The part we’re playing in the EICC initiative

Interview with Kate Rigge, Corporate Responsibility Director, Total Quality & Corporate Responsibility

As the Information and Communication Technology (ICT) sector supply chain initiative gathers momentum, around 40 companies - of which we are one - are learning about what it means to work together to improve Corporate Responsibility (CR) performance in our shared supply chain.
It is good to see the common approach beginning to gain recognition, and it is encouraging to witness the collective determination that the companies share in the way the inevitable challenges we face are addressed, to find win-win solutions.

Progress of the EICC

In 2006, the Electronics Industry Code of Conduct (EICC) - of which STMicroelectronics has been a member since November 2005 - and GeSI's (Global e-Sustainability Initiative) Supply Chain Working Group started applying the shared tools which have been developed to help implement common standards in the electronics Information and Communication Technology (ICT) sectors.

The tools, which were developed in 2005, include:

• a first level of risk assessment - to enable companies to identify high risk suppliers
• a second level of risk assessment - consisting of a self-assessment questionnaire with an embedded scoring system
• an audit checklist and a guidance manual.

These tools cover phases 2 and 3 of the official Supplier Engagement Model (see the chart below), which is designed to help companies support their suppliers in improving their CR performance. A common database tool, e-Tasc , was also being developed in 2006, to act as the ‘portal’ through which customers and suppliers will access all the initiative’s tools. We expect this to be ready in 2007.

ST’s active participation

By attending the quarterly meetings, EICC member companies follow the progress of the various working groups, which underpin the activity of the wider group. Companies are expected to actively participate in these groups (which meet on a weekly basis by conference call), according to their expertise, priorities and interests.

 

Introduction of CR requirements to suppliers and formalizing commitments	Assessment of suppliers to evaluate potential risk and current performance	Validation of supplier performance through audit and corrective action activities	Continuous improvement of supplier performance through monitoring, support and learning and capability building

 

In October 2006, ST volunteered to take a co-lead role with other companies in the newly-created Learning and Capability Building work group, which is shared with GeSI’s Supply Chain working Group. We felt we would be able to contribute our experience of company-wide training on CR (for example, our CR Awareness e-Learning program for all our employees), and bring both a customer and supplier perspective to the strategy and training courses the group is responsible for. In addition to this, one of the working group’s first priorities - training for Supply Chain Managers - was one of our own objectives for 2006. By committing resources to a collective goal that will serve many companies rather than just our own, we feel we are participating in a very tangible way in the collective spirit of the ICT initiative. The first course is due to be ready in 2007.

Creating a Learning and Capability Building work group is a significant step forward in the overall ICT supply chain initiative. It responds to the fourth phase of the engagement model and reflects the desire of EICC and GeSI members, and their stakeholders, to go beyond the ‘tick-box audit’ approach, to one that focuses on helping supplier companies develop their competences and take real ownership of their performance.

Integrating the common standards in ST’s operations

As a supplier of several of the EICC and GeSI companies and a customer in our own right, we are beginning to feel the full effect of the industry approach, which aims to streamline customer requirements throughout the supply chain, making life easier for everyone.

We feel we have a responsibility to ensure we comply with the common standards in our company facilities – and this fits in very well with our culture of Sustainable Excellence.

So, having integrated the common standards into our internal self-assessment tool in 2005, in 2006 we helped our facilities to understand the implications of the ICT initiative and prepare to respond accordingly, starting with the completion of the common self-assessment questionnaire. During the year, we have seen an increase in the number of customer requirements that integrate the common approach. By the end of 2006 we were preparing to participate in our first EICC audit, as part of the EICC’s joint audit pilot. Five of our customers requested a common third-party audit on our Shenzhen site in China, which was successfully completed in January 2007.

Our objective in 2007 is to continue formalizing the compliance process by helping more of our facilities complete the questionnaire. We see this as part of the process of ensuring our management systems cover all aspects of the EICC. We already have well-established and certified environment and Health & Safety management systems, and some aspects of our labor and ethics management systems are also being reinforced through this process. We are also capitalizing on what we see as the ‘integrated’ nature of the common industry approach, to ensure we have integrated management systems that generate greater synergies and efficiency in our operations.

Integrating the common standards in how we manage our suppliers

In 2006, our CR team and Purchasing organizations worked together to begin to align our requirements of suppliers and subcontractors with the common ICT standards. This involved reviewing our overall supplier engagement process and identifying the specific activities, processes and tools we need to evolve to support our commitment to implementing the EICC in our supply chain.

This includes:

• adopting the EICC as our official supplier code of conduct; communicating our commitment to the initiative and our expectation of suppliers and subcontractors to make the same commitment
• rewording relevant contractual clauses
• integrating EICC criteria into our Supplier Performance Evaluation tool, and
• asking some suppliers and subcontractors to complete the self-assessment questionnaire (this selection is based on an evaluation of the level of risk, using the common first level risk assessment tool).

Full integration of EICC requirements in our supplier auditing process will take more time, and we will be addressing this in 2007-2008.

Where there’s a collective will there’s a way

The experience of getting more deeply involved in the ICT initiative has been extremely positive, not least because of the outstanding commitment and determination of the companies and individuals involved.

Not only are we learning a great deal from other member companies, including our customers, who have a more mature approach to this challenging domain, we are developing our internal competences to, hopefully, help our suppliers make the same beneficial and dynamic steps forward.