Sustainability: Supply chain accountability:
Management of suppliers

TI uses a number of tools, including CETRAQ, to monitor supplier compliance with internal and external standards and laws.

We use a scorecard to better understand how our suppliers are performing in the areas of environmental and social responsibility, and to report the findings to our customers. The scorecard measures cost, environmental and social responsibility, technology, responsiveness, assurance of supply and quality, and is called CETRAQ.

CETRAQ provides a supplier performance dashboard to help us quickly identify potential risks and underperformers. It also helps new suppliers understand our expectations, and shows existing suppliers how they rank and where they need to improve.

For our Education Technology suppliers, we use a similar process to verify that their products meet our deliverable specifications.

We also assess supplier compliance, quality and performance, labor, ethics and human rights, performance management as well as risk management.

Compliance

Laws and regulations vary across the different locations where TI operates. Site leadership teams are responsible for monitoring local legislation an d ensuring compliance.

From a global perspective, our ongoing priority is to make sure that suppliers comply with all applicable local laws and regulations, including the California Transparency in Supply Chains Act and regulations issued under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. Other specific laws and regulations include:

  • The European Union's (EU) Restriction on Use of Hazardous Substances in Electrical and Electronic Equipment (RoHS2).
  • The EU's Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals.
  • Applicable regulations and standards pertaining to lead, halogen, antimony and red phosphorous.

Quality and performance

We diligently screen and monitor raw materials suppliers and manufacturing foundries by:

  • Ensuring that all critical suppliers who provide direct materials to TI are International Organization for Standardization (ISO) 9001 or Technical Specification (TS) 16949 certified before engaging with them and annually.
  • Examining environmental, safety and health policies, and evaluating related performance as part of TS 16949.
  • Gathering analytical data for six RoHS-banned substances to provide proof of compliance to customers who request additional evidence beyond certification.

Additionally, we scrutinize the financial health of key suppliers to ensure that they can maintain product deliveries. After this assessment, we put contingency plans in place to prevent possible interruptions.

Labor, ethics and human rights

Until mid-2012, TI performed targeted on-site and/or electronic risk assessments to verify the integrity of suppliers' labor and human rights practices and to identify whether suppliers maintain a documented ethics and compliance program. Using Transparency International's Corruption Perception Index, we identified high-risk regions known for inadequate labor practices. Suppliers operating within these areas received additional scrutiny.

After joining the Electronic Industry Citizenship Coalition (EICC) in 2012, TI began to implement the full requirements of EICC membership. This includes having our first-tier suppliers complete a self-assessment questionnaire on their practices and requiring a third-party audit of 25% of our high risk supplier facilities.

Performance management

We recognize outstanding suppliers each year through the TI Supplier Excellence Award. Winners are selected based on several criteria, using the principles of our CETRAQ supplier scorecard: cost, environmental and social responsibility, technology, responsiveness, assurance of supply and quality.

Vendors who do not comply with our standards, laws or regulations must put corrective action plans in place within a specified time period or risk termination of the relationship.

Risk management

We continually assess risks to our supply chain, whether anticipated (such as emerging regulations), or unexpected (such as natural disasters). Our objective is to ensure that our procurement and supplier-management processes are robust and rigorous enough to prevent shipping delays, escalated costs or impacts to our reputation.

We manufacture the vast majority of our semiconductor products internally. This results in significantly lower risks than those faced by companies that rely exclusively on external manufacturing, because we can:

  • Control the efficiency and quality of fabrication processes.
  • Manage the flexibility required to address fluctuations in the different types of process technologies manufactured at each facility and customer demand for our products.
  • Protect our proprietary technology.
  • Increase collaboration with and performance monitoring of our foundry suppliers of semiconductor manufacturing technology.
  • Control the timely implementation of new manufacturing technologies and installation of manufacturing equipment.
  • Adjust the timing of third-party foundry and assembly/test subcontract services.
  • Enhance R&D by engaging with third parties, including software suppliers, universities and select external industry consortia.