We work with suppliers in all of the more than one hundred countries in which we operate. In fiscal 2011, Linde spent around EUR 10.7 bn (2010: around EUR 9.7 bn) on purchasing in various markets worldwide. Around EUR 9.2 bn of of this amount related to the Gases Division and around EUR 1.5 bn to the Engineering Division. The most important items we purchase include energy, gas cylinders and valves, tanks and tank equipment, IT products, various services as well as machines and other components for engineering projects.
Linde’s success hinges on the products and services that we purchase being readily available – in appropriate quality and quantity and at fair market prices. When selecting suppliers, we look at a variety of factors other than pricing. These include logistics chain efficiency and delivery capabilities as well as assessments of the entire lifecycle of products.
We use various tools and measures to select and evaluate suppliers. These include software-based qualification processes for new suppliers as well as self-assessments on quality, environmental and social issues. We perform audits to check that our suppliers comply with these requirements. In certain regions we also take supplier diversity into consideration, considering the origin or employee structure of suppliers.
Compliance with standards
Our Code of Ethics requires that employees maintain fair and honest working relationships with suppliers. We also expect our suppliers to comply with environmental and social standards. These expectations are set down in our procurement guidelines. We also inform suppliers of specific requirements, providing them, for example, with overviews of the standards we expect and integrating environmental and social aspects into our selection processes.
We use risk analyses to check compliance with standards. Our Engineering Division, for example, has construction projects the world over. Site safety is therefore a top priority here. In 2010, the Engineering Division implemented a new standard that clearly sets out Linde’s expectations on its suppliers’ conduct. The guideline covers safety, health and environmental issues and is a fundamental prerequisite for working with Linde in engineering projects. The standard also addresses compliance with the principles of the Global Compact. In 2011, 250 suppliers for engineering projects were given the standard and had to confirm that they understood the requirements. At the same time, we have conducted 30 audits at suppliers for engineering projects that include assessments of key aspects of the standard.
We also carry out quality audits to evaluate environmental and social factors. Suspected violations of Linde standards can also be reported to the Linde Integrity Line reporting system. All reports of non-compliance along our supply chain that we receive are assessed. Allegations that proved to be substantiated may also result in termination of contracts with suppliers.
We involve our service providers in our environmental and safety management activities, offering, for example, driver safety training courses for contractors commissioned by Linde to transport gases. We also collaborate with suppliers on mutually beneficial projects. During the period under review, our activities here focused in particular on reducing transport-related CO2 emissions.