Supply chain

We spend £6 billion on goods and services each year1, sourcing from thousands of supplier partners worldwide. We aim to source responsibly, selecting supplier partners who meet high standards in areas such as ethical conduct, human rights, workplace standards and environmental management. This reduces risks for WPP and our clients.

1 Not including media space purchased on behalf of clients.

Fast read

Our goal

We aim to build a responsible and sustainable supply chain by:

  • Setting clear standards for supplier partners
  • Integrating sustainability criteria into supplier selection
  • Monitoring risks in priority areas of our supply chain
  • Working with supplier partners to drive social and environmental change, prioritising areas most relevant to our business

Business value

By improving oversight of our supply chain we can identify opportunities to: consolidate spend and reduce costs; protect our reputation and that of our clients; and meet the requirements of the growing number of client tender processes that include supply chain management criteria.

Sustainability impact

By working with supplier partners we can have a positive impact on human rights and environmental protection beyond our business.

Challenges and dilemmas

We have a large supply chain. We work with thousands of supplier partners, with many buying decisions made at operating company level. This makes it more challenging to ensure consistent standards.

Our current approach focuses on our tier-one supplier partners. However, higherrisk practices may be more likely to occur further down the supply chain where we have limited influence.

Management approach

Our Group Procurement Leadership Team (PLT) is responsible for managing sustainability in our supply chain. All PLT members have sustainability included in their performance objectives. The PLT oversees procurement teams at the WPP parent company level and works with out operating companies to implement our sustainability requirements and communicates on sustainability through quarterly reporting, team meetings and regular newsletters.

External frameworks

GRI indicators in this section: G4-12, G4-36, G4-58, G4-EN32, G4-LA14, G4- HR1, G4-HR6, G4-HR10

Global Compact Principles: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10

Progress on our KPIs in 2016 Performance in 2016
236 supplier partners covered by our supply chain risk program Increased
£236 million annual spend covered by our supply chain risk program Increased

Key:

Increased   Improved

About our supply chain

Around half of our spend is with WPP preferred supplier partners who provide goods and services to our companies, such as IT, travel, telecommunications, professional services and facilities. Many of these contracts are negotiated centrally.

The other half of our spend is primarily made up of goods and services used in client work, such as advertising production, market research operations and other marketing services. These contracts are usually smaller and negotiated by budget holders within our companies.

To track spend with supplier partners and monitor performance, we have implemented an online analytics system that enables us to monitor 70% of our total spend with supplier partners across 12 of our largest markets.

The large numbers of supplier partners we work with and the diversified nature of procurement within WPP means we have to prioritise our efforts. We currently focus on tier-one supplier partners, those with whom we have a direct commercial relationship. Higher-risk practices may be more likely to occur further down the supply chain, for example among raw material suppliers. We do not have a direct commercial relationship with these suppliers; however, by working with our tier-one supplier partners and requiring them to implement their own supply chain management programs, we can influence standards further down the supply chain.

Our standards for supplier partners

Our supplier standards are set out in our Code of Business Conduct – Supplier Version. This explains how our own Code should be applied by companies in our supply chain. It includes requirements relating to labour practices (such as wages, anti-harassment and discrimination and health & safety), human rights (including no child, forced or bonded labour), social impacts (such as anti-bribery and corruption) as well as other sustainability issues.

Our procurement policy is also aligned with the WPP Data Code of Conduct, our data protection and privacy principles, our Sustainability Policy, and our Human Rights Policy Statement.

Our key policies and information about our approach are available to supplier partners and prospective suppliers and the public on our website, rapturecity.info/wpp/sustainability/policies-and-resources. The Code of Business Conduct – Supplier Version is also available on our procurement website – rapturecity.info/wpp/about/how-we-buy.

Our supplier partners have access to a whistleblowing mechanism, the WPP Right to Speak helpline, with contact details provided on our website at rapturecity.info/. See our ethical standards.

Assessing modern slavery risks in our supply chain

The UK’s Modern Slavery Act now requires companies to explain their approach to preventing slavery in their operations and supply chain. Read Modern slavery for a summary of our approach or view our Modern Slavery Act Transparency Statement.

We updated our procurement policy in 2016 to ensure it is aligned with our Human Rights Policy Statement and the requirements of the Modern Slavery Act.

As part of our due diligence processes we have assessed the risk of modern slavery for WPP amongst our direct workforce, whereby we concluded the risk to be very low. We also extended our due diligence exercise to assess the risk of modern slavery amongst our preferred supplier partners, across nine categories of spend, with whom we have a direct contractual relationship. To ascertain the risk of modern slavery among these supplier partners, we evaluated their category risk in relation to category spend. Almost 90% of our spend with preferred supplier partners is in medium- or low-risk categories such as HR and professional services. We identified facilities as a high risk category, accounting for 11% of our spend. For the country risk evaluation we referred to a third party, Maplecroft. Most of our spend with preferred supplier partners (94%) is in countries deemed medium- or low-risk according to Maplecroft’s Modern Slavery Risk Index.

Preferred supplier partner spend by category risk
%

  • Low risk 34
  • Medium risk 55
  • High risk 11

Preferred supplier partner spend by country risk*
%

  • Low risk 22
  • Medium risk 72
  • High risk 4
  • Extreme risk 2

*Based on Maplecroft Modern Slavery Index.

In addition, we also assessed another category of spend – promotional goods – which was found to be high-risk both in terms of category and country. Here, we not only assessed our preferred supplier partners but also additional suppliers where the relationship is managed by our companies.

How we select supplier partners

We evaluate potential new supplier partners on factors such as assurance of supply, quality, service, cost, innovation and sustainability. Our sustainability criteria cover six areas: policy; senior responsibility; materiality and identification of key issues; reporting; supply chain; and anti-bribery and corruption. We do not have a standard weighting for sustainability criteria, which varies from supplier to supplier.

All WPP companies and Group buyers are required to take the following steps when selecting supplier partners:

  • Conduct due diligence to assess whether supplier partners pose a potential financial or reputational risk to WPP or its clients.
  • Assess operational, commercial and sustainability criteria to determine whether supplier partners are fit for purpose.
  • Apply our anti-bribery and corruption policies.
  • Have supplier partners read and sign the supplier version of the WPP Code of Business Conduct, confirming that they will comply with our standards.
  • Include a right-to-audit clause in purchase orders where appropriate.

How we monitor risks

We have identified two areas of our supply chain where breaches of our Code could have a potentially significant impact on WPP’s reputation or that of our clients. These are:

  • Advertising production: this part of our supply chain involves many small companies and costs for these services are typically passed onto clients. This category includes suppliers of promotional goods.
  • Data collection: a higher-risk area because of the importance of protecting consumer data and the many legal and contractual requirements relating to data security and privacy.

We are engaging with higher-risk supplier partners in these areas. A supplier may represent a potentially higher risk due to factors such as spend, the type and volume of goods or services we buy, the supplier’s strategic value to WPP or their location. See supplier risk monitoring chart.

Selected supplier partners are asked to complete a self-assessment questionnaire, provided by Sedex, the not-for-profit membership organisation which works to share sustainability data across supply chains. It covers four areas: employment practices; health and safety; business ethics; and environmental management. Responses are analysed using the Sedex risk tool, enabling us to assess the level of potential sustainability risk associated with each supplier.

Over the last four years (2013-2016) we have assessed 236 advertising production and data collection supplier partners working with our companies in China, the UK and the US. This covers £236 million in annual spend, or approximately 15% of our total spend on advertising production and data collection.

Supplier risk monitoring

We follow three key steps:

Advertising production supplier partners

Since 2013, we have assessed 213 supplier partners, the majority of which carry a medium sustainability risk as defined by Sedex. Based on the issues identified during this process, we hold supplier meetings and workshops and train supplier partners on the practical steps they can take to align with our Code of Business Conduct.

In 2016, Maxx Marketing – an Ogilvy company specialised in the sourcing of promotional goods – joined our Sedex program and is using the platform to engage with key tier 1 supplier partners mostly in Asia.

In the US, we are conducting audits for five higher-risk supplier partners and will work with these supplier partners to improve their social and environmental performance and correct issues identified during the audits.

Data collection supplier partners

Starting in 2014, we carried out a pilot, assessing 23 supplier partners that provide and/or manage data for Kantar, KBM and Xaxis. In addition to signing our Code of Business Conduct – Supplier Version and completing the Sedex questionnaire, these supplier partners were asked to read and sign the WPP Data Code of Conduct and complete a WPP-designed data security and privacy survey. Areas covered include supplier standards for collection, use, storage and transfer of data, physical security measures, testing, access controls and data security accreditations and certifications. This methodology is based on the WPP Data Health Checker.

We have worked with The Data Alliance, our horizontal team supporting our data businesses, on integrating key elements of this approach into the way we manage data collection supplier partners. Future engagement with data supplier partners will take place mainly via our operating companies.

During 2016, our Group procurement team began working with the procurement team at Kantar, our data investment management group, to embed our standards in their global procurement program. We are reviewing seven categories of supplier starting with suppliers of translation services and survey incentives, used to increase consumer survey response rates.

Read more about our approach to Privacy and our Data Code of Conduct on Privacy and data security.

Suppliers and spend covered by our supply chain risk program

  • Number of supplier partners
  • Spend £m

Embedding sustainable procurement

To broaden our efforts and encourage accountability at a regional and category level, we have established social and environmental action plans for each Group procurement team and Kantar’s procurement team for implementation in 2017. These action plans, which are specific to each team, have three components:

  1. Category initiatives: Integrate sustainability objectives in the daily management of up to three categories of products and/or services. Initial examples include cleaning services in the UK and local couriers in Brazil.
  2. Training: All team members to receive online training on sustainability (including on the UK Modern Slavery Act). This will be completed in 2017.
  3. Risk monitoring: Map key social and environmental risks for their categories, countries and regions as well as helping to implement Group initiatives in the areas of advertising production and data collection.

We work with supplier partners to reduce the environmental impact of our procurement, to embed ethical standards and to increase diversity in our supply chain. This includes:

  • Living wage: We support the principle of the living wage, see Living wage in the UK. Our UK companies have been mandated to pay the voluntary living wage set by the Living Wage Foundation for on-site contractors such as cleaning, security and catering staff by the end of the first quarter of 2017. We have issued guidance to our companies on the Responsible Procurement of Cleaning Services.
  • Diversity: We incorporate diverse supplier partners in our supply chain, including small businesses and those owned by women and minorities. This enables us to comply with client requirements in markets such as the US, and can boost innovation and creativity.
  • Green goods and services: We have identified preferred supplier partners for our operating companies to use, which provide goods and services with better environmental credentials for energy, paper and waste management.
  • Carbon emissions: We have estimated the carbon emissions of our supply chain and work with supplier partners to target reductions in key areas. See Our wider carbon impact.