Purchasing contribution for CSR : Salomon experienceg p

1Pierre JARNIAT EIPM Workshop CSR 2008 March 14th

SALOMON PRESENTATION

• Company Context• How Salomon create operating synergies between

CSR and Sourcing Depts to enhance sustainability in h l b l S l Ch ithe global Supply Chain

• Focus on Economical Pillar Fair Partnership ???Ethi t t l?– Ethics … a management tool?

– Towards a purchasing code of ethics for SalomonNext steps following Aker Yards tracks !!!– Next steps … following Aker Yards tracks !!!

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AMER SPORTS CORPORATIONGROUP ORGANIZATIONGROUP ORGANIZATION

RACKET SPORTS, GOLF, TEAM SPORTS (INDOOR & OUTDOOR)

FITNESS EQUIPMENT

SPORTS INSTRUMENTS

WINTERSPORTS

CYCLINGWINTERSPORTS OUTDOOR

APPAREL, FOOTWEAR & ACCESSORIESALPINE & NORDIC SKIING, SNOWBOARDING EQUIPMENT

SNOWBOARD APPAREL

SKATEBOARD TECHNICAL APPAREL & ACCESSORIES

2006 AMER SPORTS KEY FIGURES

THE WORLD’S LARGEST WINTER SPORTSTHE WORLD S LARGEST WINTER SPORTS EQUIPMENT BRAND AND A SIGNIFICANT

SUPPLIER OF OUTDOOR FOOTWEAR AND APPAREL

DURING THE PAST 60 YEARS, SALOMON’S COMMITMENT TO INNOVATIVE DESIGN ANDCOMMITMENT TO INNOVATIVE DESIGN AND PASSION FOR MOUNTAIN SPORTS CREATED A VAST RANGE OF REVOLUTIONARY NEW CONCEPTS IN BINDINGS, BOOTS, SKIS AND APPAREL FOR BOTH ALPINE AND NORDIC SKIING AND BROUGHT INNOVATIVE SOLUTIONS TO FOOTWEAR, APPAREL AND EQUIPMENT FOR SNOWBOARDING, TRAIL RUNNING,FOR SNOWBOARDING, TRAIL RUNNING, ADVENTURE RACING, MOUNTAINEERING, AND MANY OTHERS SPORTS.

www.salomonsports.com

THE YELLOW JERSEY OF CYCLING

MAVIC, FRENCH MANUFACTURER OF COMPLETE WHEEL-SETS, RIMS, COMPONENTS AND CYCLE COMPUTERS CAME INTO BEING IN 1889.

TODAY, AROUND 300 STAFF AT THE FOUR PRINCIPAL EUROPEAN SITES HELP THE FAMOUS YELLOW BRAND TO PROGRESS - WITH A REAL PASSION FOR THE SPORT OF CYCLINGA REAL PASSION FOR THE SPORT OF CYCLING.

MAVIC IS ALSO PRESENT OUT IN THE FIELD DURING THE MOST IMPORTANT EVENTS OF PLANET CYCLING (RACE AND MOUNTAIN BIKE). ( )

iwww.mavic.com

2006 SALOMON KEY FIGURES

GEOGRAPHICAL DISTRIBUTION BUSINESS DISTRIBUTION GEOGRAPHICAL DISTRIBUTION

11%

EMEA

16%

WINTERSPORTS

65%

24%EMEAAMERICASASIA PACIFIC

52%

32%

APPAREL &FOOTWEARMAVIC

Industrial Strategy Evolution (Salomon + Mavic)gy ( )

85% 91% 96%

80%

100%

40%

60%

15%

9% 4%0%

20%

2002 2005 2007 Europe AsiaSalomon/Mavic factories External Network

60%

%

52%

48% 49% 51

%50%

60%

p

40%

30%

40%

0%

10%

20%

9

0%2002 2005 2007

Industrial activities by countriesIndustrial activities by countries45,00%

30 00%

35,00%

40,00%

20,00%

25,00%

30,00%

10,00%

15,00%

0,00%

5,00%

hina

ania nce ar

iaro

peand

namAsia

Chin

Roman

Fran

Austria

/Bulgar

Others

Euro

p

Thailan

Vietna

Others

As

10

A

Sustainable Development : 3 Pillars

ECONOMICSOCIAL équitable

SustainableEco-Conception

viablebearable

ENVIRONMENT

Purchasing

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PurchasingImplication

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Sustainable Development : 3 PillarsWorking conditionsWorking conditionsSOE program

ECONOMICSOCIAL équitable

Sustainableviablebearable

ENVIRONMENT

Purchasing

13

PurchasingImplication

SOE Mission StatementSOE Mission Statement

• The SOE defines, measures and aims to improve working conditions in our partners’ factories pand is one of the elements which validates the selection of suppliers and selection of suppliers and guides the purchasing department’s actions.Fi ld f ti th • Fields of operations: the environment, health and safety, employees rights, salaries, freedom to join a trade union, working conditions…

14AMER SPORTSETHICAL ISSUES IN WORKING CONBDITIONS

SOE TOOLSSOE TOOLS

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Sustainable Development : 3 PillarsPurchasingEthical Code

ECONOMICSOCIAL équitable

Sustainableviablebearable

ENVIRONMENT

Purchasing

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PurchasingImplication

Salomon’s situation• An export oriented company (over 90%)• Whose industrial activity is principally (91%) Whose industrial activity is principally (91%)

conducted through external networks ( subcontractors and suppliers)subcontractors and suppliers)

• Most of these networks being abroad• Most of these networks being abroad• Hence the importance of better pdefining « the rules of the game »

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1 Code’s objectives1. Code s objectives

T i i t h i tiTo give a meaning to purchasing practicesTo further the purchasers’ human and professional fulfillmentfulfillmentTo guide the purchasers in their daily actionsTo support them in the key management tasks of their To support them in the key management tasks of their profession.to maintain and strengthen balanced business relations

i h liwith our suppliersTo give the suppliers some reference points in their relationship with Salomonrelationship with SalomonTo communicate better with suppliers

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2 Existing foundations2. Existing foundations

A purchasing charterp gThe company’s valuesAn Adidas –Salomon frame of reference An Adidas –Salomon frame of reference, SOE (standards of Engagement)C t ti sCurrent practices

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Procedure towards a purchasing Procedure towards a purchasing code of ethics for salomon

• From our existing foundations• With the help of an outside expert from the • With the help of an outside expert from the

field (Jean-Jacques Nillès of Socrates)• Starting from actual practices (as framed by g f m p ( f m y

our project team and validated by Eval’éthique » of Socrates)With j t t d f ti • With a project team composed of operatives (Purchasing manager / Purchasers / Assistants)

• By an inclusive procedure ratified by all By an inclusive procedure ratified by all purchasing associates before implementation

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Project Framework• From Strategy …to everyday practice• To give « meaning » to our actions• To give « meaning » to our actions• To share the same « rules of the game »

With t i t d i i i• Without introducing an excessive rigor• Co-development with representatives of

th i l i h i t the various players in purchasing so as to define the actual concerns of the teamT d t l hi h i b th i • To produce a tool which is both organic and easy to useB d ll b ti ff t

21• Based on a collaborative effort

Project stagesj gDeliverable Purchasing Code of Coduct

• Setting up of the project group March Year n-1

• First draft of the code May Year n-1

• Relating the articles to actual scenarios June year n-1Relating the articles to actual scenarios June year n 1

• Formation of the Eval’Ethique survey July Year n-1

• Survey of the purchasing team as a whole 1st Sept Year n-1

W ki f th t d di i • Working from the outcomes and discrepancies End Sept Year n-1– Modification of the code’s articles– Clarification of certain articles– Decisions made on the refocusing of the practices

• Finalization of the code 15 Nov Year n-1

• Submission and approval from the purchasing group End Nov n-1

• Communication and approval by HR, legal resources First Quarter Year n

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Actions realised in 2006-2007:

1. An Ethics referential (ethics charter and code of conduct) to formalise Aker Yards commitments towards its suppliers (with the reciprocity)Aker Yards commitments towards its suppliers (with the reciprocity)

2. Information and awareness campaign of 450 Aker Yards2. Information and awareness campaign of 450 Aker Yards collaborators on this referential

3. Launch of the Ethics & Performance Barometer, to measure the level of ethics and confidence implementation in the relationships

4. Results communication during Suppliers Symposium to involve everybody in the move

Preferred for Innovation

part of the Aker groupSlide 24© 2007 Aker Yards 24

RecognitionImportance

GUIDELINES Matrix Importance / Performance

Courtesy

Moderation

Coherence Longtermvalue

ErrorsCommitments

Equity

Decisions

Clarity

value

FirmnessOpenmind Ethics

RESPECT

JUSTICE

RESPONSIBILITY

Confidentiality

essBalance InterestsCOURAGE

INTEGRITY

TransparencyReliability

Discretion

Laws

Progress

Preferred for Innovation

part of the Aker groupSlide 25© 2007 Aker Yards 25

Recognition

Importance

Action plan 2007-2008

Strong pointsPoints to be improved

Courtesy

Moderation

Coherence Longterm

lErrors

CommitmentsEquity

Decisions

Clarity

value

OpenFirmness

pmind

Balance Interests

Ethics

Transparency

Confidentiality

Reliability

Laws

ReliabilityDiscretion

Preferred for Innovation

part of the Aker groupSlide 26© 2007 Aker Yards 26Progress

Actions to be launched in 2007-2008 :

Internally :

1 Internal seminars to work on the 2007 barometer’s results1. Internal seminars to work on the 2007 barometer s results

2. Integration of the Ethics referential in the Aker Yards training plan

3 Aker Yards collaborators training on the customers/suppliers relationships3. Aker Yards collaborators training on the customers/suppliers relationships

With the suppliers :

1 C i Ak Y d /S li f l ft hi d li1. Common seminars Aker Yards/Suppliers, for example after a ship delivery

2. Encourage the feed back from suppliers and Aker Yards collaborators with immediate and common treatment of the issue.

3. Integration of ethics issues in the different working group (as “Cap Excellence”)

4. Launch the Barometer in 2008 (with enlarged base)

Preferred for Innovation

part of the Aker groupSlide 27© 2007 Aker Yards 27

Preferred for Innovation

part of the Aker groupSlide 28© 2007 Aker Yards 28

SALOMON-MAVIC purchasing charter February 2003

For millions of consumers in the world,the Salomon and Mavic brands represent a tradition of authenticity, inspiration,commitment and honesty. We expect our partners to perpetuate these traditions, to share these values as well as the growth and success we have built on h bthese bases.

Our values are not confined to innovation, to the quality of the products and the satisfaction of our customers, but extend to the way we manage our business.The economic performance of our purchasing is one of the guaranties of the longevity of our m p f m f p g f g f g y fbusiness.

« Serving our CUSTOMERS whilst insuring ECONOMICEFFICIENCY with a team of COMMITTED and RESPONSIBLEoperatives, be they internal or external to the Salomon Mavic group »

Our purchasing policy :-To select our supply grouping based on a purchasing and quality assessment and

i l ti f fan ongoing evaluation of performance-To share with them strategic and economic interests-To join them in cost improving actions in the context of strong international competitionp-To get them to join in product development relying on their know-how and their own innovative capabilities-To guide them in continuous improvement processesAll i t l it t t t th l f th thi l f k ( -All in a mutual commitment to respect the rules of the ethical framework (

SOE..) Pierre JARNIAT

Responsable Achats/AQF/Sourcing

Company’s values and driving principlesCompany s values and driving principles

The group’s values are Autenticity Inspiration The group s values are Autenticity , Inspiration , Commitment and HonestyThey are expressed through the purchasing department’s driving principles:• The integrity and loyalty of the buyer who acts in the best

interests and values of Salomon• The professionalism and objectivity in the setting up of the • The professionalism and objectivity in the setting up of the

purchasing department’s procedures with a transparency within the bying department and through its relationships with other departments within salomondepartments within salomon.

• The respect of the legislation and the rules of the game as clearly expressed to the suppliers , so as to favour a healthy rivalry and a loyal competitionrivalry and a loyal competition.

• Respect for the suppliers and the preservation of their fundamental interests in a context of long term relations and the respecting of reciprocal arrangements

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respecting of reciprocal arrangements.

SOE Mission StatementSOE Mission Statement• The SOE defines,

measures and aims to improve working conditions in our partners’ factories pand is one of the elements which validates the selection of suppliers and selection of suppliers and guides the purchasing department’s actions.Fi ld f ti th • Fields of operations: the environment, health and safety, employees rights, salaries, freedom to join a trade union, working conditions…

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Our operational team…

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InquiryWhen a supplier commits a serious mistake what is the relative weighting of each of the

•Subsequent to a purchasing tender you choose a supplier with a significantly better offer than their

mp tit s ( t th d f 20%)

When a supplier commits a serious mistakefollowing virtues to manage the situation( altruism,justice, courage,prudence, temperance

competitors ( to the order of 20%).• Comparing the offers you realize that the supplier has probably underestimated a line of their costings.• During the drafting of the contract, the supplier

t comes to see you.• They admit that owing to an unintentional oversight they underrated the costs and would like to revise them.

The choices available to you

Aware of his constraints, you accept his new request

You refuse: he must respect his commitments•You accept but you reopen the tendering process to their l t ti t dclosest competing tenders

•You accept to renegociate but keep them first in line

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The Salomon purchasing project The Salomon purchasing project ethics team

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