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Supplier Engagement

Identifying the total number of nonconformances per country and region helps the team determine risks, complete the annual supplier risk assessment, and prioritize future audit planning.

Supplier Social Responsibility Goals
Supply Chain Management
Risk Assessments
Audits
Validation
Grievance and Remedy
Training

Engage. Protect. Respect

Supplier Social Responsibility Goals

Engaging with our supply chain on social and environmental issues are key pillars in our Sustainability Policy and a prominent part of our supplier engagement strategy and goal setting.

Goals	2021 Results
100% of key suppliers sign NXP Supplier CoC statement of conformity	99% of key suppliers signed our statement of conformity, with the exception of one supplier that provides local warehouse support. They are currently reviewing with their legal team.
Annual risk assessment and audit of high-priority suppliers	Completed annual supplier risk assessment. Even with the ongoing and new COVID-19 variant situation, we managed to increase the number of due diligence audits, compared to 2020, and completed three onsite audits and six remote audits
>85% audit closure rate for corrective-action plans	89% audit closure rate for corrective-action plans
100% certified mineral smelters	100% certified mineral smelters

Supply Chain Management

Commitment to the NXP Supplier Code of Conduct

Either through contracts or a signed conformance letter, we require our suppliers to comply with the NXP Supplier Code of Conduct and the laws of the country or countries where our suppliers conduct business.

Risk Assessment

NXP engages with advisory firms Verisk Maplecroft and Verité to identify potential risks in our supply chains annually.

Self-Assessment Questionnaire

Identified high-risk suppliers complete an NXP self-assessment and provide any supporting policies and/or documentation.

Audit

Verify compliance with applicable laws and the NXP Supplier Code of Conduct.

Engagement

NXP works collaboratively and consultatively with suppliers to support and enable corrective and preventive action plans for continuous improvement.

Other

Ensure suppliers are recruiting workers ethically in the sending and receiving countries, materials supplied meet legal and NXP requirements, as well as source minerals ethically.

Risk Assessments

Risk is assigned according to three scoring categories:
<49% (medium risk), 50%-70% (high risk) and 71%-100% (priority risk).

2021 High-Risk Suppliers by Country and Region from Annual Risk Assessment

In the 2021 risk assessment, 225 suppliers were assessed and identified 132 medium-risk suppliers, 77 high-risk suppliers, and 16 priority-risk suppliers.

Audits

We began our supplier audit program in 2013 and have since audited 156 suppliers. Verification audits began in 2014.

New Supplier and Verification Audits

In 2021, we conducted three announced onsite audits and six remote audits. Two of the three on site audits were conducted using the Responsible Business Alliance (RBA) Validated Audit Program (VAP), directly initiated by NXP. We conducted no verification audits in 2021.

Supplier Audits by Country and Region

The nine audits in 2021 were located in Malaysia, Mainland China, and Taiwan.

Number of Nonconformances by Rating

Audits conducted in 2021 addressed suppliers who have previously been audited to a social responsibility standard. We are seeing a maturity in social responsibility practices at suppliers we had previously audited and they have been able to improve on their previous performance.

Number of Nonconformances per Number of Audits

The number of audits naturally increases the overall total number of nonconformances. Our approach is to divide the number of nonconformances per number of audits, as well as the number of priority violations per number of audits. While the number of nonconformances increased compared to 2020, we saw a decrease in 2021 compared to 2020, for both ratios.

2021 Nonconformances by Country and Region

Identifying the total number of nonconformances per country helps the team determine country risks, complete the annual supplier risk assessment, and prioritize future audit planning.

Nonconformance by Category

Calculating nonconformances using our five categories of standards helps us to identify trends, provide a strategic focus, and adjust our engagement plan to continue improving our supply chain.

2013-2021 Top 5 Nonconformances by Category

From more than 4,500 findings, freely chosen employment is the most frequently reoccurring nonconformance.

2021 Priority Violations by Category

One supplier in Malaysia registered three priority violations where workers paid recruitment fees, had wages deducted to pay foreign worker levies, and had their passports withheld. The other two priority violations were at a supplier in China, where workers paid medical fees upon recruitment, while excessive working hours was also identified as a priority violation.

No fees	3
Priority working hours	1
Retention of workers original documents	1

Audit Closure Rate

In 2018, we set a goal to close 80% of our supplier nonconformances within the 90-day timeframe. In 2021, we set a new goal at an 85% closure rate. We chose this 5% increase after reviewing improvements in closure-rate performance from audits performed in 2019 and 2020.

Year-on-Year Audit Closure Rate Analysis

In 2021, not only did we close 89% of 2021's audit nonconformances, we also closed out the remaining 3% of 2020's open nonconformances. At the end of 2021, we have one nonconformance that has remained open since 2019. We continue to address the nonconformity with the supplier.

Validation

Each month, the Social Responsibility team reports key performance indicators to the Sustainability office and the Purchasing team on topics such as risk assessments, audit corrective action plans and the audit closure rate.

The Senior Director of Sustainability and the Social Responsibility team are tasked with the delivery of programs across the business with defined targets and is part of a performance-appraisal system that links pay to performance.

Grievance and Remedy

We encourage everyone to voice concerns and to report potential violations of our Code of Conduct or Supplier Code of Conduct by using any of our reporting channels. Grievances can be confidentially lodged using various reporting channels, such as the phone or web option of the SpeakUp line, which is a service, hosted by an independent third party, that facilitates anonymous reporting in various languages. We have a strict non-retaliation policy to protect those who report potential violations.

Suppliers must also have equivalent grievance systems and mechanisms in place for resolving employees grievances, and must ensure effective communication with employees or their representatives.

Our Ethics webpage provides additional information.

Training

Training addresses our suppliers and labor agents, in sending and receiving countries, as well as onsite service providers. NXP provides tools and resources to support our suppliers in building and/or improving their social-responsibility programs.

We Want to Hear from You

Contact NXP's Sustainability team at csr@nxp.com.

Supporting the UN SDGs

Aligning NXP’s products, operations and engagements with the UN Sustainable Development Goals to combat global challenges related to economic, social and environmental sustainability.