Business report > Business and financial review
Logistics and procurement
Logistics established as core competency
Following the radical restructuring of Group logistics that was completed by the end of 2010, (→ German Award for Supply Chain Management 2011), this area has been given top priority and is viewed as a core competency. Integrated logistics processes along the entire value chain improve customer closeness and thus represent an important link to customers. The planned certification of Geberit Logistik GmbH, which is responsible for Group logistics, to ISO 9001 and ISO 14001 standard was successfully completed in December 2012.
As the interface between plants, markets and transport service providers, Transport Management coordinates the activities in question. The centralized management of transport service providers facilitates intelligent transport solutions, for example, by enabling transport runs between plants to be linked with deliveries to customers. This reduces the number of empty kilometers and increases truck capacity utilization. Geberit currently works with six main transport service providers for land transport in Europe, whereas it used to be more than 70. These service providers undertake to pursue a sustainable corporate policy, which can take the form of training their drivers in eco-friendly driving, for example. In addition, these main transport service providers must deliver regular reports to Geberit on their quality and environmental management systems – including the reduction of energy consumption and emissions. Geberit's logistics calculator records data on the composition of the vehicle fleet, transportation performance and the environmental impact of the transport service providers and prepares an eco balance sheet. In the reporting year, the 12 largest transport service providers handled 169.7 million ton-kilometers (previous year 168.1 million ton-kilometers), resulting in 26,883 tons of CO2 emissions (previous year 25,501 tons), with a fleet consisting of 84% Euro5 vehicles (previous year 85%).One important aim in the reporting year was to expand the use of → mega-trailers. These vehicles allow more load volume to be transported. Thanks to the use of mega-trailers between the Rapperswil-Jona (CH) and Pfullendorf (DE) as well as between the Pfullendorf and Pottenbrunn (AT) sites as opposed to conventional vehicles, 414 fewer transport runs were made in 2012. This translates into a reduction of 126,000 kilometers. Moreover, diesel consumption was reduced by 37,500 liters and CO2 emissions were lowered by 155 tons.
In 2013, as part of a pilot project, an eco-friendly, gas-driven truck is to run between Pfullendorf and Rapperswil-Jona. This pioneering project is being conducted in collaboration with a transport service provider and a truck manufacturer.
Supplier management further optimized
Geberit's business partners and suppliers are obligated to maintain comprehensive standards. Not just with regard to quality, but also to socially responsible and healthy working conditions as well as environmental protection and fair business practices. A quality audit is an absolute must when choosing a supplier. If such an audit shows up inconsistencies in the area of sustainability, an additional, in-depth environmental, health and safety (EHS) audit is conducted. The EHS audit is based on the → Code of Conduct for Suppliers. The Code, which was adopted in 2007, is aligned with the principles of the United Nations Global Compact and is binding for every new supplier. Up to the end of 2012, 671 suppliers had signed this Code (previous year 603 suppliers). This equates to 95% of the total procurement value (previous year 93%). Among the top 200 suppliers, the proportion of companies that have signed is 99% (previous year 99%).
When evaluating suppliers, Geberit strives to achieve the greatest possible degree of transparency. All new and existing suppliers are thus assessed by means of standardized processes according to the same criteria: Company and financials, quality and EHS, price and costs, procurement chain and delivery, production and technology. The across-the-board implementation of this uniform supplier management was successfully concluded at the end of 2011 already. In 2012, a start was made on gradually digitalizing the exchange of data with the aim of cutting paper consumption.
In the interests of the systematic planning and performance of audits, which are generally conducted every three years, the existing risk management approach was further developed in 2012 based on the division of suppliers into risk classes – depending on production location (country) and production processes. To increase the number of audits, Geberit cooperated with external partners for the first time: In China an external consultancy firm carried out the required EHS audits in three cases. Performing such audits makes an important contribution to enhancing credibility in supplier management. To anchor this aspect even more firmly, it has now been incorporated in the annual objectives of the respective purchasing managers. Any shortcomings exposed by audits give rise to sanctions. As a rule, a deadline is imposed for remedying the situation and additional follow-up audits are conducted. For example, one Chinese supply company failed to pay either wages or social benefits for several months. Geberit gave the company a two-month ultimatum by which to remedy the situation; the requirements were subsequently met within the deadline.