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Supply Chain Approach

Besides our own employees, workers in our suppliers’ factories play a central role in our sustainability program. It was our concern for their working conditions and well-being that led us to establish our “Workplace Standards”, the supply chain code of conduct, which also covers workers’ health and safety and provisions to ensure environmentally sound factory operations. To enforce compliance with our Standards we have a multi-level monitoring and enforcement process in place, including the use of an innovative rating system for the assessment of our suppliers. The rating results are shared with our Sourcing teams and incorporated into the overall supplier rating that influences our decision whether and to which extent we continue the business relationship with a specific supplier. This transparency and integration with sourcing decisions is fundamental to the success of our efforts to drive improvements in workplace conditions.

The company’s global supply chain extends through various tiers from strategic manufacturing partners, to componentry and materials suppliers, to raw material sources. Working closely with key strategic partners, the vast majority of our products are produced in 132 manufacturing partners worldwide. We value long-term relationships: By the end of 2020, 61% of our strategic suppliers have worked with Royal Distributions for more than ten years and 30% have a tenure of more than 20 years. The length of our supplier relationship is determined by specific performance criteria which is regularly measured and reviewed. Royal Distributions has outsourced most of its production. Overall, we work with around 500 independent factories from around the world that manufacture our products in more than 49 countries (Status: 2020). Our supply chain is global and multi-layered, with many different types of business partners, some of whom are directly contracted factories, while others are not.

Training & Empowering Suppliers

As part of our continuous efforts to achieve more effective and sustainable practice within the supply chain, we have initiated a system of multi-level and cross-functional training sessions with our global supplier network. In 2019, we trained more than 1,200 staff and personnel through 143 training sessions. We have three main approaches to training content:

Fundamental training includes introductory training for the Workplace Standards, Fair Factories Clearinghouse (FFC) data entries, new factory approval process and the SEA operating guidelines.
Performance training includes detailed training on specific issues on labor, health, safety and environmental practices, as well as initial assessment monitoring methods.
Sustainability training includes training in the KPI and rating tools, sustainable compliance planning and supplier self-assessment methods.