10.2 Operations

Supply chain (GRI 102-9)

Corporate Purchasing is responsible for procurement in all production plants worldwide (except the USA) and manages the procurement organisation through a team of lead buyers who are strategically responsible for various material groups.

Geberit’s production processes entail a high in-house production depth, i.e. it largely purchases raw materials and semi-finished products with a high share of raw materials. As such, material costs constitute a relatively low share of Geberit’s net sales. As Geberit neither directly imports nor processes conflict minerals (tin, tantalum, tungsten, gold), it is not deemed to be an “importer” within the meaning of EU Regulation 2017/821. If products containing such metals are shipped to the USA, the provisions of the Dodd–Frank Act (Sec. 1502) apply.

The raw materials and semi-finished products primarily come from suppliers in Western Europe (81.2% of procurement value). The share of the procurement volume from Eastern Europe amounts to 7.8%, that from Asia 9.1%, from America 1.7% and from Africa 0.2%. Owing to the high level of vertical integration as well as the very high share of Western European suppliers, the general risk profile of the supply chain is relatively low. The active implementation of a dual-source strategy – i.e. the procurement of a resource from two providers – serves additionally to reduce dependencies.

In 2020, Geberit procured raw materials (26.6%), semi-finished products (45.6%), and finished products (27.9%) with a procurement value of CHF 798 million (previous year CHF 882 million) from 1,721 direct suppliers around the globe.

Management approach procurement

Geberit’s suppliers are obligated to maintain comprehensive standards. The basis for cooperation is the Code of Conduct for Suppliers, which is available in 15 languages, to which an Integrity Line for suppliers was added in 2017. The Code is guided by the principles of the UN Global Compact, which itself is based on the Universal Declaration of Human Rights and the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work. The Code of Conduct is binding for every supplier. These include direct suppliers of raw materials and semi-finished products for use in production, as well as indirect suppliers such as those providing services or office materials. The Code comprises specific guidelines on quality and meeting environmental, labour law and social requirements and sets out compliance with human rights. The supplier must prepare appropriate documentation in order to demonstrate – upon request by Geberit – compliance with the provisions of the Code and ensure that these papers are available for inspection at all times. Should the supplier fail to comply with the obligations set out in this Code, then measures for improvement are implemented. Failure to comply on the part of the supplier is regarded as a serious obstacle to the continuation of the business relationship. If the supplier does not correct this non-compliance, Geberit can terminate the cooperation. When evaluating suppliers, Geberit strives to achieve the greatest possible degree of transparency. All new and existing partners are thus assessed by means of standardised processes and according to the same criteria: company as a whole, quality, sustainability, price, procurement chain, delivery reliability, production and technology. As a rule, the selection of suppliers is required to include a quality audit covering clarification on environmental and occupational safety issues. Where an audit reveals inconsistencies in these criteria, an additional, in-depth audit is conducted.

Supplier management incorporates a risk management approach on environmental, occupational safety and human rights matters that is based on the assignment of suppliers to a particular risk class within a risk matrix depending on production location (country) and material group (type of production process). As such, suppliers in the highest risk category pose an increased risk both in terms of production location and type of production process. In 2017, suppliers and material groups that had been added due to the acquisition of Sanitec were systematically assessed and included in risk management. In addition, the classification of existing material groups into certain risk categories was reviewed. Since then, the risk matrix has been updated on an annual basis. In the reporting year, 179 existing suppliers were identified in the highest risk category, which corresponds to around 7% of the procurement value of Geberit. A systematic planning and performance of audits is conducted for these suppliers. To ensure neutrality and the expertise required for the audits, Geberit also works with an external partner. This tried-and-tested procedure has been carried out for years and makes an important contribution to ensuring compliance with the duty of care in the supply chain at Geberit. New employees in procurement also receive training in the process of sustainable procurement. Regular training of lead buyers on procurement and sustainability takes place, plus proactive exchanges with other industrial companies and participation in a working group of the UN Global Compact on sustainable supply chains.

For further information, see Business Report > Business and financial review > Financial Year 2020 > Logistics and procurement.

Assessment of new suppliers based on sustainability criteria (GRI 308-1 / GRI 414-1)

All new suppliers undertake to comply with the Code of Conduct for Suppliers and hence also to international standards governing environmental protection, labour practices and human rights. Since 2017, an Integrity Line has also been available to suppliers for anonymously reporting irregularities in the procurement process or non-compliance with the Code of Conduct for Suppliers. No cases were reported in the reporting year. As of the end of 2020, a total of 2,098 direct and indirect suppliers had signed the Code of Conduct. This equates to over 90% of the total procurement value. In the Code of Conduct for Suppliers, suppliers undertake – wherever possible and appropriate – to ensure that their own suppliers and second tier suppliers also adhere to the terms of the Code. Geberit may explicitly demand of a supplier that this Code also be extended to selected second tier suppliers. When auditing suppliers, an analysis of the most important second tier suppliers is included in the risk analysis and the audit investigations on site. Geberit’s goal is long-term, collaborative supplier management, where the relationship with the supplier is actively managed and sustainability risks in the supply chain are jointly analysed and minimised.

Sustainability-related impacts in the supply chain (GRI 308-2 / GRI 414-2)

In 2020, five third-party audits were carried out at suppliers in China and Ukraine. The results showed that the majority of obligations set out in the Code of Conduct for Suppliers were complied with. Appropriate corrective measures were agreed in cases of non-compliance.

Management approach production

See Business Report > Business and financial review > Financial Year 2020 > Production.

Management approach logistics

Group logistics is being further standardised and harmonised. Man and technology work hand in hand at the logistics centre in Pfullendorf (DE), which is the hub for almost all Geberit sanitary technology products. Touchscreens, glove scanners, integrated voice control systems and built-in lift tables as well as lifting devices make the work efficient, safe and ergonomic. Logistics processes are improved continually, quality and productivity are further optimised, and the environmental impact is reduced, see Sustainability strategy.

The logistics infrastructure of the ceramic business comprises 13 distribution sites of varying sizes across Europe. The integration of the ceramics business into Group logistics continued in 2020. The Geberit Logistics Operation System (GLOS) is the standard system for logistics and is used to continuously improve business processes.

Geberit does not have its own transport fleet, having outsourced this to external transport service providers. Intercompany and distribution logistics play a major part in Geberit’s environmental impact, amounting to a significant proportion of the total figure. Cooperation with the transport service providers is therefore of key importance. Partners agree to actively support Geberit in its efforts to use energy and packaging material efficiently and to reduce emissions. Furthermore, the partners support Geberit by providing the data needed for the environmental reporting. Developed in 2010 and continuously expanded since then, the logistics calculator facilitates the annual capture of data on the vehicle fleet composition, transportation performance and fuel consumption of all transport service providers, as well as the preparation of the eco-balance.

For further information, see Business Report > Business and financial review > Financial Year 2020 > Logistics and procurement.

For information on the eco-balance of logistics, see GRI 302-2.