Sustainable supply chain management at Daimler

Procurement of materials and services

Supply chain management at Mercedes-Benz.

It is our goal to gradually establish transparency even in dynamic supply chains of identified potential risk raw materials. This is a permanent task since transparency cannot be created with the click of a button. That is why experts from different specialist units such as Procurement and Supplier Quality, Compliance and Corporate Responsibility work very closely together to advance the topic from different perspectives.

With the Human Rights Respect System (HRRS) we analyse and identify risks to human rights in our supply chain, and continuously develop our separate due diligence approach further for the supply chain.

Requirements for suppliers

Our procurement department has been responsible for the Group-wide Mercedes-Benz Group Supplier Network cooperation model since 2009. It works on the implementation of the Mercedes-Benz Group Responsible Sourcing Standards  in the supply chain.

Our Responsible Sourcing Standards  set the framework for supply chain management and serve as the central contractual document defining requirements for suppliers in the areas of working conditions, human rights, environmental and safety standards, as well as business ethics and compliance.

We demand that our direct suppliers commit themselves to observing our standards, communicating them to their employees and to their upstream value chains, and then checking to ensure that the standards are complied with.

We support our suppliers in their implementation with information and qualification measures. Our service providers also explicitly recognise these standards as a contractual component of their supplier agreements.

Social standards for work and service contracts

The awarding and performance of contracts for work and services are subject to standards. They define our requirements with regard to occupational health and safety, accommodation, remuneration, use of temporary workers, commissioning of subcontractors, and the prevention of illegal false self-employment. These social principles are relevant to all orders that exceed a period of two months and are actually carried out on the business premises of Mercedes-Benz Group AG in Germany. All relevant contractors or service providers must sign a declaration that they comply with these standards. Only if they fulfil this prerequisite can they receive purchase orders. An auditing team from Procurement determines whether the standards are being complied with in Germany.

Monitoring of suppliers

Compliance with the standards is systematically reviewed. For example, Procurement examines new suppliers in the course of their on-site assessments, also with regard to sustainability issues. Such examinations are even more thorough in high-risk countries. If there are any doubts regarding a new supplier’s compliance with applicable requirements, the responsible team initiates a deeper review. In critical cases we discuss the results of the analyses in management committees and take them into account in decisions on whether to award a contract.

Assessment of existing production material suppliers Close

Along with the assessment of new suppliers, we also examine risks at our existing direct suppliers as part of our regular risk assessments.

We systematically follow up reports of violations. In case of anomalies discovered for example during audits or database research, we conduct further reviews and supplier surveys. Mercedes-Benz Cars does this by means of an online questionnaire. These surveys require suppliers to provide information about their sustainability management system and the measures they take to ensure that their own suppliers comply with the defined standards. If the results of such surveys indicate insufficient performance, we instruct the supplier in question to improve the relevant processes.

In order to ensure an effective supplier management system, we assign high priority to the comparability of the survey results. For this reason, we work with standardised instruments such as the industry-wide Self-Assessment Questionnaire  developed by the European initiative Drive Sustainability .

Assessment of service providers and non-production material suppliers Close

For Mercedes-Benz, the lawful execution of labour and service contracts is a fundamental core requirement in terms of corporate and social responsibility. We strictly opposes any form of abuse of labour and service contracts. For this reason, a team of experts checks whether the suppliers comply with legal and collectively agreed framework conditions as well as Mercedes-Benz's own requirements when procuring services and non-production materials. The auditors for example examine the suppliers’ compliance with legal and collectively agreed regulations regarding working hours, remuneration, as well as accommodation and health and safety standards. These supplier audits focus, among other things, on service providers in the low-wage segment and on business areas with lower visibility.

The supplier audits are selected based on an internal risk assessment of the purchased products and services, and mainly throughout Germany. In addition, the supplier auditors also follow specific hints, for example through the whistleblower system BPO (Business & People Protection Office).

In case of findings during the audits, measures for remediation are developed and agreed with the suppliers. The supplier auditors also follow up on the subsequent implementation of the agreed measures.

Assessment of new suppliers Close

The evaluation of new suppliers according to social standards is firmly embedded in the processes of our three procurement units. For example, Procurement evaluates all of the new suppliers in high-risk countries and socially critical procurement segments. Mercedes-Benz Cars Procurement and Supplier Quality conducts a potential analysis of all new suppliers.

Co₂-free steel in the supply chain.

Human rights in the supply chain.

We follow a risk-based due diligence approach to identify, assess and minimise potential human rights risks of production and non-production materials and services.

Governance

Governance.

Responsibilities, policies and memberships - this how we manage our human rights activities.

Handling risk raw materials.

Handling critical raw materials.

Our activities in selected raw material supply chains.