Supplier risk management

Risk management system

As part of the Supply Chain Risk Management 360 (SCRM 360) project, Swisscom ran a pilot test with the Cloud-based Supply Risk Network (SRN) platform in the first half of 2014. The solution will be implemented in stages in 2015. The comprehensive SCRM 360 approach will enable Swisscom to reduce the risks it is exposed to not only in terms of the environment and society, but also in terms of finances, security, logistics and quality. Swisscom continuously checks external data sources using individual, weighted score cards (featuring more than 50 risk indicators). If a top 100 supplier and many upstream suppliers breach a pre-defined threshold, the purchasing organisation is automatically notified. Top 100 suppliers are selected based on the following criteria: purchase volume, strategic importance and risk profile of the product group.

In 2014, Swisscom reviewed the product groups from the perspective of Corporate Responsibility. It decided to maintain the current risk structure and has completed a critical revision of the list of suppliers in high-risk product groups. Of these, all of the major suppliers are already registered on the e-tasc platform from EcoVadis. For potential supply partners and invitations to tender, Swisscom continues to use the implemented process. From 2015 the new Cloud-based platform SRN will also enable a first estimate of a supplier’s overall risk.

Swisscom intends to phase in the overall concept in the first quarter of 2015, including the introduction of a supply chain crisis management organisation.

Risk management procedure in the supply chain

Swisscom does not assess the risk of every supply partner. Instead, it uses a filtering process to determine the effective risk potential at an early stage, while at the same time reducing the number of supply partners to be assessed.

Filtering process: Risk management procedure in the supply chain

In the first stage of the filtering process, Swisscom assesses all product groups in terms of their ecological and social risks using clearly defined criteria, with the individual product groups being assigned to one of three risk profiles – low, medium or high.

In the second stage Swisscom then identifies the supply partners whose goods have been assigned to the product groups with high- and medium-risk profiles. It reviews the risks of these supply partners individually using clearly defined criteria. Goods belonging to a category with medium and high risks are also used to determine the risk of potential supply partners. The results of the assessment are then taken into account when deciding on a possible collaboration.

Overview and requirements of risk management in the supply chain

Corporate Responsibility Contract Annex

In 2014, 96% of the total order volume came from suppliers that had accepted the CR Contract Annex (CRCA). In 2015, Swisscom will continue its efforts to identify the suppliers who have not yet signed the CRCA. The proportion of suppliers who have signed the CRCA remains stable at a high level. Swisscom will therefore refrain from publishing the above figure next year.


As part of two campaigns, Swisscom registered and assessed 31 suppliers on the e-tasc platform from EcoVadis, bringing the total number of assessed suppliers on the platform as at the end of 2014 to 101. Of the 101 assessed suppliers, 34 have not yet met expectations in terms of CR. Swisscom has therefore set up a corrective action plan (CAP) for them that documents potential improvements. After 12 to 24 months, Swisscom will decide which suppliers need to be reassessed. By the end of 2014, 19 suppliers had started working on the CAP via the platform, with some having already completed their efforts. One supplier was classed as high-risk but no longer maintains a business relationship with Swisscom. Further processing will thus only be carried out if a new contract is concluded. Swisscom exceeded its objective for 2014 to assess 101 suppliers on the e-tasc platform. In 2015, Swisscom intends to register further key and strategic suppliers as well as high- and medium-risk suppliers in e-tasc.


Swisscom is a member of the Joint Audit Cooperation (JAC). Swisscom carried out three audits in 2014 as part of its collaboration with the JAC. The JAC is a consortium of telecoms companies which checks, assesses and promotes the implementation of social responsibility in the production centres of the major multinational ICT suppliers. In total, 35 audits of suppliers were carried out within the JAC network (prior year: 38). These audits involved production facilities, most of which were in China, Taiwan, India, Japan, South Korea and South America. The following guidelines apply to the on-site audits:

  • Preparation: Audits are based on information that must be obtained in advance via the company to be audited.
  • Qualified auditors: Audits are carried out by international auditing companies that have specialist knowledge of the social and environmental conditions particular to the country in question.
  • Confidentiality: Confidentiality agreements are signed with suppliers, so audit results are only known to JAC members.
  • Methodology: The JAC members create a checklist based on the SA 8000 (including in relation to working conditions, health and safety, environment, business ethics, management system) and ISO 14001 standards. On-site audits with the relevant dialogue partners are also taken into account.
  • Report: The report formulates the findings based on objective evidence.
  • Collaboration with suppliers: The collaboration is based on the common understanding that the CR risk management system plays a key role in supporting responsible and sustainable development.
  • Collaborating with and further developing suppliers: On the basis of the findings from the audit, corrective measures are drawn up with suppliers to correct shortcomings. The respective JAC member follows the implementation of these measures until they have been successfully completed.

In weekly teleconferences, the JAC members set the audit agenda, check the audit reports and monitor the progress of the planned corrective measures. These regular conferences and the exchange of best practices help to optimise the Corporate Responsibility assessments and make the JAC initiative more efficient. The JAC steering committee, which is made up of representatives from the senior management level of the respective CR and sourcing areas, meets twice a year to review the audit campaign and decide on how to proceed.

Audits results

A limited number of instances of non-conformity and various types of non-compliance were noted in the audits carried out in 2014. The instances of non-compliance mainly concern working hours, occupational safety, wages and health/security. The audits also identified several cases of discrimination and the employment of minors. The time period for rectifying the problems depends on the type of non-compliance.

Due to the impact on the human resources of the company concerned, rectifying irregularities with respect to working hours in particular (for example limiting regular working hours and overtime) requires several months.

Swisscom achieved its JAC audit objectives for 2014 in part and conducted three audits. One audit had to be postponed. The collaboration with the JAC will continue in 2015; Swisscom plans to contribute 6 audits.

The Joint Audit Cooperation network has conducted a total of 146 audits in 15 countries on five continents since 2010, of which 35 took place in the year under review. The audits covered 540,000 employees in total and identified 922 cases of shortcomings, with 317 yet to be resolved. The audits identified the following number of shortcomings:

Number of problems201220132014
Health and safety626893
Working hours / overtime527383
and “Worksheet emissions factors combustion”, FOEN, 2005 (in german).316450
Child and juvenile labour101013
Forced labour and discrimination71022

Of the total 922 shortcomings, 279 were published during the 2014 reporting year. 83 of the outstanding cases were connected to issues involving working hours. 55 of these 83 shortcomings occurred in the years 2010 to 2013, and 28 in 2014. 234 identified shortcomings fall into other categories. Of those, 98 occurred in the years 2010 to 2013, and 136 in 2014. The shortcomings in terms of under-age workers relate to noisy environments, excess hours or night shifts, but not child labour. The cases of discrimination that have been highlighted involve inadequate formalisation of contracts, but no cases of forced labour. Environmental shortcomings refer to missing environmental reports and improper waste disposal.

The individual JAC members are continuously addressing these shortcomings. The collected data is updated regularly and discussed in the steering committee.

Carbon Disclosure Project (CDP) – Supply Chain Program

In the year under review, Swisscom continued its cooperation with the Carbon Disclosure Project (CDP) – a non-profit organisation founded in 2000. The organisation wants companies to publish relevant environmental data, including data on harmful greenhouse gas emissions and water consumption. Once a year, the CDP, on the behalf of investors, provides companies with standardised questionnaires which they can use to voluntarily provide information and data on CO2 emissions, climate risks and reduction goals and strategies. The CDP now maintains the world’s largest database of this kind. As part of its cooperation with the CDP, Swisscom contacted and surveyed 47 of its key suppliers. The suppliers surveyed have a high order volume or a high degree of environmental relevance. The response rate was 85%, thus allowing the survey to be brought to a successful completion (in the previous year, the response rate from all suppliers was 52%). In the fourth quarter of 2014, the CDP analysed the responses and applied a scoring system to rate the suppliers who took part. The results are partly incorporated into the e-tasc platform from EcoVadis and serve as a basis on which to comprehensively assess Swisscom’s key suppliers.

Main risk factors in the supply chain

Human rights

Swisscom attaches great importance to the observance of human rights in the areas specified by the Social Accountability International (SAI) SA 8000 standard, which include child labour, forced labour, health and safety, freedom of association and the right to collective bargaining, discrimination, discipline, working hours and remuneration.

Climate risks from CO2 emissions

Climate change poses risks, for example in the form of increasing levels of precipitation as well as higher average temperatures and extreme meteorological events. These risks could compromise the manufacture of telecommunication products and network equipment and its transport into Switzerland, and have a negative effect on Swisscom’s market chances and operations. Swisscom’s greenhouse gas inventory shows that the majority of its CO2 emissions are attributable to the supply chain, a fact Swisscom takes account of in its strategic priority on climate protection.

Raw materials

The raw materials used in Swisscom’s various products stem from a wide range of countries and regions. Questions on the origin of the raw materials used and the associated ecological and sociological risks are increasingly being asked. Swisscom has been addressing the issue of raw materials since 2011 and over the last two years has implemented the following measures in this regard:

  • January 2012: Swisscom became a member of the World Resources Forum Association (WRFA) through its membership in the Global e-Sustainability Initiative (GeSI).
  • March 2012: Inaugural meeting of the WRF Association, at the meetings of which Swisscom represents GeSI.
  • March/October 2013: Participation at the Annual General Meetings of the WRFA in St. Gallen and the WRF in Davos.
  • October 2013: Dialogue with the NGO “Bread for All” and participation at the “High Tech – No Rights” symposium in Berne.
  • 2014: Preliminary enquiry into involvement with Fairphone. Involvement is planned for 2015 with the launch of second-generation end devices.

In 2014, Swisscom revised the content of its purchasing policy. If necessary, the company will also review the CR Contract Annex in 2015.

Purchasing Circle – embedding corporate responsibility in the organisation

The Purchasing Circle is a series of events for Swisscom purchasing staff. In 2013, the first Circle took the form of a conference on “Challenges for a sustainable supply chain”. The programme included keynote presentations from external guests and internal CR managers and a podium discussion. Swisscom purchasers also visited the “Umwelt Arena” (“Environment Arena”), an exhibition platform in Spreitenbach (canton of Aargau) for sustainable solutions. Swisscom continued the Purchasing Circle concept with three additional events in 2014.