“Less risk in our supply chains means less risk for our customers”

Körber attaches great importance to ensuring sustainable supply chains and sustainable procurement. This is a complex task, because the Group works together with around 10,000 suppliers in 80 countries   worldwide and purchases about 50 percent of its total output. This means that a large part of the CO₂e emissions are generated in the supply chains.

When selecting and evaluating suppliers, emissions reduction now plays a key role alongside environmental protection, occupational health and safety, social standards, compliance, and the observance of human rights. Thus environmental, social, and company-related criteria are part of the regular evaluation of existing suppliers as well as decisive concerns in the selection of new suppliers.

Group Procurement & Supply Chain Management and its employees play a key role in turning Körber into a thoroughly sustainable company. They work together with suppliers to advance innovative ideas and ensure sustainable changes along the supply chains.

Marco Kretschmar is the Senior Manager in Procurement & Supply Chain Management who is responsible for risk management and sustainability. Among other things, here he talks about what makes supply chains so complex and how Körber is successfully making supply chains resilient and fit for the future.

You have about 10,000 suppliers in 80 countries worldwide. How challenging is it for Körber to keep track of all the supply chains and monitor them?
It’s a big challenge. For our complex products, we need countless parts that are supplied by different partners from many countries all over the world — by our direct suppliers themselves and by the subcontractors. These partners must comply with all the obligations that are specified by the Supply Chain Act, for example, all over the world. We take this task very seriously, and we operate a systematic risk management system that even goes beyond the existing obligations. That’s because one thing is very crucial for us: Less risk in our supply chain also means less risk for our customers.

Do you have an example that illustrates the complexity of a supply chain?
Let’s take semiconductors, which are important for many of our electronic assemblies in machines, as an example. A large number of suppliers are involved in the production of these semiconductors, which occurs upstream along the supply chain. They all perform different tasks, ranging from the production of silicon wafers to photolithography, surface processing, wiring, and testing to the integration into control and drive electronics. All of these suppliers, in turn, have upstream suppliers in their value chains, which are situated in a global environment. And that applies not only to semiconductors but also to other commodity groups for many of our products and services.

Körber not only complies with the applicable laws and obligations but also assumes further responsibility on its own initiative. What measures are helping to make supply chains as sustainable as possible?
It is fundamentally important for us to minimize risks along the supply chains. For example, we have drawn up our own Code of Conduct, which all of our suppliers must comply with if a contract is to be concluded with us. The Code specifies the principles, corporate values, legal requirements, and social standards according to which we intend to work together. In addition, we regularly conduct audits (i.e. standardized surveys) at our partners’ sites in order to identify or rule out any violations as early as possible. To this end, we train our employees on a regular basis. In addition, we use an online monitoring platform, IntegrityNext, to further minimize risks. In-depth market research also helps us to identify potential risks in our supply chains at an early stage and to define countermeasures.

Are there certain areas that are hard to monitor?
There’s no such thing as a perfect or fully automated system. That is why we speak more generally of risk management. It is important for us to gather as much information as possible from all the relevant areas. This enables us to learn how our partners operate and how sustainable their business practices are. If we identify increased risks as part of our continuous monitoring, we obtain further information and conduct an on-site audit, for example. Should a supplier be non-compliant, we define corrective and preventive measures together with our partner. Depending on the severity of non-compliance, we reserve the right to terminate the business relationship immediately.

You’ve mentioned IntegrityNext. How does digitization help you keep track of supply chains more effectively?

Digitization is indispensable for transparency as well as for connectivity with our suppliers. One of the helpful digital tools we can use to monitor our supply chains more effectively is IntegrityNext, where suppliers provide comprehensive information about their business and sustainability practices. The platform thus provides a lot of important information in one spot, for example about how to deal with labor and human rights, anti-corruption and bribery, environmental protection, and CO₂e management.   Companies that position themselves sustainably and transparently have a clear competitive edge. Many companies — including Körber — have already defined sustainability as an important selection criterion regarding suppliers. In other words, if two suppliers offer products or services at a similar price and the same quality, the “more sustainable” one will win the contract.  
Digital platforms thus help us quickly collect and retrieve important information. However, we still ultimately examine special issues such as increased risks of human rights violations ourselves with the support of the aforementioned information systems.