In 2008, we met with 18 major suppliers in a series of workshops to raise awareness of our approach to sustainability and seek their input for future improvements.

Monitoring supplier performance

In 2008, we modified our risk-based audit and reporting process to improve our supplier risk assessment, compared with the questionnaire we used previously. In 2009, we plan to apply the new process first to product quality audits, and then expand this to cover other areas such as labor and environmental compliance.

We are working with our affiliate in China to roll-out this audit program. K-C China is already carrying out product quality and environmental audits of both raw material suppliers and contract manufacturers using the new, risk-based approach. Two tools have been developed to support the process. The first is used to select and train suppliers. The second is used to evaluate supplier performance.

We have contracted an independent global supply chain auditing company to conduct audits of contract manufacturers globally, beginning with those identified as presenting the highest risk.

Climate change and our supply chain

In line with our life-cycle approach, we are seeking to assess the greenhouse gas emissions of our suppliers as well as those from our own operations.

Through our partnership with the World Resources Institute (WRI), which developed the GHG Protocol in partnership with the World Business Council for Sustainable Development, we have discussed the challenges of tracking greenhouse gas emissions throughout the product life-cycle. The challenge is partly because there is no standard methodology available. WRI and WBCSD have since begun work on the GHG Protocol product and supply chain program.

In 2008, we made a financial contribution to the product and supply chain initiative and have been asked to chair the methodology technical working group that will develop the guidelines on the accounting methodology. The GHG Protocol is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.

Our North American supply chain is based around nine regional distribution centers that are strategically located near key customers and markets. This saves nearly two million gallons of fuel per annum compared with the more complex and diffused distribution model we used to operate, substantially reducing our carbon footprint and overall impact on the environment.

Supplier diversity

Our goal is for five percent of our total spending in the U.S. to be with minority-owned suppliers and another five percent with women-owned suppliers, by the end of 2010.

In 2008, our spending with these groups was two percent and three percent of the total respectively.

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