at company-owned, contractor facilities and select raw material supplier facilities
manufacturing facilities producing for us, which represents less than 10% of total revenues
our 3rd Suppliers Summit organized in Honduras
Compliance with our ethical, social and environmental standards is a fundamental condition of doing business with us and becoming part of our supply chain. Our third-party manufacturing contractors and key raw material suppliers are all required to formally acknowledge these standards and agree to comply with them throughout the term of their relationship with us. Before taking on new contractors, we fully evaluate their ability to comply with the principles of our Code of Conduct our quality standards and cost expectations. We do this through mandatory audits conducted either by our experienced internal auditors or in some instances by a third-party auditor .
Internal Auditing Methodology
All company-owned and third-party contractor facilities are subject to a complete internal audit based on a risk assessment that evaluates country risk, order volume, the facility’s rating and previous audit performance. Internal audits are conducted by regional audit teams that have been thoroughly trained on our monitoring guidelines and social compliance programs. The Company may also mandate third party audit service providers to conduct internal audits, on its behalf, in some regions.
In 2018, 181 complete audits were conducted at our owned facilities, third party contractor facilities and select raw material supplier facilities throughout Asia, Central America, the Caribbean Basin and North America. Of these, 112 audits were conducted by our internal auditors or by third party auditors on our behalf and 69 audits were conducted by external auditors mandated by the FLA, Better Work and WRAP or by customers.
Remediation of Audit Findings
Following an internal audit at a company-owned or third-party contractor facility, our regional social compliance teams partner with facility managers to make changes and put in place sustainable remediation actions. The Social Compliance Teams also provide advice and recommendations on how best to address certain issues. Following an assessment, a management action plan is developed and shared with the facility. Facilities are expected to implement corrective actions and to demonstrate improvements within a prescribed timeframe.
Current Third-Party Contractors
Third-party contractors involved in ongoing production of the Company’s orders are regularly assessed for compliance with our Code of Conduct. If a current contractor achieves a low rating following an audit, our internal Social Compliance Team will partner with the facility’s management to remediate any major issues found during the audit with the establishment of an action plan. In addition, systematic follow-ups are conducted to verify progress made towards resolving any pending issues. Our objective is to help the facility improve their overall performance and remain in compliance with our Code of Conduct.