Auditing suppliers in China

Alice Yang and Helen Qi are working for Axel Johnson International’s business groups Power Transmission Solutions, Transport Solutions and Industrial Solutions at SCM Citra’s office in Ningbo, China. Since February 2019, they perform sustainability audits onsite at our suppliers around China. Having local auditors is important for us to ensure compliance with our Code of Conduct, which demands responsible production and good working conditions in our supply chain. 

Despite the Chinese government having strengthened the environment protection laws with more focus on high polluters, there are still many challenges related to environmental issues and health and safety working conditions in small and medium-sized industries.

“There are two major factors that can impact a supplier’s attitude towards sustainability: lack of transparency and lack of support from top management. Sometimes the supplier doesn’t want to give out documents or there is no appointed full-time resource to work with environmental and social-related issues, which usually means that there is little focus on these areas”, Alice says.

When doing audits of Axel Johnson International’s suppliers, the base is always our Code of Conduct that the suppliers need to sign. Alice and Helen especially look for the status within some main areas:

  • Safety awareness
  • 7th day rest
  • Labour contract practice
  • Occupational health & safety
  • Insufficient payment
  • Late payment/hold deposit
  • Handling of wastewater
  • Handling of air emissions
  • Handling of chemicals

“We have seen different examples of violations from illegal discharge of wastewater, spilled chemicals in the factory and the workers having direct contact with the chemicals without wearing proper personal protection equipment, to blocked emergency exits or non-existing fire-fighting devices. Also, sometimes not paying the workers directly has been used as a means to retain skilled workers, or simply that the cashflow is not high enough,” Helen explains.

When suppliers have been audited, they are marked as high risk, medium risk or low risk supplier. They all get a feedback document together with a corrective action plan, which includes actions that need to be taken and a time schedule for the improvements. The corrective action plan must be agreed upon and then the supplier will be offered training and support in case of lack of awareness. A follow-up visit is performed within a certain time to see if the supplier has performed all the actions needed.

“Depending on the need, we will offer the supplier official guideline suggestions, on-site training and one-on-one coaching. If a supplier doesn’t act after our feedback and follow-up and fails to provide a safe and healthy workplace for its employees, then ultimately, we will end the cooperation”, says Helen.

Successful impact on suppliers

Actions that suppliers successfully have introduced after being audited ranges from introducing personal protection equipment, first-aid devices in connection to chemicals, unblocked emergency exits, anti-falling chains on gas cylinders as well as infrared sensors for machine safety to ensure no one gets stuck with their hands in the machine.

“We tend to talk about what kind of issues we find. There are however many good examples among our suppliers, where they handle the environmental related areas in a responsible way and with good status for the working conditions. Some even provide a day-care centre, recreational area, reading room or a fund for children’s education,” explains Alice.

Next step for Alice and Helen is to provide training for key suppliers in different forms. They will gather all key suppliers in seminars (face-to-face training), WebEx training as well as on-site training around fire safety, chemical safety, safety signs at workplace, occupational health and safety, employment relationship, working hours and environmental related areas.

“We make sure to stay up-to-date with the latest best practice and take refresh training on the latest legal updates, to make sure that we can at all times provide correct training to our suppliers,” Helen says. “Of course, it is also important that we understand our companies’ products to know what we should look for in terms of hazardous substances and so on,” adds Alice.

Depending on the need, we will offer the supplier official guideline suggestions, on-site training and one-on-one coaching.

Learn more about SCM Citra

Presence in China to ensure compliance

Download our Code of Conduct