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