Procurement and logistics
Supply chains affected worldwide
The Corporate Purchasing department is responsible worldwide for procuring raw materials, semi-finished and finished products, commercial products, and services. Besides minimising risks of downtime as well as costs, the primary purpose of comprehensive supplier management is to safeguard supplies.
The impact on global and regional supply chains was even more acute in 2021 than in the previous year. The availability of raw materials and components was very difficult and at times even critical in the reporting year due to COVID-19.
Transport service providers on land and sea were faced with major challenges, but thanks to the great flexibility of the Geberit transport service providers, the freight capacity required was made available as far as possible. In the US, there were major delays with electronic taps (although these products represent a relatively small share of Group sales) due to shortages of electronic components.
Viewed overall for the entire Geberit Group, the bottlenecks experienced with raw materials and transport capacities in the reporting year did not result in any relevant shortfalls in the availability of Geberit products.
Massive rise in raw material prices
As has already been mentioned, the situation on the raw material markets was turbulent in the reporting year. This had significant effects on raw material prices. Due to the pandemic, the reporting year saw historic price increases for the entire product mix relevant for Geberit – both for plastics and for industrial metals. Compared to the previous year, the price increase in local currencies was 13.3% or CHF 112 million.
Development of currency-adjusted raw material prices relevant for Geberit
2020/2021
(Index: January 2020 = 100)
Compliance with Code of Conduct for Suppliers checked
All business partners and suppliers are obligated to comply with comprehensive standards. This applies to quality, socially responsible and healthy working conditions as well as environmental protection and the commitment to fair business practices. The basis for the cooperation is the Code of Conduct for Suppliers. This Code is aligned with the principles of the United Nations Global Compact and is available in 15 languages. As of the end of the reporting year, a large majority of suppliers as measured in terms of purchasing volumes had signed the Code.
Corporate Purchasing and Sustainability jointly ensure that the standards found in the Code of Conduct are upheld by conducting regular EHS (Environment, Health and Safety) audits. The number of audits made and their content are selected with the help of a risk matrix. The goal of these audits is to check compliance with the Code of Conduct and local legal requirements regarding environmental aspects, occupational health and safety and social responsibility on site. The audits are carried out by an independent service provider. Appropriate measures are initiated where required. During the reporting year, five external EHS audits (previous year: five EHS audits) were carried out at suppliers in the area of procurement.
Supplier Integrity Line
Introduced in 2017, the Supplier Integrity Line from Geberit allows suppliers to anonymously report any violations of the guidelines set out in the Code of Conduct for Suppliers by Geberit employees and by competitors. The hotline is free of charge for users and is operated by an independent service company in a total of eleven languages. Violations can also be reported online via an external URL. No violations of the guidelines set out in the Code of Conduct for Suppliers were reported in 2021 (previous year: no violations reported).
Delivery capability and product availability in logistics ensured
At the end of 2021, Group logistics comprised the central logistics centre for installation and flushing systems and piping systems in Pfullendorf (DE) as well as a decentralised network of 13 European distribution sites for ceramic appliances and bathroom furniture.
In the reporting year, logistics at Geberit was faced with major challenges due to the COVID-19 pandemic as well as the large increase in volume. Thanks to the outstanding commitment and flexibility of the employees, it was nonetheless largely possible to ensure delivery capability and product availability around the world.
Further standardisation in ceramics logistics
It was possible to further standardise processes in ceramics logistics in the reporting year thanks to the Geberit Logistics Operation System (GLOS) – a system used for the continuous improvement of business processes.
Implementation of the OneERP project – where the IT systems and processes are adjusted to the Group ERP standard – also continued successfully. In this context, preparations for the introduction of the Group-wide SAP ERP system in Germany were made during the reporting year so that it was ready for operation from 1 January 2022.
Synergies in transport management
Great importance is attached to central transport management as the interface between suppliers, production plants, wholesalers and transport service providers in order to enable cost- and resource-optimised transport solutions. Customers generally receive orders of Geberit sanitary technology products in a single truck delivery. This not only reduces the number of empty kilometres, it also increases truck capacity utilisation and reduces CO2 emissions (see also Strategy Green Logistics). Geberit’s key transport service providers are required to report regularly on reductions in energy consumption and emissions. Checks are also made regularly as to whether new, sustainable drive technologies can be used in logistics across the Geberit Group.