Supply Chain

Auditing Our Suppliers

Third-party social responsibility audits provide suppliers with feedback about how well they are meeting legal requirements and Ford’s expectations. They also help identify specific areas for improvement.

Our Audit Approach

Our human rights and working conditions audits, conducted by qualified third-party social auditors, consist of a pre-assessment questionnaire, a review of facilities and relevant documents, and interviews with both management and employees. Audits are generally announced and coordinated with the supplier in advance; however, in 2015, we conducted our first semi-announced audit of a supplier facility. An audit is defined as semi-announced when the supplier is aware that it will take place but is not aware of the exact date.

Auditors are provided with a list of key issues that must be immediately raised (within 24 hours) if found during an audit. These issues include:

  • Labor

    The presence of child workers, forced labor or physical disciplinary practices

  • Governance

    Noncompliance with minimum wage levels, fraudulent books or attempted bribery

  • Safety

    Life-threatening situations such as blocked fire exits or an absence of lock-out procedures

In 2015, we received three auditor notifications that were immediately investigated and were deemed not to be priority violations. For example, in one case, a supplier had not posted a sufficient number of evacuation plans around the facility. When this was found in an audit, we worked directly with the supplier to rectify the issue and ensure that proper signage was put in place.

Audit Results

In 2015, 81 initial social responsibility audits and 120 follow-up audits were conducted, as detailed below:

2015 Audits: Assessment Results

 20142015Total To Date1
Initial assessments75811,071
Follow-up assessments531201,232
  1. Program Total represents cumulative data from 2003 to 2015.

2015 Audits: Prevalent Issues Identified

 Audits with Referenced Issues Identified (Number/%)FindingSample Corrective Actions
Category: Labor
Working Hours55/68%

No procedures to ensure working hours and rest day limits are followed

Supplier revised “Excessive Working Hours” training procedure; deviations in daily procedure reported

Some employees working more than six consecutive days

Facility to ensure every employee has at least one day off per week

Child Labor Avoidance46/57%

No child labor avoidance policy or procedures found

Supplier updated employee manual to include child labor remediation

No procedure in place to respond to potential discovery of underage workers

Facility now requires and keeps copies of proof of birth of all employees

Category: Health and Safety
Emergency Preparedness and Response59/73%

Insufficient lighting around emergency exits

All non-working lights to be replaced during annual shutdown

Evacuation maps only posted in English

Evacuation maps to be translated into local languages of employees

No strobe/visible fire alarms in high noise areas to show emergency evacuation route

Facility will install visible fire alarm in high noise areas

No fire drill held in last 12 months

Fire drill planned for early 2016

Occupational Injury and Illness41/51%

First aid material not clearly marked or accessible

First aid kits have been replenished and placed in each department

No record of designated individuals attending first aid training

First aid course will be given to all facility workers, and course completion certificates issued

No investigations into causes of safety issues or implementation of corrective actions

Preliminary analysis conducted; data now reviewed at monthly Safety Committee meetings

Category: Labor and Ethics Management
Management Accountability and Responsibility43/53%

No assessment of the status of labor and ethics management system to identify improvement opportunities

A system review will be conducted and gaps will be discussed and addressed

Health and safety responsibilities for managers and supervisors not defined

Facility will define and document health and safety roles and responsibilities for managers, supervisors and workers

Taking Corrective Action

For any issues identified during an audit, the supplier is required to prepare a corrective action plan, which Ford reviews and monitors. Regular supplier reviews help ensure ongoing compliance with the agreed action plan, which serves as a blueprint to audit closure.

Should a supplier be unable or unwilling to address audit findings within our expected timeframe, we first engage with our regional and global purchasing communities to attempt to resolve the issue. However, we reserve the right to end our relationship with any supplier that fails to comply with our policies or local laws, or fails to address noncompliances within an agreed timeframe. This approach enables us to ensure that human rights are upheld throughout our supply chain, while mitigating any potential negative impact on the supplier relationship.

In 2015, seven suppliers that did not meet our expected timeframe were escalated within Global Purchasing, resolved all issues and were not removed from our supply base due to human rights concerns.