Through streamlining our operations and positioning ourselves to procure smarter, TI has been able to accommodate the turbulent drop and then rapid rise in product demand over the past two years.
Our small but nimble worldwide procurement team worked hard to maintain our existing supply chain, while also enabling TI to procure equipment, supplies and services for three new manufacturing sites globally, including managing an entirely new vendor market in China. They were able to accomplish these tasks while simultaneously finding ways to further reduce procurement costs by more than 10 percent.
As a supplier ourselves, TI works to uphold the very same standards we require of our own vendors. We were delighted to learn that Siemens AG recognized TI among its 91,000 suppliers as its No. 1 supplier for responsiveness, citizenship, productivity, reliability, technology, innovation and quality.
Here are some additional performance highlights for the year:
Sustainability
TI rolled out an evaluation process globally to scrutinize the financial health of our key suppliers to ensure they can maintain product deliveries. After assessing their financial indicators, we put contingency plans in place to prevent possible interruptions. Underperforming suppliers are given 90 days to put corrective actions in place. Likewise, many suppliers asked about TI’s financial position and growth strategy to better understand our product demands for the year so they could adequately meet our needs.
Resource constraints again prevented us from comprehensively assessing our suppliers’ social responsibility performance as part of our screening process. TI will appoint a supply-chain corporate social responsibility specialist in 2011 who will manage, among other activities, this examination process.
We responded to an increasing number of customer inquiries about the sustainability performance of not only our first-tier suppliers but also their subcontractors. We investigated and shared more information about our supply chain’s human rights/fair treatment policies, environmental impacts, and compliance with new conflict minerals legislation.
Growth
TI’s rapid growth helped us bring on three new fabrication sites this year in China, Japan and Texas, which strengthened our ability to meet customer demands for our products and provide more opportunities for our vendors. Our procurement teams met with new suppliers to educate them on TI’s business requirements and expectations. TI Malaysia created and piloted a supplier handbook, which helps new vendors understand how to do business with TI.
Compliance
TI continued evaluating the quality of our suppliers’ products and audited those considered at risk for not meeting our standards. We also conducted additional training to reinforce our expectations.
Minority/women-owned business enterprises
The economic upturn and stronger engagement allowed TI to spend 5.1 percent of our total U.S. procurement dollars with certified minority- and women-owned prime and sub-tier suppliers in 2010, exceeding our spend goal. Currently, TI does not track global spending with MWBE suppliers.
In the U.S., direct spending with MWBEs totaled $177 million, and TI’s major non-MWBE suppliers reported $22 million in direct sub-tier purchases from firms operated by minorities and women. To learn more about TI’s progress in economic inclusion of MWBEs, read our Economic Inclusion annual reports.
TI’s sponsorship of the Super Bowl Emerging Business Program facilitated the recruitment of more than 900 certified vendors in Texas, creating the largest MWBE resource guide in National Football League history. The program was designed to provide local businesses with information, tools and training to pursue Super Bowl-related contracts and opportunities. The resource guide was also shared with North Texas hotels, convention and visitors’ bureaus, and other large venues to generate more business locally with MWBE suppliers. TI itself forged new MWBE relationships, bringing new or expanded resources to our company as well.
We launched a new Supplier Development Initiative as a way to develop promising MWBE suppliers so they can do more business with TI and contribute meaningfully to the regional economy. Procurement directors of various business units hand-picked five vendors and matched them with a procurement mentor, who met with them for 12 months. Plans were created to remove potential growth barriers – from not understanding TI’s culture or expectations, to not knowing what other departments could benefit from particular services or products. Each quarter, the group also came together to hear about TI’s business results and strategic direction and learn more about our procurement needs.
Looking ahead
In 2011, TI intends to:
Begin inquiring about our suppliers’ ethics, human rights and compliance protocols and performance. As part of this effort, we will identify suppliers that are ISO 14001-certified as well.
Continue putting processes in place to ensure compliance with conflict mineral and rare earth mineral source requirements across our supply chain.
Distribute supplier handbooks throughout all of our regions.
Continue aligning new Asian suppliers with TI’s standards and protocols.
Welcome six new MWBEs as participants in our Supplier Development Initiative.
