Management of Relationships With Suppliers

The performance of our suppliers plays a key role in WACKER’s success. That is why we encourage close cooperation and actively enhance our supplier portfolio to guarantee supply security, performance and sustainability. We also provide our Code of Conduct to our business partners as a guide along with our Supplier Code of Conduct.

Regulations and directives

Our supplier relationships are governed by a company regulation and several directives including a specific directive to encourage sustainability. This aims to efficiently ensure a sustainable supplier base by enabling suppliers to be prioritized according to their significance and by allowing robust relationships and processes to be established.

Assessment and categorization

WACKER assesses suppliers in terms of their procurement volume, dependency and strategic aspects. Key suppliers cover almost 80 percent of the global procurement volume and are ranked in categories A, B or C. This rating enables active management of supplier relationships and the definition of formal requirements such as supplier performance assessments and plans for improvement.

Long-term partnerships and preferred suppliers

WACKER strives to establish long-term partnerships with key suppliers based on our experience that long-serving suppliers better understand and fulfill our specific demands. This objective is expressed in our related directives and guides our conduct in supplier management. In addition to key suppliers, WACKER chooses preferred suppliers to avoid too fragmented a supplier structure. These preferred suppliers are often separate from the key supplier group.

Monitoring and supplier development

For all key suppliers and for a selection of non-key suppliers, WACKER has processes in place to continuously monitor and improve supplier performance. These processes help identify relevant developments, risks and opportunities in good time and enhance performance capability and cooperation to lasting effect.

Our supplier development strategies include:

• Personal relationships
• Complaint management
• Supplier assessment
• Continuous improvement activities
• Fulfillment of sustainability standards
• Supplier quality audits

Sustainability requirements and supplier management

WACKER expects all its key suppliers to demonstrate positive sustainability performance at least every three years either in the form of an EcoVadis assessment with a minimum score of 46 points and/or a TfS audit with no major findings. The areas we look at include sustainability management, environmental practices, labor and human rights, ethics and sustainable procurement. All key suppliers will have to fulfill these requirements by 2030. We follow up on our targets in monthly management reports.

We also require a sustainability assessment from those suppliers that are considered particularly relevant due to our ongoing risk analysis. If the results are not satisfactory, we agree measures for improvement, the progress and status of which are tracked by way of supplier talks, reassessments or repeat audits. Results and measures are documented in an internal dashboard. Results that remain poor and a lack of readiness to cooperate may lead to termination of the business relationship. We also make it compulsory for suppliers of conflict minerals to only supply from mines that meet the criteria of the Responsible Minerals Initiative (RMI).

Communication and training

Our sustainability targets are published on our website. We also have information on it dedicated to suppliers and regular supplier days in Europe, Asia and the USA at which we communicate news, key issues and our expectations. This should also help to reduce the negative impact on people and the environment in the upstream value chain.

Training programs

In addition to general training in safety and compliance, we also offer our Procurement staff specific training programs, which include training to familiarize staff with procurement processes and tools, regular training on negotiations and costs, and add-on training such as courses on product carbon footprints. What is more, our employees and suppliers are able to participate in online TfS Academy courses free of charge on relevant sustainability issues.