Interaction and dialogue between Pirelli and its suppliers

Relations with suppliers are defined and enforced by specific Company processes. There are two fundamental underlying phases to supplier management:

  • approval of new suppliers, where the interdepartmental process based on specific quality standards led to the addition of the approved material/ vendor to the Vendor List. This is the company’s list of approved suppliers for each individual product. The sustainability limits have been integrated in this phase since 2007;
  • monitoring of vendor (Vendor Rating), assessed on the basis of the quality of the product supplied or service provided, the quality of the commercial relationship, technical/scientific cooperation, performance in terms of occupational safety, environmental and social responsibility through on-site audits and periodic monitoring of the progress of the actions scheduled in any improvement plans that have been signed.

The vendor’s sustainability is assessed in an independent audit, as illustrated in detail elsewhere in this section.

The Vendor Rating covers all merchandise and geographical areas of purchase and is used as an integral component of commercial negotiations.

These procedures are supported by a special website available online through the Purchasing Portal. This website supports the Regulations (including the Purchasing Manual, General Conditions to be applied to suppliers), the Vendor List, surveys, Vendor Rating with feedback and the definition of support actions. This portal provides both an assurance of process uniformity and a guarantee of transparency, in addition to being a communications, on-going training and knowledge sharing tool.

In view of shared development, the processes of dialogue and interaction with suppliers are the object of process improvement, in terms of both quality and tools. Specifically, the Vendor Rating results are regularly revised and commented on by the Purchasing Department. This process involves meetings organised with the vendors, aimed at identifying any corrective actions or measures to improve performance. Each purchase contract includes the name of the buyer contact, to provide the vendor with a company channel that is always available for any feedback.

Several new projects to improve the efficiency and effectiveness of the purchasing process were developed in 2011, where sustainable management of the supply chain has assumed prominence. This is specifically the case of the new Group “Purchasing Portal,” whose implementation began in 2011 and that will be fully operational in 2012, becoming the key “platform” both for Group vendors and for corporate purchasing managers. The new IT tool will allow sharing information between the various countries where the Group operates and trace vendor compliance with the Group Sustainability System, beginning from the approval phase and continuing to entry of the status of implementation of any remedial plans agreed by Pirelli and its vendors on the basis of independent audits of vendor sustainability.

Potential suppliers that want to be approved for inclusion on the Pirelli Vendor List will have to use the portal. By accessing it, the first thing that they will have to do is respond to a pre-assessment questionnaire concerning economic, social and environmental sustainability. Responding to the questionnaire will be a pre-requisite for qualification.

The portal has also been designed to support the execution of communication, awareness and training campaigns for suppliers, whose sustainability will be a key element, particularly in regard to social and environmental responsibility.

An analysis of logistic service providers was conducted in 2011 to measure both the degree of environmental sensitivity and climate impact resulting from their activity for Pirelli. The analysis revealed significant opportunities for improvement, which will be mentioned by the company in communications with suppliers and during future training sessions. In view of properly measuring the environmental impact of logistics, it must be pointed out that in the life cycle of a tyre, the impact stemming from distribution accounts for less than 1% of the total impact stemming from the other phases of the life cycle (first and foremost the usage phase).