as follows: 62% in the health, safety and environment category; 16% related to labor rights; and 22% related to compliance, product safety and supply chain management. In addition, we build suppliers’ capacity through training, knowledge sharing and active communication.

The progress related to Metso Outotec’s responsible procurement targets is reviewed monthly by the procurement heads. The targets and actions are cascaded to local procurement, and monthly status reports are prepared to follow up on progress.