A Responsible Purchasing Policy

Excellence in supplier relations for a sustainable strategy

"Customer satisfaction is at the heart of our purchasing strategy"

Michelle Wen, Executive VP, Global Purchasing and Supplier Quality, Member of the Global Executive Committee

With a procurement turnover of €42 billion in 2018, Groupe PSA Purchasing Department is responsible for procurement for the entire automotive production cycle and contributes to the achievement of the Group’s international ambitions.

More than 75% of the manufacturing cost price of a Group vehicle comes from the purchase of serial parts, involving the Purchasing Department at all stages of the process.

As a true interface between Groupe PSA and its suppliers, the Purchasing Department works closely with the Quality and Engineering Department, the Industrial Department and the Programs and Strategy Department, but also more generally with all Groupe PSA entities and its external partners.

 

Groupe PSA’s strategy is based on two main approaches

Excellence in supplier relations

The selection of our suppliers

More than 8,000 suppliers, with whom we have a contractual relationship, make up Groupe PSA panel. They are selected according to rigorous criteria including quality, performance and customer orientation standards.

In order to complete our annual supplier audit system and make it more robust, Groupe PSA has undertaken an evaluation of its entire supplier panel on environmental, social, ethical and subcontracting chain control criteria. It has chosen to outsource this evaluation to an external third party, EcoVadis.

Each supplier must sign Groupe PSA Responsible Purchasing Charter.

Embark on the path of co-innovation

Groupe PSA considers its suppliers as partners. Instead of following a short-term approach based on opportunism and cost reduction, we want, through a vision shared with our suppliers, more transparency and mutual trust in order to build a long-term relationship that is more efficient and meets our ever-increasing requirements.

In a co-innovation process, framework agreements have been signed between Groupe PSA and equipment manufacturers to boost innovation collaboration. They simplify the contractualization of information exchanges and work, define governance and the way in which the relationship is managed. They thus enable the partners to identify common subjects as soon as possible, to engage them and to follow their smooth progress until their industrial development.
The Purchasing Department believes in a win-win approach with its suppliers, with the objective of pooling the know-how of each partner and establishing a lasting relationship, in a continuous improvement process. The Group aims to surround itself with suppliers who, through their financial structures and innovation capacities, support its international development.

For the Purchasing Department, innovation means preparing with its suppliers for the mobility of tomorrow that is more responsible, connected and attractive.

 

Groupe PSA Supplier Awards

Each year, Groupe PSA rewards its suppliers in different categories for their commitment and the quality of their responses to the Group’s expectations. Groupe PSA Supplier Awards are an opportunity to reaffirm the importance of the supplier relationship in the implementation of the Group “Push to Pass” strategic plan, as well as in the development of technological innovations to meet global competitiveness challenges.

The list of rewarded suppliers is validated by the Purchasing Leadership Team to ensure that these suppliers do not present any difficulties with regard to the evaluation criteria of the other categories. For example, a supplier will not be rewarded in the “Competitiveness” category if it is not at the required CSR level.

 

 

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Groupe PSA B2B portal: http://b2b.psa-peugeot-citroen.com/Pages/en-US/Home.aspx

Opel Vauxhall SupplyPower portal: https://ovsupplypower.portal.covisint.com/web/portal/home

Developing local procurement for a sustainable strategy

Given the economic challenges of being present in different host countries, Groupe PSA is committed to make supplier relationship management part of its core strategy. For the Group, having a sustainable purchasing strategy means that sourcing must take place as near to production sites as possible. This helps to:

  • Reduce the Group’s carbon footprint through the environmental optimization of upstream logistics;
  • Involve suppliers in ongoing improvements to technological, logistical and CSR aspects;
  • Give the Group greater oversight due to operational proximity with its partners.

 

Groupe PSA is a full-fledged partner to its host countries and commits to continue to increase its purchases in the area around its production sites, a policy that also helps sustain local subcontractor activity.

Today, in Europe, 87% of direct material parts used in the Group in European plants are sourced in Europe.

The label “Origine France Garantie” is an example of this.

The “Origine France Garantie” (Made in France) label provides a guarantee to consumers that the product they are buying is French-made. It is awarded to products whose final assembly is done in France and where 50% of the value of these products is also produced in France, following certification by Bureau Veritas.

14 Groupe PSA vehicles are currently certified:

PEUGEOT 5008 and SUV Citroën C5 AIRCROSS, produced in Rennes (Ille-et-Vilaine, France)

DS 3 and PEUGEOT 208 GTI produced in Poissy (Yvelines, France)

Citroën C4, PEUGEOT 2008, DS 4 produced in Mulhouse (Haut-Rhin, France)

PEUGEOT 308, PEUGEOT 3008 and DS 5 produced in Sochaux (Doubs, France)

PEUGEOT Expert, Traveller, Citroën Jumpy and SpaceTourer produced in Hordain (Nord, France)

As an international actor, Groupe PSA has to envision global issues and stay at the forefront of solving them. Our approach is rooted in the excellence of our supplier relations as they are major links for keeping the Group’s engagements.

Any new supplier selection process takes into account a CSR evaluation conducted by a third party organization (EcoVadis) and existing ones are to be reassessed every year. Additionally, on-site audits carried out by an independent third party provider can be conducted or commissioned any time, to check and ensure compliance with Groupe PSA. Finally, all suppliers are required to sign our Responsible Purchasing Policy.

Today, customer expectations are growing to be informed about the production conditions and origin of the products they buy. It is crucial for Groupe PSA to prove transparency throughout the supply chain regardless of the challenges to implement it.

 

Environmental performance of the Supply Chain

Groupe PSA works on reducing the environmental impact of the supply chain.

Today, 19.2% of CO2 emissions of our vehicles is generated in the the Supply Chain. This largely includes emissions made by suppliers to produce goods and services purchased by Groupe PSA.

The Purchasing Department’s strategy to reduce GHG (greenhouse gas) emissions in its entire supply chain consists of:

  • Selecting suppliers according to environmental criteria such as the ISO 14001 certification, or their capacity to develop products which incorporate green or recycled materials;
  • Collecting a status report from its major suppliers on their current and future C02 emissions and implementing a reduction plan.

Local sourcing

Logistics and transport in the supply chain have a strong impact on the environment both globally and locally.

It is essential to boost local production in order to support the Group’s increasing internationalization and to reduce inequality in terms of economic development in host communities.

 

This optimization of upstream logistics helps:

  • Reducing the Group’s carbon footprint;
  • Involving suppliers in ongoing improvements to technological, logistical and CSR aspects;
  • Strengthening the Group’s due diligence processes due to operational proximity with its partners.

 

Today, in Europe more than 87% of the parts are locally sourced.

Human Rights in the Supply Chain

Groupe PSA ensures through every level of its supply chain that Human Rights are respected. We work to make sure that forced or compulsory labour and child labour are not tolerated and forbidden throughout the entire supply chain, including all tier levels, down to smelters and minders.

Groupe PSA added a new clause to our purchase contracts for certain critical commodities, such as conflict minerals.

We guarantee that standards defined by supranational bodies (International Labour Organization, Global Compact, ISO 26000, ISO 20400, ISO 14021, the UK modern slavery act, REACH, US regulations and the European Directive on conflict minerals, human rights, ethical principles, etc.) are fully integrated into the Group’s internal processes.

When Groupe PSA joined the Global Compact in 2003, it promised to adhere to and promote to its suppliers the ten principles based on the Universal Declaration of Human Rights, the Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on the Environment and Development and the United Nations Convention against Corruption.