Article: Third-Party Due Diligence – Supply Chain

In addition to our own employees, our company relies on a vast network of third parties to deliver high-quality products (services) to our customers. Those third parties can range from companies that supply raw materials to firms that manufacture, assemble, package, warehouse and distribute products. Even that isn’t a complete list because we also rely on individuals and organizations to meet our basic business needs. That might include billing and payroll, advertising, customer service, internet service and scores of other services.

Our Responsibilities

Our customers want to know that the products they buy from us are safe and effective. They also want to know that our products are made under high ethical standards. Ultimately, we are responsible for meeting those expectations, whether the work is performed by our employees or those of a third party.

We choose our third party associates carefully and monitor them for compliance with relevant laws, regulations and our Supplier Code of Conduct. Assuring compliance can be especially challenging because our third parties typically have their own supply chains of subcontractors, vendors, suppliers and third-party entities. Sometimes, those supply chains can include hundreds of entities and extend across many countries.

What Kinds of Misconduct?

No matter how challenging, it is up to us to prevent, detect and address any illegal or unethical conduct – no matter where it occurs. Here are some of the types of misconduct that require quick action on your part:

  • Bribery of anyone, anywhere
  • Corruption including fraud, conflict of interest and bid rigging
  • Human rights violations such as trafficking and child labor
  • Unfair labor practices such as an unsafe workplace or withheld wages
  • Sanctions violations
  • Environmental violations
  • Financial mismanagement
  • Data security violations
  • Conflict minerals
  • Theft of intellectual property

Where Does Misconduct Occur?

Unfortunately, misconduct can occur at any point in any organization. Our employees work hard to protect our company’s reputation for ethics and compliance. The majority of our third parties share our values but there are some business functions that are especially vulnerable to misconduct. Here are some of the things you can do to prevent or detect possible problems in key areas:

  • Scrutinize new suppliers for their compliance, subcontractors, performance and existing relationships;
  • Schedule regular monitoring of existing suppliers for consistent performance with their contractual responsibilities;
  • Regularly examine third parties and their subcontractors for possible sanctions violations, especially if they change their third party associates;
  • Conduct regular on-site audits of suppliers and their key suppliers with particular care for possible human rights violations such as child labor, trafficking, prison labor and unsafe working condition;
  • Regularly audit supplier and compliance-required records;
  • Consistently monitor financial records, especially those related to billing, expenses, subcontractor fees, and any unusual costs;
  • Pay attention to anything that “doesn’t look right.” It might not “be right.”

Awareness is key!

We know how hard you work every day to maintain our reputation for quality and ethical behavior. And we certainly recognize that no individual can know our entire network of third parties. But, just as it is important to stay alert to possible misconduct inside our company, it is also important to stay vigilant about actual or potential misconduct by third parties and report any problem to our compliance office or through our help line.

 

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