As an industry leader and global company Nokia is committed to continuous improvement in environmental performance. This requires effective supply chain management. As a part of Nokia’s supplier environmental management, supplier environmental assessments are used in verifying the sustainability status of Nokia’s suppliers.
It is evident that Nokia’s responsibility extends to the supply chain. "Although each company is responsible for its own practices, it is our responsibility to promote good practices and supply chain management to our suppliers, and to help them improve in case gaps are identified. The main focus is on the first tier suppliers, but effective upstream supply chain management is also an essential component to Nokia", says Dr. Abigail Oxley-Green, a Supply Chain CR Specialist from Nokia UK.
Nokia has a set of global Nokia Supplier Requirements, including environmental and ethical considerations, which apply to both direct and indirect suppliers. All suppliers have to fulfill these requirements in order to be Nokia’s supplier. They must, for example, have an environmental management system in line with ISO14001, design for environmental practices, know and record the raw materials used within their products, manage their supply chains, and demonstrate continuous improvement. Supplier environmental assessments are implemented to monitor supplier compliance to these requirements.
Assessments are also used as a development tool, identifying possible weaknesses and helping the suppliers to develop and improve their environmental performance. In case a supplier does not fully meet Nokia expectations, they are required to implement corrective actions. If needed, Nokia provides advice and shares best practices. However if a supplier refuses to address the issue, Nokia is prepared to reconsider the business relationship with the supplier.
The frequency of assessments depends on the supplier type. Typically they are carried out at least in case of major changes, such as a process change or a new supplier, or in case a particular supplier or area is specifically critical to Nokia or otherwise on the public agenda. The assessments are implemented in two different ways: system assessments and in-depth assessments. Both assessment types are carried out on site. The former is carried out on the basis of Nokia Supplier Requirements, while in the latter more time is spent focusing on environmental and/or labour condition issues. To complement the on-site assessment process, suppliers are also required to engage in a self-assessment.
According to a self-assessment survey conducted in 2004, suppliers seem to have significantly improved their environmental performance in the past years. In 2004, 88% of Nokia’s suppliers had an environmental management system in place or planned to certify one before the end of 2006. 97% of the supplier had an environmental policy, and 78% set criteria for their own suppliers. 79% of the companies had a documented design system considering environmental aspects, and 95% of them were prepared to declare the material content delivered to Nokia. Details can be found in the Environmental Report of Nokia Corporation 2004.
Nokia is relying on real commitment from the whole supply chain. As a large customer Nokia is often in a good bargaining position, which enables to truly influence the suppliers and help them develop. However, external stakeholders often want to see very rapid results, which is problematic since the supply chains extend quite far. "Nokia takes a first tier approach in SCM, aiming to positively influence and to spread responsibility throughout the entire supply chain. Although the approach is time consuming, it is effective because it is sustainable in the long term", says Oxley-Green. Another advantage is that in the electronics industry, supplier relationships are often long term and the suppliers can be quite stable. Nokia spends years working with suppliers, which provides a good opportunity to improve their environmental performance if needed. Pressure is exerted upon suppliers from other directions as well: in addition to the increasing legal requirements, the suppliers have many other important customers that are also setting performance requirements.
The reliability of supplier assessments in general has been questioned by many stakeholder groups. The truth is that the assessments only provide snapshots, not the whole picture.In fact, according to Oxley-Green the focus should be on the follow-up side, concentrating on development and collaboration. Nokia cooperates with suppliers and other stakeholders to enhance supply chain management and sustainable environmental performance. Through communication, clear requirements, training, and supplier assessments, Nokia aims for continuity and high environmental standards in Supplier Network Management.
At the end of the day, assessments are only one of the many ways in which Nokia manages its supply chains.