Chapters
Annual Report 2020

2.2 Strategic sourcing and product 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 Supplier Code of Conduct, and we verify their alignment through regular third-party audits. Our employees who are 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 October 2020, we updated our Supplier Code of Conduct, which will be included in new supplier agreements and shared with current suppliers during contract renewals. We partnered with 43 strategic suppliers, of which 30 are from OECD countries and 13 from non-OECD countries. In 2020, we concluded our non-OECD supplier assessments and the reduction of our non-OECD country suppliers from 19 to 13 was a result of this work.

For similar reasons mentioned above, the number of GrandVision's local suppliers decreased by 10% in 2020. With fewer partners to negotiate with, we can improve conditions for conducting business and provide even more affordable eyecare to the communities in which we operate, as well as offer customized solutions to suit our customers' needs.

In 2020, 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 three new contracts using the standardized contract.

During 2020, we faced one of the most challenging years for our business due to the COVID-19 pandemic. However, our long-lasting relationships with our suppliers remained strong.

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, labor conditions and human rights.

Supplier audit program
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 follow the SA8000 Standards of social certification. SA8000 is based on human rights norms as described in International Labor Organization conventions, the UN Convention on the Rights of the Child and the Universal Declaration of Human Rights.

Major 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 several important areas to maintain 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 the environmental preparedness of our suppliers’ factories by assessing their environmental management systems. They also review suppliers' business integrity policies on topics of bribery, corruption, etc.We engage in SGS audits for the following benefits:

We engage in SGS audits for the following benefits:

  • 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

Human rights due diligence
In 2020, we conducted a human rights due diligence exercise to identify and reassess salient human rights issues in our supply chain, particularly among our strategic suppliers. We analyzed our current policies, actions and commitments, and we planned further steps and actions based on this outcome to tackle human rights risks and opportunities.

The human rights due diligence exercise we conducted consisted of two parts:

  1. Risk assessment on tier one suppliers to identify the possible risks, and grade and prioritize them by their relative importance (most salient risks such as forced labor, child labor, labor conditions, discrimination, freedom of association, wage and remuneration, and health and safety)
  2. Gap analysis on the human rights risk management approach to assess the risk management approach GrandVision is taking to reduce the likelihood that these hypothetical human rights problems, particularly the most serious ones, will actually occur

The outcome of our due diligence exercise showed that GrandVision has a sufficient approach when it comes to the management of human rights risks. Based on these findings, we will take steps to form a cross-departmental human rights task force and strengthen our risk management approach. We will also establish more frequent supplier communication and introduce training to cover human and labor rights and other potential issues.

How we manage audit results
SGS applies a 'traffic light' color-coded scoring system to track 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.

In late 2020, 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 they received 'green' results except for one factory that received a 'yellow' result. When the factory received yellow results, we worked with our audit partner to investigate the root cause, so the supplier could set up a correction plan and undergo another audit.

The majority of non-OECD suppliers fulfilled all of our Code of Conduct and Social Compliance standard requirements.

Strategic supplier audits and 2020 results

2015

2016

2017

2018

2019

2020

2025 target

Suppliers in non-OECD countries

Signed Code of Conduct or equivalent (% of total)

12.5%

68.8%

100%

83%

100%

100%

100%

Audited (% of total)

18.8%

93.8%

100%

91%

84%

100%

100%

Fulfils all requirements (green)

0%

47%

94%

67%

81%

92%

100%

Fulfils most requirements (yellow)

100%

53%

6%

29%

13%

8%

0%

Does not fulfil most requirements (red)

0%

0%

0%

5%

6%

0%

0%

Suppliers in OECD countries

Signed Code of Conduct (% of total)

6%

23%

80%

83%

100%

100%

100%

Procurement and COVID-19

Our procurement team played an instrumental role in keeping our customers and employees safe during the COVID-19 pandemic. The team was a key contributor to our COVID-19 Task Force, which you can learn more about in our case study 'How we protect our customers, employees and business during COVID-19.' The team ensured swift and accurate sourcing of necessary personal protective gear for our employees and UV-C disinfection devices to disinfect our products in stores. This also contributed to our waste reduction efforts in our stores and offices. Learn more about our UV-C boxes and these efforts in our case study 'Joining forces for a more sustainable future: The achievements of our global CSR community.'