Annual Report 2021

Annual Report 2021


10.2 Operations


Supply chain (GRI 102-9)

Geberit’s production processes entail a high in-house production depth, i.e. it largely purchases raw materials and semi-finished products with a high share of raw materials. As such, material costs constitute a relatively low share of Geberit’s net sales.

The raw materials and semi-finished products procured by Geberit primarily come from suppliers in Western Europe (81.9% of procurement value). The share of the procurement volume from Eastern Europe amounts to 7.2%, that from Asia 9.6%, from America 1.0% and from Africa 0.3%. Owing to the high level of vertical integration as well as the very high share of Western European suppliers, the general risk profile of the supply chain is relatively low.

In 2021, Geberit procured raw materials (30.0%), semi-finished products (42.5%), and finished products (27.5%) with a procurement value of CHF 1,061.3 million (previous year CHF 798 million) from 1,783 direct suppliers around the globe.

As Geberit neither directly imports nor processes conflict minerals (tin, tantalum, tungsten, gold), it is not deemed to be an “importer” within the meaning of EU Regulation 2017/821. If products containing such metals are shipped to the USA, the provisions of the Dodd–Frank Act (Sec. 1502) apply.

Management approach procurement

Corporate Purchasing is responsible for procurement in all production plants worldwide (except the USA) and manages the procurement organisation through a team of lead buyers who are strategically responsible for various material groups. Various changes within Geberit’s operating environment mean that demands on procurement are constantly increasing. As a result, Geberit has drafted a new procurement strategy that aims to holistically assess its suppliers (“total value of ownership”), including sustainability aspects. In addition, new laws concerning responsible procurement have been developed – especially in Switzerland and Germany – resulting in binding reporting and due diligence obligations for companies with regard to their supply chains. Geberit is closely monitoring these developments and considers itself well equipped thanks to its existing approach. In 2022, both the current laws and new legislation on supply chains across Europe are to be analysed in detail, with appropriate measures derived where necessary. In addition to this risk-based approach, the aim going forward is to work more intensively with suppliers in the areas of sustainability and CO2 reduction.

Geberit’s suppliers are obligated to maintain comprehensive standards. The basis for this cooperation is the Code of Conduct for Suppliers, which is available in 15 languages and was supplemented by an Integrity Line for suppliers in 2017. The Code is guided, among other things, by the principles of the UN Global Compact, the Universal Declaration of Human Rights, and the International Labour Organisation’s (ILO) Declaration on Fundamental Principles and Rights at Work. The Code of Conduct is binding for every supplier. These include direct suppliers of raw materials and semi-finished products for use in production, as well as indirect suppliers such as those providing services or office materials. The Code comprises specific guidelines on quality and meeting environmental, labour law and social requirements and sets out compliance with human rights. The supplier must prepare appropriate documentation in order to demonstrate – upon request by Geberit – compliance with the provisions of the Code and ensure that these papers are available for inspection at all times. Should the supplier fail to comply with the obligations set out in this Code, then measures for improvement are implemented. Failure to comply on the part of the supplier is regarded as a serious obstacle to the continuation of the business relationship. If the supplier does not correct this non-compliance, Geberit can terminate the cooperation. When evaluating suppliers, Geberit strives to achieve the greatest possible degree of transparency. All new and existing partners are thus assessed by means of standardised processes and according to the same criteria: company as a whole, quality, sustainability, price, procurement chain, delivery reliability, production and technology. As a rule, the selection of suppliers is required to include a quality audit covering clarification on environmental and occupational safety issues. Where an audit reveals inconsistencies in these criteria, an additional, in-depth audit is conducted.

Supplier management incorporates a risk management approach on environmental, occupational safety and human rights matters that is based on the assignment of suppliers to a particular risk class within a risk matrix depending on production location (country) and material group (type of production process). As such, suppliers in the highest risk category pose an increased risk both in terms of production location and type of production process. In 2017, suppliers and material groups that had been added due to the acquisition of the ceramics business were systematically assessed and included in risk management. In addition, the classification of existing material groups into certain risk categories was reviewed. Since then, the risk matrix has been updated on an annual basis. In the reporting year, 171 existing suppliers (previous year 179) were identified in the highest risk category, which corresponds to around 8% (previous year 7%) of the procurement value of Geberit.

A systematic planning and performance of audits is conducted for these suppliers. To ensure neutrality and the expertise required for the audits, Geberit also works with an external partner. This tried-and-tested procedure has been carried out for years and makes an important contribution to ensuring compliance with the duty of care in the supply chain at Geberit.

New employees in procurement also receive training in the process of sustainable procurement. Regular training of lead buyers on procurement and sustainability also takes place, plus participation in a working group of the UN Global Compact on sustainable supply chains.

For further information, see Business Report > Business and financial review > Financial Year 2021 > Procurement and logistics.

Assessment of new suppliers based on sustainability criteria (GRI 308-1, GRI 414-1)

All new suppliers undertake to comply with the Code of Conduct for Suppliers and hence also to international standards governing environmental protection, labour practices and human rights. The Code is guided, among other things, by the principles of the UN Global Compact, the Universal Declaration of Human Rights, and the International Labour Organisation’s (ILO) Declaration on Fundamental Principles and Rights at Work. As of the end of 2021, a total of 2,568 direct and indirect suppliers had signed the Code of Conduct. This equates to over 90% of the total procurement value.

In the Code of Conduct for Suppliers, suppliers undertake – wherever possible and appropriate – to ensure that their own suppliers and second tier suppliers also adhere to the terms of the Code. Geberit may explicitly demand of a supplier that this Code also be extended to selected second tier suppliers.

When auditing suppliers, an analysis of the most important second tier suppliers is included in the risk analysis and the audit investigations on site.

Geberit’s goal is long-term, collaborative supplier management, where the relationship with the supplier is actively managed and sustainability risks in the supply chain are jointly analysed and minimised. Since 2017, an Integrity Line has therefore been available to suppliers for anonymously reporting irregularities in the procurement process or non-compliance with the Code of Conduct for Suppliers. No cases were reported in the reporting year.

Sustainability-related impacts in the supply chain (GRI 308-2, GRI 414-2)

In 2021, five third-party audits were carried out at suppliers in China. The results showed that the majority of obligations set out in the Code of Conduct for Suppliers were complied with. Appropriate corrective measures were agreed in cases of non-compliance.


Management approach production

See Business Report > Business and financial review > Financial Year 2021 > Production.


Management approach logistics

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 WC ceramic appliances and bathroom furniture.

Geberit constantly improves its logistics processes, optimises quality and productivity, and reduces the impact on the environment, see Sustainability Strategy. Since 2015, Geberit has managed to improve the eco-efficiency of its logistics operations (environmental impact per tkm) by 31%.

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.

Geberit attaches great importance to central transport management in order to enable cost- and resource-optimised transport solutions. Customers generally receive orders in a single truck delivery. This not only reduces the number of empty kilometres, it also increases truck capacity utilisation and reduces CO2 emissions.

Geberit does not have its own transport fleet, having outsourced this to external transport service providers. Intercompany and distribution logistics play a major part in Geberit’s environmental impact, amounting to a significant proportion of the total figure. Cooperation with the transport service providers is therefore of key importance. Partners agree to actively support Geberit in its efforts to use energy and packaging material efficiently and to reduce emissions. Furthermore, the partners support Geberit by providing the data needed for the environmental reporting. Developed in 2010 and continuously expanded since then, the logistics calculator facilitates the annual capture of data on the vehicle fleet composition, transportation performance and fuel consumption of all transport service providers, as well as the preparation of the eco-balance.

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.

For further information, see Business Report > Business and financial review > Financial Year 2021 > Procurement and logistics. For information on the eco-balance of logistics, see GRI 302-2.