Global Sourcing Principles
In addition to embracing the Company's Purpose, Values and Principles, our Purchases people are guided by five global principles for strategic sourcing. These five principles establish a foundation for our discipline and serve as guidelines in our daily activities as we interact with external suppliers.
These five principles are:
- Best Total Value
- Honest, Ethical and Fair Dealings
- Externally Linked Supply Solutions
- Competition and Collaboration
- Supplier Incumbency
Best Total Value
We make sourcing decisions on the basis of best total value offered to supply our requirements for goods and services. Best total value is driven by business needs and includes a number of components that include total cost of ownership, quality of goods or services performed, supplier responsiveness and account service, speed or time-to-market, minority/women ownership, localized supply, and supplier willingness to share risk/provide resources.
Honest, Ethical, and Fair Dealings
We treat all suppliers with respect and deal with them honestly, ethically, and fairly. We conduct business in compliance with all applicable laws and regulations wherever we operate. We believe that buyers and suppliers optimize their working relationship when there is a foundation of trust. By treating suppliers and potential suppliers honestly, ethically and fairly, we do our part in building that foundation, and expect that the supplier will do likewise. We do this not only because we believe it is right, but also because it makes working with P&G attractive to current and potential suppliers.
Externally-Linked Supply Solutions
We deliver solutions that meet P&G business needs by bringing the Company's deep supply and market knowledge and access to supplier competencies, resources, and relationships around the globe. We create effective business alternatives to develop commercial and supply solutions for P&G businesses that deliver improved service, revenue and profit, while flexible enough to accommodate market changes.
Competition and Collaboration
We apply the strategic use of competition, collaboration or a blend of the two in our approach towards managing our supplier relationships. The Company has a long-held belief that competition encourages the innovation and efficiency from our supply base that ultimately delivers optimum value over the long-term. P&G also believes that we must collaborate with suppliers to access and engage their core competencies, capabilities, and resources to support us in creating value for our consumers and customers. The choice to emphasize competition or collaboration or blend the two is driven by business circumstances, supply market dynamics, supplier capability, supplier compatibility with P&G, and the level of interdependency necessary between P&G and the supplier to deliver best value.
We seek to balance stability in our supply base and orderly shifts of business with the need to seek out new suppliers who offer superior value. We prefer ongoing relationships with incumbent suppliers because we believe they deliver lower long-term costs and higher value to our business. Therefore, to win our business, new suppliers must provide meaningfully better total value than the incumbent. Incumbency is applied to each specific situation where a number of elements are considered that includes P&G business needs, past performance and future potential of a supplier, impact of business shifts on overall marketplace competitiveness and long-term buyer/supplier relationships, and costs for start-up, qualification, and/or shut-down.