Rating our suppliers

The new Workplace Standards Key Performance Indicator (KPI) was completed in 2006, and applied within our core global supply chain. Mainstreaming of the KPI, started in Q4 of 2005 with desktop exercises for supplier applications, continued in 2006 with rating exercises integrated into the majority of field monitoring activities. Newly integrated core suppliers for Reebok received KPI rating exercises.

The KPI’s six units of measure

1. Measuring management commitment and responsiveness to a strategic compliance plan. This planning document defines each unit of measure from the supplier KPI so there is a direct linkage between 12-month compliance activities and opportunities for improvement identified during SEA monitoring. Additionally, the plan spells out details for employee retention, compliance-related investment, relationships with third parties and local government, crisis management and project development on critical compliance issues.

2. Measuring supplier management systems for HR and HSE includes an evaluation of certifications for environment and health and safety, development of HR and HSE systems, retention of qualified professionals for those management systems and internal audit assessments of labour and HSE practices.

3. Measuring worker-management communication and industrial relations focuses on the factory’s ability to resolve disputes, respect forms of worker representation, develop effective grievance procedures and promote sustainable worker-management communication. There is an evaluation of the communication committee’s effectiveness and sustainability and the training needs assessment used by the factory to develop worker and management training.

4. Measuring the delivery and effectiveness of internal training for factory staff focuses on the process for a training needs assessment, the scheduling and execution of the training programme and the budget allocated for training. Trainers are evaluated for their skill, knowledge and experience. Factory records for training and the protocols for reporting these activities are also reviewed.

5. Measuring transparency in communication and reporting focuses on pro-active factory reporting of self-assessment audits and action plan progress. There are additional benchmarks for determining if workers are coached, verification of document authenticity and communication of the Workplace Standards to the workforce and subcontractors.

6. Measurements for compliance activities that focus on the factory’s management response to findings of non-compliance, remediation or enforcement actions.

In 2007, the application of the SEA Key Performance Indicator was extended to a selected group of core Reebok suppliers.

Measuring supplier performance through units of measure [Click image to enlarge - opens new window]

The following table shows the average audit score (expressed as a percentage) of those core suppliers that were rated against the six units of measure in the KPI during 2007.

• business and
  report overview
• vision and
  governance
• engaging our
  stakeholders
• managing our
  supply chain
• protecting the
  environment
• working with
  the community
• our
  employees