Suppliers

“Suppliers and outside workers play a key role in improving the competitiveness of the business. While seeking the keenest competitive edge, the Group bases it relations with suppliers and outside workers on fairness, impartiality, and ensuring equal opportunities for all parties concerned. The Pirelli Group requires that its suppliers and outside workers comply with the principles and rules in this Code.”
(Ethical Code – Suppliers and Outside Workers).

INTERACTION BETWEEN PIRELLI AND ITS SUPPLIERS

Relations with suppliers are defined and enforced by specific Company processes. There are two fundamental underlying phases to supplier management:

The Vendor Rating covers all merchandise and geographical areas of purchase and is used as an integral component of commercial negotiations. These procedures are supported by a special website available online through the Purchasing Portal. This website supports the Regulations (including the Purchasing Manual, General Conditions to be applied to suppliers), the Vendor List, surveys, Vendor Rating with feedback and the definition of support actions. This portal provides both an assurance of process uniformity and a guarantee of transparency, in addition to being a communication, on-going training and knowledge sharing tool.

The processes of dialogue and interaction with suppliers are the object of process improvement, in terms of both quality and tools. Specifically, the Vendor Rating results are regularly revised and commented on by the Purchasing Department. This process involves meetings organized with the suppliers, aimed at identifying any corrective actions or measures to improve performance. Each purchase contract includes the name of the buyer contact, to provide the supplier with a company channel that is always available for any feedback.

INDEPENDENT AUDITS OF VENDOR SUSTAINABILITY

Independent audits of 72 suppliers of Pirelli Tyre operating in countries of concern where Pirelli operates – Brazil, Argentina, Egypt, China, Romania, Turkey, Venezuela, Indonesia, Malaysia, Thailand - (as defined by the EIRIS classification) were carried out between November 2009 and January 2010. These audits reviewed compliance by these vendors with the sustainability clauses. A number of remedial plans to rectify identified nonconformities were developed after the audit, and all of these were being completed at the end of 2010. The commitment made by Pirelli Turkey merits special mention: it has trained dozens of vendors on the sustainable corporate management process, in view of shared growth. Another 58 independent audits have been performed between the end of 2010 and early 2011 in the United Kingdom, Germany, Italy, China, India, Latin America, Turkey, Egypt and Romania.

These 58 audits cover: