Supply Chain Stewardship
Supplier Code of Ethics To help ensure the products we distribute are manufactured and delivered with high ethical standards, our Supplier Code of Ethics focuses on four main areas of ethical sourcing: human rights, labor, environment and anti-corruption. All Grainger suppliers and their sub-suppliers with dealings in the U.S., Canada and Mexico are expected to comply with the Supplier Code of Ethics as a condition of doing business with Grainger. Prior to onboarding, a new supplier must agree to abide by the Supplier Handbook, which includes applicable Grainger policies, transportation requirements and the Supplier Code of Ethics. All suppliers must confirm to abide by these rules by signing a Supplier Agreement Letter.
Human Rights Grainger’s Human Rights Principles reflect our philosophy on how we conduct business on a global basis, including the company’s commitment to providing a safe and fair workplace that upholds and respects international human rights standards. These principles are applicable to all Grainger team members and are approved and monitored regularly by Grainger’s senior leadership.
Conflict Minerals Grainger’s Conflict Minerals Policy supports the aim of the Dodd-Frank Act to prevent armed groups in the Democratic Republic of the Congo (DRC) and the surrounding region from benefiting from the extraction and trade of minerals including tantalum, tin, gold or tungsten sourced from the DRC and the surrounding region.
Supplier Engagement Grainger’s Supplier Engagement Program seeks to understand the material issues of the suppliers who are most impactful to our business. In 2019, we began to communicate more proactively with these key suppliers via quarterly calls and active feedback channels. We plan to continue this cadence in 2020 and expand future engagement topics.
Supplier Diversity Grainger’s Supplier Diversity Program assists customers in diversifying their supply chains and promotes the growth of underrepresented supplier groups. Grainger has more than 20 years of experience partnering with small and diverse businesses through two core programs. Grainger’s Supplier Diversity Program helps customers procure quality products manufactured or distributed by diverse suppliers. Grainger’s Channel Development Program promotes products sold by our network of Diverse Business Enterprise (DBE) resellers. In 2019, company-wide, Grainger spent $1.2 billion with more than 20,000 small businesses, and $246 million with 840 minority-, woman-, veteran-, disabled-person- and LGBT-owned businesses for goods and services. Within our tier 2 supplier diversity portfolio, we offer more than 600,000 products from more than 2800 key small and/or diverse suppliers.
“Our diverse suppliers are integral to an inclusive supply chain that reflects our customers, team members and the communities we serve. Our collaborative partnerships with diverse suppliers allow Grainger a unique competitive advantage while supporting our own diversity standards and assisting our customers with their diversity goals.” — Benjamin Nichols, Vice President, Government, Grainger
Transportation Logistics Grainger relies on a network of third-party carriers for our transportation needs. The company works closely with these providers to continuously identify opportunities to maximize efficiency and minimize fuel use. Grainger continues to be one of the only industrial suppliers to be recognized by the U.S. Environmental Protection Agency (EPA) as a SmartWay® partner.
Sustainable Packaging In line with our sustainable sourcing commitments, we work closely with our suppliers to identify opportunities to minimize unnecessary packaging, while reducing the risk of damage to the products we offer. Our Supplier Packaging Guidelines include best practices for our U.S. and Grainger Global Sourcing (GGS) suppliers to help reduce damage and waste, while maximizing recyclable materials, thereby encouraging our partners to choose sustainable packaging options.
We have a number of initiatives in place to help us meet our sustainable packaging goals.
- Our iconic Grainger boxes are fully recyclable, are made from 43 percent post-consumer content and are certified by the Sustainable Forestry Initiative.
- Through Grainger.com, we offer customers an array of products made from 100 percent recycled content, including 312 different cartons and mailers in one product category alone.
- In select distribution centers (DCs), we employ a customized fulfillment solution using automated technology to right-size packaging for parcels, reducing the overall size of a package and thus increasing the number of packages that fit in a shipment. This technology in turn reduces freight costs, enables labor savings, minimizes unnecessary void fill, and reduces damage.
Ship Complete/Carton to Order Grainger’s DCs are dedicated to reducing packaging and freight usage. In a process called “ship complete,” we strive to ship all items in the fewest number of cartons, on the same day, from the same shipping point. In doing so, Grainger can maintain a lower usage of corrugate and produce fewer transportation emissions. This results in resource savings that our customers value as much as we do. During the past two years, our ship complete rate has increased by 3.4 percent. We also measure our carton-to-order ratio by tracking the number of boxes we ship compared to the number of orders we receive. We continue to monitor this ratio in order to drive improvement and efficiencies in packaging and corrugate use.
Private Label We evaluate Grainger private label products not only to ensure expected quality and performance, but also to confirm they meet our responsible sourcing guidelines. Suppliers who provide Grainger private label products through GGS complete an annual social responsibility survey, which indicates the suppliers’ compliance with social responsibility elements. Grainger reviews responses and contacts suppliers directly for additional clarification or information. We also assess the dependability, durability and performance of our private label products to maintain high quality standards. One way we measure private label brand quality is through the return rate performance of those products. Product return rate is calculated as a percent of total return dollars over cost of goods sold (COGS). The 2019 return rate performance was 3.17 percent, with COGS down slightly from 2018 to 2019.