MICHELIN - 2008 ANNUAL REPORT

The principles applied by the Purchasing department in vendor
relations are completely consistent with company values, affirmed
in the Michelin Performance and Responsibility approach.
In particular, the Group’s objective is to develop sustainable
relationships with suppliers and to eliminate the risks from noncompliance
with environmental or social legislation.
These principles are outlined in the Michelin Purchasing Code,
published four years ago, which requires suppliers to comply
with a set of principles, particularly social and environmental
(International Labor Organization conventions, assessment and
control of environmental impacts, ...).
In 2008, the Purchasing department continued its integration
into documents and referentials of the provisions of the Michelin
Purchasing Code. Supplier evaluation questionnaires, internal and
external audit reference documents, local contracts and global
contracts, indicators for evaluating suppliers and performance
assessments include specifc criteria on respect of values and the
Michelin Performance and Responsability approach.
A maturity scale, established initially for the purchases of raw
materials, is now being gradually deployed for purchases of
capital goods. It was applied for the first time to Michelin’s
most important suppliers, with meetings to evaluate and discuss
results.
For example, the maturity scale shows with regards to 80% of
raw material purchases, 58% of these suppliers’ sites are certified
ISO 14001, an increase compared to 2007.
The establishment of these scales is accompanied by detailed
supplier audits, made by Michelin’s teams (30 to 40 annually).
During these visits, Michelin always discusses safety or ergonomics.
This approach actually meets suppliers’ expectations: considering
the positive attitude adopted, Michelin is considered by them to
be the company that best helps them progress in these areas.
This is reinforced in the case of suppliers from emerging countries,
with which purchases are growing significantly. Michelin gives
them particular attention and they are subject to regular visits.
The issue of child labor is always considered very carefully and
a breach would constitute a cause for immediate relationship
termination.
In 2008, Michelin also extensively covered the Europen REACH
regulation with its suppliers, to help them with their registrations
and chemical authorisations and also control its own risks in the
area of component substitutions.
Along with these external measures, Michelin set up within its
Purchasing department an Internal Control function in charge
of identifying and eliminating fraud risks and of ensuring proper
implementation of the Group’s “Purchasing Ethics” Referential.
This action was complemented by a systematic initiative to
identify risks by the Internal Audit Department. The “Purchasing
Ethics” referential has been an internal communication campaign
within Michelin’s teams and with the key internal partners. These
rules are displayed in all the rooms in which meetings are held
with suppliers.
Finally, the launch of the new Raw Material Quality Assurance
Suppliers Manual was an opportunity to put the topic of ethics
in front of suppliers, by systematically sending explanation letters
to them.
170 2008 Michelin Annual Report