2010 Sustainability Report - Cummins.com

Challenges ahead: Governance and Risk Management
Here are three areas in Governance and Risk Management that Cummins
will be working to improve in 2010:
Ethics investigations: The average closure
of ethics cases at Cummins was under the
Company’s goal of 24 days in 2009 but a Six
Sigma project being implemented in 2010 seeks
to lower the goal to 15 days.
Economic forecasts: Cummins wants to develop
a better way to predict when economic downturns
will end so the Company can be more precise in
planning for production increases. Some
manufacturing plants saw significant swings
in demand from quarter to quarter in 2009 and
early 2010.
Business Continuity Plans: Cummins wants to
continue implementing Business Continuity Plans at
our most critical sites, working with site leadership,
which will assume responsibility for updating them.
Supplier Code of Conduct
Cummins wants to do business with companies that
share its values. The Company’s Supplier Code of
Conduct includes provisions banning child or forced
labor, respecting employee rights and providing a safe
workplace for employees.
The Supplier Code was updated in 2009 to align with
Cummins’ own internal Code of Conduct, making it
clear that the Company holds suppliers to a higher
standard than just compliance with local laws.
Cummins’ purchasing department solicits a
response from suppliers on their conduct codes
and addresses any areas of concern. If the Company
has a contract with a supplier, the Supplier Code of
Conduct is included in the legal agreement.
The code has been translated into more than a dozen
languages. By the end of 2009, Cummins had sent it
to more than 6,000 suppliers with 98 percent reporting
that they were in compliance.
Joint venture relationships
In a number of instances around the world, Cummins
does business through alliances with business partners
and joint venture agreements to increase market
penetration, streamline supply chain management,
expand product lines and/or develop new technologies.
Regardless of whether Cummins directly manages
these alliances and joint ventures, the Company takes
appropriate steps to ensure they share Cummins’
values. Cummins screens potential partners carefully
and only initiates a joint venture with partners whom
Company leaders know and trust. The Company
makes sure Cummins’ values are included in a joint
venture by making them a part of the negotiations and
by ensuring Cummins employees are included on the
joint venture’s board of directors.
In 2009, all North American joint-venture partners
and distributors adopted Cummins’ Code of Business
Conduct or substantially similar codes embodying
the same principles.
Corporate Governance
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