Procurement Sustainable Development strategy
The Procurement Team's mission
The aim of the Procurement department is to generate savings while ensuring the internal clients' satisfaction.
The Procurement Department deals with only the costs for which he has obtained a mandate by the Management excluding of his scope the incompressible costs such as salaries, tax, amortizment, Group Legal auditors and the inter-entity costs.
The Procurement structure and the Procurement policy deployment within the locale entities
AXA has a network around 250 buyers in the world through 17 Procurement main entities and around 50 persons in charge of the Procurement support: AXA Belgium, AXA UK, AXA Nederland, AXA France, AXA Germany, AXA Life Japan, AXA Spain, AXA Portugal, AXA Switzerland, AXA Canada, AXA Australia, AXA Tech, AXA Equitable, AXA Italia, AXA Asia Life, AXA IM et Alliance Bernstein.
Key Procurement figures for 2007
- 3.6 billion euros of negotiable purchases each year on IT and General Services
- Around 300 people, including 25 at Group level
- 76% of Group current expenses covered by the Procurement function
- More than 20% of expenses managed under master agreement which are applicable at Group level
The Procurement Sustainable Development Policy
In 2005, AXA formalized and implemented its Procurement Sustainable Development policy, characterized by the incorporation of a simple set of tools into the standard purchasing process. As formalized in 2 "Procurement Standards": the Procurement Code of Conduct signature by the entire person who is involved on the supplier process selection (except local exception) and the Procurement Sustainable Development process respect (sent questionnaire with corresponding reference frame, taking the Sustainable Development assessment into account on the supplier selection and negotiation).
1) The Procurement Sustainable Development Tools
These tools include:
- A Procurement Code of Conduct, included in the Group Compliance and Ethics Guide, defining business ethics for employees.
- A questionnaire (in two versions, with one for goods and one for services) that is sent out to every supplier or vendor participating in a competitive bidding process. The aim of this questionnaire is not to eliminate the potential suppliers but more to obtain a Sustainable Development supplier maturity profile and to identify the potential risks. The questionnaire is accompanied by a reference guide to help suppliers fill it out.
- A contractual clause to formalize the supplier's ethics, notably in terms of respect for human rights, and environmental commitments as well as AXA's commitments. This detailed clause clearly sets out that if a supplier fails to comply with any of the International Labor Organization's 3 fundamental principles (elimination of forced labor, elimination of discrimination, and abolition of child labor), AXA reserves the right to terminate their contract without any compensation.
The three documents have been incorporated into one summary document: the Procurement Sustainable Development Toolbox, which aims to guide buyers in their efforts to implement the Procurement strategy. The summary presents the guidelines on these tools as well as the conditions for processing questionnaires in order to assess their supplier's Sustainable Development maturity. The Toolbox is provided to all of the Group's members of staff, and more specifically those responsible for purchases at all levels:
- Group Sustainable Development Procurement manager
- Local Sustainable Development Procurement managers
- Group Sustainable Development manager
- Local Sustainable Development correspondents
Plus, the Group Procurement has developed performance indicators to monitor the Procurement Sustainable Development process respect and the Procurement Code of Conduct signature. These indicators are evaluated on a quarterly basis for the 17 Procurement main entities.
2) Implementation
The Procurement Sustainable Development strategy has been included in the AXA Procurement Standard, which was validated by the Procurement Strategy Board (PSB: the governance board for the Group Procurement function) and the Management Board in July 2005.
These tools were refined in collaboration with the Sustainable Development Department and tested on suppliers in a pilot phase conducted by Group Procurement in 2005. All members of the Procurement community are now required to systematically use these resources since May 2006.
Detailed instructions on how to use the questionnaire and contractual clause were presented in meetings held for Procurement specialists at AXA's European entities. These meetings also served to educate local Procurement teams about the strategic Sustainable Development issues in their field. In 2006, these meetings were ramped up to include other countries.
2.1) The Procurement Sustainable Development shared workspace
Provided of the strong decentralization of the AXA and especially of the Procurement function, a shared workspace dedicated to the Procurement Sustainable Development was developed and launched in July 2007 by the Group Procurement Sustainable Development team. Its aim is to better communicate as well as share information and feedback. This site is accessible to the whole AXA Procurement community and to the AXA Sustainable Development correspondent network. This site makes it possible for these 2 communities to find all the Procurement Sustainable Development process and tools. They can also consult the Group Procurement supplier folders as well as the suppliers' folders member of the Key Supplier Account Management Program, including the questionnaire completed by the supplier, the additional documents, the Sustainable Development assessments, the comments and recommendations about the improvement points.
2.2) A specific process for the key suppliers
Our Key Supplier Account Managers (KSAM) plays a crucial role, managing relations with our key suppliers. KSAM are responsible for the Procurement network worldwide, maximizing suppliers' added value for the Group through close cooperation and a careful monitoring of their capabilities and performance levels, based on ongoing two-way dialog, especially in terms of Sustainable Development. Also, the Sustainable Development questionnaire is sent to the key suppliers every year to monitor their maturity on this item.
Within the context of this privileged relationship, the key suppliers have been assessed at least once since 2005 and 71% have been assessed at least twice.
Sustainable Development profile of key suppliers in 2007
- 70% of suppliers have implemented a Sustainable Development policy with strong commitments and formalized actions.
- 43% have started to apply this type of process with their own suppliers.
- 72% have an externally validated or audited professional code of ethics.
Testimonial: Harry Van Namen, Global Key Account Manager - AXA, MUNTERS SERVICES FRANCE SAS
Munters is the world leader in dehumidification, providing services and products for water and fire damage restoration as well as systems for evaporative cooling. Our renovation techniques are much used by insurers as they enable them to rehabilitate a building or area rather than to rebuild it. Our social and environmental responsibility is deeply rooted in our culture and as such we are perfectly in line with AXA's sustainable development strategy, which includes an analysis of the social and environmental performance of its suppliers. In 2007, we have launched a three-year sustainable development plan. AXA's comments and collaboration are very useful to enhance this initiative in a continuous improvement perspective. Nevertheless, one hurdle remains: to convince the different parties in a claims settlement that the economic and environmental advantages of repair exceed those of total replacement.