Chapters
Annual Report 2019

2.2 Strategic sourcing and procurement

One of our strategic priorities is to enhance our end-to-end Product Value Chain, as well as to establish fair, transparent and efficient relationships with our suppliers. We also align our strategy with global social and environmental goals, such as creating inclusive and sustainable economic growth, decent work for all and sustainable production patterns.

That’s why we only work with suppliers that align with our Supplier Code of Conduct and international standards, including the Universal Declaration of Human Rights, and the International Labor Organization’s Declaration on the Fundamental Principles and Rights at Work.

All suppliers receive and acknowledge a copy of our policy, and we verify their alignment through regular third-party audits. Our employees engaged in procurement take responsibility and accountability for policy compliance.

Centralized suppliers for better business

Partnering with strategic suppliers enables us to centrally manage procuring services and products while using standardized GrandVision Supply Chain contracts, including our Supplier Code of Conduct, which is automatically included in new or renewed contracts. In 2019 we partnered with 48 strategic suppliers, of which 29 are from OECD countries and 19 from non-OECD countries. This is a decrease compared to the 28 non-OECD country suppliers we worked with in 2018.

As a result of harmonization and centralization, the number of GrandVision's local suppliers has decreased by 2% in 2019. We now have 108 local Goods-For-Resale suppliers. With fewer partners to negotiate with, we can improve conditions for conducting business and provide even more affordable eye care to the communities in which we operate, as well as offer customized solutions to suit our customers' needs.

In 2019, our spend was concentrated on strategic suppliers, retaining a concentrated spend index of 95%. We harmonized all local supplier contracts and replaced them with standardized GrandVision Supply Chain contracts, including our Supplier Code of Conduct. We also concluded five new contracts using the standardized contract.

Safeguarding human rights and safe labor practices

The majority of our Exclusive Brand frames are produced in non-OECD countries where potential labor conditions, human rights, and other risks are considered to be higher than for suppliers from OECD countries. We expect our suppliers to comply with the regulatory requirements of the territories where our Exclusive Brand products are sold. We control this through our supplier audit program, which focuses on product quality as well as labor conditions and human rights.

We use third-party audits and an SGS-certified supplier audit rating system, the world’s leading inspection, verification, testing and certification company, to ensure responsible operations from our suppliers.

These SGS audits are based on SA8000 Standards of social certification. SA8000 is based on human rights norms as described in International Labour Organization conventions, the UN Convention on the Rights of the Child and the Universal Declaration of Human Rights.

Brands and industry leaders rely on the SA8000's rigorous approach to meet the highest level of social compliance in their supply chains, while maintaining business interests. It measures eight areas important to social accountability in workplaces:

  • Child labor
  • Forced labor
  • Health and safety
  • Acceptable living conditions
  • Free association and collective bargaining
  • Discrimination
  • Disciplinary practices
  • Working hours
  • Compensation and minimum living wages

In addition, SGS audits assess:

  • Environmental preparedness of our suppliers’ factories by assessing their environmental management systems
  • Business integrity policy on topics of bribery, corruption, etc.

Benefits of SA8000 Audit Standard:

  • Proves our commitment to social accountability as we treat employees ethically and comply with global standards
  • Improves supply chain management and performance
  • Ensures our compliance with global standards and reduces risk of negligence, public exposure or possible litigation
  • Supports our corporate vision as we build and reinforce our employees', customers' and other stakeholders' loyalty
  • Lets us demonstrate proper social accountability
How we manage audit results

SGS applies a 'traffic light' color-coded scoring system to track further measures we need to undertake if suppliers are not completely compliant with SA8000.

  • Green: Supplier fulfils all requirements (no critical or major negative findings) and will be audited again in two years.
  • Yellow: Supplier fulfils most standards (no critical findings, and high scores in most sections), but must improve in certain areas. In these cases, we proactively work with our audit partner to investigate the root cause. We also inform the supplier promptly so they can quickly set up a correction plan, and we re-audit these improvement areas in three months.
  • Red: Supplier does not fulfil most criteria (has critical findings, and/or low scores in most sections), and will be fully re-audited in three months.
Strategic supplier audits and 2019 results

2015

2016

2017

2018

2019

2025 target

Suppliers in non-OECD countries

Signed Code of Conduct or equivalent (% of total)

12.5%

68.8%

100%

83%

100%

100%

Audited (% of total)

18.8%

93.8%

100%

91%

84%

100%

Fulfils all requirements (green)

0%

47%

94%

67%

81%

100%

Fulfils most requirements (yellow)

100%

53%

6%

29%

13%

0%

Does not fulfil most requirements (red)

0%

0%

0%

5%

6%

0%

Suppliers in OECD countries

Signed Code of Conduct (% of total)

6%

23%

80%

83%

100%

100%

In late 2018, we implemented a new round of initial Code of Conduct audits with our 13 non-OECD Exclusive Brand frames and sunglasses suppliers across 28 factories.

We performed audits in all 28 factories and none received negative results.

The majority of non-OECD suppliers fulfilled all of our Code of Conduct and Social Compliance standard requirements. However, we will conduct a follow-up review for one supplier that did not meet the requirements. If it still fails to meet our requirements, then we will cease doing business with this supplier.

Meanwhile 100% of our strategic suppliers in OECD countries have signed our Supplier Code of Conduct. And we have achieved part of our 2025 target to ensure all our strategic suppliers in OECD and non-OECD countries sign our agreement. We are proud to have accelerated this process.