Responsible management of our supply chain is a top priority. Our suppliers must meet the Ericsson Supplier Code of Conduct (S-CoC) requirements, based on the UN Global Compact principles. All our Regions and Business Units have trained auditors and procedures in place to assess high-risk suppliers and to conduct S-CoC audits and on-site assessments. Results are followed up to ensure continuous improvement.

Engage

We engage with suppliers to raise awareness of CoC issues, particularly in developing markets. By actively helping our suppliers improve their performance with the use of audits, on-site assessments, web training and seminars, we reduce our risk while contributing to higher standards in the supply chain.

We identify high-risk suppliers using a systematic and documented risk approach. Among the prioritized categories are: die-casting and network roll-out; tower manufacturing and galvanization; enclosures; mechanical parts; power supply; printed circuit board manufacturing, and warehousing and logistics.

Online training for suppliers, and any other interested parties, is available on our corporate website in 13 languages. The goal: to help suppliers improve their own performance as well as help them inform their own suppliers of expectations. The training covers employee conditions (including forced and child labor); health and safety; supply chain compliance; environmental management; elimination of discrimination, and Anti-corruption.

Partner

Ericsson is a member of the Global e-Sustainability Initiative (GeSI) Supply Chain Work Group and we are represented also on the Executive Board of GeSI and several working groups including in the Extractives Working Group (which includes focus on conflict minerals).

Impact

An analysis of audit scorecard results of some 60 suppliers audited in 2010 and 2011 showed significant improvement. The number of critical findings dropped by 50% Improvements were made in areas including overtime; fire prevention; training and information, and environmental management. These areas remain in focus, along with use of personal protective equipment and communicating Ericsson S-CoC requirements further in the supply chain. In the two latter areas, improvements were not as significant as expected. Findings are actively followed up, with corrective action plans and follow-up audits.
The number of active S-CoC auditors increased from 150 to 170 during 2011.
In 2011, 392 S-CoC audits and 270 on-site assessments were performed. The total number is down from 2010, due to an improved level of compliance and control in the supply chain after three years of intense S-CoC audit activities. This trend also reflects a shift in focus to other activities, such as promotion of the on-line training, as part of a preventive approach.
Nearly 90 percent of Regional Strategic Sourcing personnel completed the Code of Conduct training for suppliers during 2011.
Maintaining and developing the S-CoC Program is included in each Regional and Unit Sourcing Management scorecard.

Highlights of Ericsson’s work with Supplier Code of Conduct

1998 – Code of Conduct and environmental requirements are among supplier evaluation criteria.
2002 – Ericsson Supplier-Code of Conduct established.
2004 – The first auditors trained and first benchmark audits conducted for high risk areas.
2005 – Initiated risk-based supplier improvement projects and scorecard system to rank compliance.
2006 – Risk-based projects exceeded targets, delivering marked improvements in compliance among selected suppliers.
2007 – Risk assessment model for local sourcing units piloted in China, India and Brazil. Prioritized commodities added to the Supplier Code of Conduct (S-CoC) Program.
2008 – Internal, web-based S-CoC observer training launched. Roll-out of risk assessment model. Global roll out of S-CoC Program initiated. Most tower manufacturers worldwide audited and/or assessed.
2009 – Global roll-out of S-CoC Program completed. On-line extensive Code of Conduct training for suppliers launched in five languages – English, Chinese, Russian, Spanish and Portuguese.
2010 – Performed 550 S-CoC audits and 218 on-site assessments. Updated risk matrix to identify higher-risk suppliers. Held eight training sessions worldwide for Ericsson auditors, and number of certified S-CoC auditors globally increased from 130 to 150 since 2009. On-line training for suppliers available in 13 languages.
2011 – 15 S-CoC auditor training sessions performed. 170 auditors at the end of the year. The S-CoC Program and its implementation audited by several key customers with positive results.

Best practice: Linksoft Communication Systems, Tanzania

Linksoft Communication Systems, a supplier to Ericsson in Tanzania, showed significant improvement between audits in 2010 and 2011. Linksoft is a regional service provider with offices across several countries in East and West Africa. In the first audit in 2010, it became clear that while Linksoft’s headquarters in Kenya met with most of Ericsson’s requirements, little had been done to make the branch office in Tanzania compliant.

In a second audit in 2011, Ericsson found that Linksoft Tanzania had addressed most of the identified areas of improvement, especially policy matters, adapting Group-level policy to Tanzanian laws. Fire and other safety procedures were fully implemented (including an accident prevention plan), training had been conducted and there were improved plans and records, proper records on incidents, and storage areas were sorted. The branch office in Tanzania had also been awarded by The Tanzanian Ministry of Health a certificate of compliance to the National Health and Safety Regulations. They further committed to handling the few remaining gaps.

The ability of Linksoft Communication Systems Tanzania to reach this level of compliance was due to the following factors:

Through the Ericsson audit, they became aware of the risks of sub-standard performance.
A dedicated person was appointed to present the issues to the management team and ensure actions were implemented.
A dedicated person was appointed to present the issues to the management team and ensure actions were implemented.
There was commitment from top management to comply with Ericsson requirements.

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