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2011 Corporate Citizenship Report

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2011 performance

Sustainability | Growth | Minority/women-owned business enterprises | Results | Looking ahead

The last few years have brought unexpected challenges to TI, from natural disasters to a weakened economy followed by rapid industry growth.

This year was no different. We faced two separate natural disasters, emerging legislation, a drop in production demand and the acquisition of National Semiconductor's global supply chain in the latter part of 2011.

Thanks to the robust management and response systems TI already had in place, and the distribution of suppliers throughout the world, we successfully delivered products and materials without significant interruption following the March earthquake in Japan and October floods in Thailand.

The commitment and efficiencies of TI's supply chain helped us achieve these successes. After reviewing CETRAQ's scorecard and identifying our highest-performing suppliers, we recognized 16 vendors with TI Supplier Excellence Awards. We applaud them for sharing and upholding our high standards.

As a supplier ourselves, we were honored to:
  • Receive the Best Supplier Award from TDK-Lambda Corporation, which recognized us for helping resolve its supply issues and grow its business.
  • Be the only semiconductor supplier honored by GE Healthcare for helping keep its production lines running, reducing supply-chain risks, and providing benchmark design support at its worldwide design locations.
  • Receive recognition from Bosch Security Systems in Zhuhai, China, as "Best Supplier" for our practices in quality management and cost, and cooperation on new projects.
Our nimble worldwide procurement team was also busy addressing the following issues and establishing additional supply-chain management programs during the year. Their key activities are described below.

Sustainability

In 2011, TI:
  • Developed a new supplier environmental and social responsibility policy, which suppliers are encouraged to adhere to starting in 2012. It includes TI's expectations for not only humane treatment, human rights and ethics, but also more stringent environmental controls and performance.
  • Expanded our supply-chain assessments to also include suppliers' programs and performance related to human rights, the humane treatment of labor and ethical business practices.
  • Began embarking on more in-depth environmental assessments by identifying suppliers that are ISO 14001-certified.
  • Engaged with the Electronics Industry Citizenship Coalition's Extractives Workgroup and some customers to develop a process that will evaluate and measure our critical suppliers' environmental and social responsibility practices.
  • Invested in additional human resources to manage, among other activities, the examination of suppliers' social responsibility performance.
  • Continued responding to customer inquiries about the sustainability performance of not only our first-tier suppliers, but also their subcontractors.

Growth

TI continued its growth with the acquisition of National Semiconductor late in the year. The addition of three new manufacturing sites in the U.S., Malaysia and Scotland strengthened our ability to meet customer demands for our products and provide more opportunities for our suppliers.

Fortunately, the two companies already shared much of the same supply chain. Our procurement teams began meeting with primarily local or regional National suppliers to educate them on our business requirements and expectations. We also distributed our supplier handbook to suppliers in Malaysia and China, which helps them understand how to do business with us.

Minority/women-owned business enterprises

Our key diversity supplier achievements for the year included:
  • Celebrating six minority-/women-owned business enterprises (MWBEs) that graduated from TI's inaugural 12-month Supplier Development Initiative. The initiative pairs business owners with company procurement mentors.
  • Honoring 95 employees as 2011 Supplier Diversity Champions based on their support of and commitment to TI's Minority & Women Business Development Initiative globally.
  • Being recognized by three Texas organizations for fostering a business environment that promotes access and opportunity for minority-owned businesses. TI and one employee were named Corporation or Volunteer of the Year, respectively, by:
    • The Dallas Black Chamber of Commerce.
    • The American Indian Chamber of Commerce of Texas.
    • The Dallas/Fort Worth Minority Supplier Development Council.

Results

After examining the labor and ethical business practices of nearly 200 of our most critical suppliers, TI conducted more in-depth assessments of 22 vendors. We selected them because they either lacked or did not disclose their associated policies or performance, or because they operate in countries that historically have had poor human rights performance. We also conducted three on-site inspections of vendors in Malaysia and the Philippines. No major findings were identified. Minor issues were either resolved or are currently being addressed.

Of our total U.S. procurement dollars, TI spent 4.99 percent ($204 million) with certified minority- and women-owned prime suppliers. We also enabled our major non-MWBE suppliers to spend $16 million (another 0.39 percent) in direct sub-tier purchases from firms operated by minorities and women. Combined, this exceeded our 5 percent goal. (Currently, TI does not track global spending with MWBE suppliers. To learn more about our progress in the economic inclusion of MWBEs, read our Economic Inclusion annual reports).

Global spend with suppliers

Looking ahead

In 2012, TI intends to:
  • Take a holistic look at how we evaluate supply-chain risks – politically, operationally and sustainability-focused issues, as well as natural disasters – to help us better understand and improve how they are managed moving forward.
  • Reduce duplication and improve efficiencies between National Semiconductor's former and TI's existing supply chains.
  • Spend at least 5 percent of U.S. procurement dollars with minority- and women-owned suppliers.
  • Continue aligning National Semiconductor's supply-chain (management and reporting) systems with TI's.
Additional plans for the year include:

Sustainability
  • Joining the Electronic Industry Citizenship Coalition (EICC), a group of leading electronics companies that work together to improve efficiency and social, ethical and environmental responsibility in the global supply chain. We will adopt the EICC's code of conduct and begin using its assessment tools.
  • Revising TI's existing code of business conduct, supplier commitment letter and supplier handbook to ensure that suppliers understand and comply with our new environmental and social responsibility requirements and expectations.
  • Begin integrating supplier's environmental and social responsibility scores into CETRAQ, a tool that assesses supplier performance on cost, environment, technology, responsiveness, assurance of supply and quality.
  • Continuing to assess the labor, human rights and ethics practices of higher-risk suppliers, as well as conducting on-site audits of suppliers in China and Thailand.
  • Evaluating how to best integrate social responsibility and environmental considerations into supplier bids and proposals.
Compliance
  • Training procurement specialists to monitor and report compliance with laws and regulations for both suppliers and TI.
  • Assessing our U.S. suppliers' compliance with the California Transparency and Supply Chains Act.
Supplier diversity
  • Inviting eight new MWBEs to participate in TI's Supplier Development Initiative.
  • Spending 5 percent of our U.S. procurement budget with certified MWBEs.
  • Engaging with diverse suppliers who worked with National Semiconductor to ensure that they understand TI's commitment to doing business with certified enterprises.


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