Supply chain

Our suppliers

We consider our suppliers as critical partners, contributing to the ongoing and sustainable success of our business.

As a critical part of our value chain, the performance of our suppliers directly impacts the sustainability performance and commitments of Coca‑Cola HBC.

Under a unified procurement framework, we segment our supply base universe of around 19500 suppliers into direct and indirect spend suppliers (actively used for purchasing transactions in 2019).

• Direct spend suppliers include ingredients and packaging suppliers.
• Indirect spend suppliers include categories such as IT, production equipment, spare parts, maintenance services, logistics providers, fleet vehicles, utilities, real estate, facilities management, professional and other consultancy services, personnel and temporary labour.

Total Supplier Spend - 2019

Coca‑Cola - Direct Categories - 2019 Spend

Coca‑Cola - Indirect Categories - 2019 Spend

Coca‑Cola HBC also segments suppliers into three categories based on criticality and potential opportunities:

Group Critical Suppliers are those that fulfil any of the following criteria: high percentage of spend, critical components (e.g. Sweeteners, Juices, Resin, Cans, Glass, Preforms, Closures, Aseptic Packaging), limited alternatives and partnership supporting our business strategies.

Country Strategic Suppliers are those which have strategic importance at a local or regional level.

Both Group Critical & Country Strategic suppliers are considered critical to the overall competitiveness and success of Coca‑Cola HBC.

Tactical Suppliers represent low-volume and/or low-spend suppliers, supplying goods or services where there are many alternative sources available, enabling a flexible supply base.

We place significant focus on forming partnerships with suppliers that have supply points located within our countries, both multinational and local while also developing strong local suppliers across our territories. These efforts support our strategy for local sourcing and contributing to socio-economic development in the countries where we conduct business. These suppliers significantly contribute to our business and include key markets such as Russia, Nigeria, Italy, Romania and Poland. Coca‑Cola HBC annual spend with suppliers in 2019 reached €3.3 billion of Direct & Indirect spend and appr. €5.0 billion including concentrates, cold drink equipment and traded goods. Our practice is to source locally, provided that goods and services are available to meet our requirements and quality standards in an economically viable way.

We target over 95% of our spending is local in our countries of operation or from within the European Union, which is considered local for EU countries. In 2019 we had 98% sourced locally representing €3.2 billion spend.

This means transport distances play an important role and through our local sourcing strategy are optimized. As an example, for sugar in the following countries that there is local sugar production & enough capacity i.e. Austria, Bosnia, CZK, Poland, Serbia, Romania, Russia, Ukraine, Belarus, Nigeria, Switzerland we source from the country. For other EU countries, where they have no sugar production, or the capacity of production is limited we source from the closest and most cost-efficient sources within the EU.

Engaging with our suppliers.

We collaborate with our suppliers to improve our overall performance and build a responsible and sustainable supply chain.  We actively seek to partner with them in providing new technologies for materials, equipment, packaging, cold drink equipment, vending machines, renewable energy.  With our logistics providers to work on ways to minimize our environmental footprint.

At Coca‑Cola HBC, we are committed to high standards of performance related to human rights, labour practices, minimizing environmental impact, ensuring health and safety, ethical business and unsurpassed quality in our supply chain. Our supplier partners play a critical role in ensuring that we deliver against these standards.

Given the diversity of countries from which we source, we are well aware that the practices of our suppliers reflect directly on the reputation of the Coca‑Cola System overall and thus we stand committed to maintain high standards of performance across our supply chain.

To ensure proper governance and that our suppliers meet our standards, we have implemented policies including our Coca‑Cola HBC Supplier Guiding Principles (SGP) and Coca‑Cola HBC Sustainable Agriculture Guiding Principles (SAGP). In addition, we have developed an environmental, social and governance supplier pre-assessment process for our strategic buy segment which includes multiple criteria for supplier selection across all main pillars of our guiding principles. We monitor compliance of our critical suppliers by utilizing The Coca‑Cola Company Supplier Guiding Principles compliance audits and EcoVadis CSR Platform. We also recognize supplier certifications as per international standards including ISO 9001, 14001, 50001, FSSC 2200 and OHSAS 18001. For agricultural commodities, we recognize the Rain Forest Alliance, Fairtrade International, BonSucro, Sustainable Agriculture Initiative Platform (SAI Platform), Global G.A.P.  & GRASP certifications.

Our Suppliers acknowledge our Supplier Guiding Principles and are expected to comply as a minimum with applicable environment and local labour laws and core international conventions. These principles also communicate our values, and our expectations for responsible business practices.

We aspire 100% of our suppliers accepting our SGPs by utilizing our ‘SGP Coverage Triangle’ with three checkpoints throughout the Procure-To-Pay process:

In our own business, we are promoting a 100% quality culture with zero tolerance for failure to meet standards. This approach extends to our suppliers as well. We monitor compliance of our critical suppliers through third party’s compliance audits leveraging multiple credible sources  such as TCCC SGP Audits, SEDEX SMETA 6.0 and EcoVadis CSR assessment platform Suppliers are required to submit corrective actions to the 3rd party audit bodies when a non-conformance is identified during the audits as a remediation activity. In 2019 we have identified 18 Suppliers with significant environmental impact findings, of which all developed corrective action plans and demonstrated improvement through the year. Types of these findings identified: missing supporting documentation over declared practices, policies etc. or missing regular formalised environmental reporting for relevant KBIs, expired or lack of supporting documentation (e.g. ISO 14001, measures on energy consumptions & GHG emissions), no endorsement of external CSR initiatives or principles (e.g. UN Global Compact), not adequate reporting on environmental issues.

In 2019 we have identified 12 Suppliers to have labour & human rights critical findings, of which all developed corrective action plans and demonstrated improvement. Types of these findings identified: gaps in health and safety practices, work hours and wages violations.

More information is available in our 2019 GRI Content Index:

https://coca-colahellenic.com/Campaigns/AnnualReport2019/Assets/pdf/Coca‑Cola-HBC-2019-GRI-Content-Index.pdf  

We also engage with our suppliers through our joint value creation initiatives, sustainability events, industry associations, workshops on sustainable supply, annual supply chain innovation workshops, materiality survey and CSR platform for ethical and sustainable supply chains. We invest in joint value creation programs, ranging from developing climate-friendly cold drink equipment to increasing local beet sugar production.

Our critical suppliers are invited to subscribe to EcoVadis, a third-party CSR assessment platform, hosting a collaborative network to manage the sustainability performance of suppliers. The platform monitors CSR risks utilizing 21 criteria divided in 4 themes based on international standards as UN Global Compact, ISO 26000, GRI, ILO etc. Starting in 2017 we piloted 140 critical suppliers at the platform and by mid-2020 we have exceeded 600 of critical suppliers assessments with EcoVadis. Our plans are to extend the third-party CSR assessments in order to ensure more objectivity and equity amongst our suppliers.

To increase awareness of sustainability in our supply chain, in 2019 we continued to hold Sustainability Days in Russia, Austria and Hungary hosting strategic suppliers to identify initiatives on both sides that can help further our joint sustainability effort and provide insights to our corporate social responsibility policy, sustainability commitments, achievements and best practices. In 2019 have introduced supply chain innovation workshops with key suppliers where we explore in a joint manner new technologies that promote operational efficiencies with a positive impact on the environment.

Supplier sustainability events

Becoming a Coca‑Cola HBC supplier

Coca‑Cola HBC aspires critical suppliers to gain certification to the following standards:

• ISO 9001 (quality);
• ISO 14001 (environment);
• OHSAS 18001 (health and safety);
• EcoVadis Assessment (ecovadis.com).

Ingredient and packaging suppliers must also achieve certification to FSSC 22000 for food safety and the Global Food Safety Initiative (GFSI).

A prerequisite to become listed as a Coca‑Cola HBC new supplier is to commit to the Coca‑Cola HBC Supplier Guiding Principles, as well as, to the extent these apply to supplier, Coca‑Cola Hellenic Code of Business Conduct and Anti-Bribery Policy. These Policies make clear the values and behaviour we expect and audit in our value chain.