Our Products: Supply Chain Transparency and Performance

Ingersoll Rand has a combined annual spend of $9 billion for direct and indirect commodities. Our global procurement team sources these commodities from a broad, multi-tiered supply base. Using our Preferred Supplier List Program and Supplier Council, we promote business with those strategic suppliers who best align with our expectations on quality, service and value. We operate with a “in region, for region” philosophy. For example, 95% of Ingersoll Rand products sold in the U.S. are manufactured in the U.S. This philosophy allows us to deliver products to market quickly, implement local preferences, reduce freight costs and improve our quality and reliability by being close to our supplier partners.

95% of Ingersoll Rand products sold in the U.S.

are manufactured in the U.S.

 

MATERIALITY TRACEABILITY AND SOURCING SUPPLIER ENVIRONMENTAL ASSESSMENT

New suppliers that were screened using environmental criteria

97% of controllable spend suppliers have agreed to our Business Partner Code of Conduct

SUPPLIER SOCIAL ASSESSMENT

New suppliers that were screened using social criteria

97% of controllable spend suppliers have agreed to our Business Partner Code of Conduct

 

Our target is that 100% of all new suppliers will have agreed to our Business Partner Code of Conduct by 2020; at the end of 2017, 97% of controllable spend suppliers have agreed. We also have a 2020 target that 90% of our direct material spend will be assessed on a quarterly basis for risk. At the end of 2017, 87% of our direct material spend was assessed on a quarterly basis for risk. Understanding how our suppliers are performing, both environmentally and socially, enables us to manage risk and collaborate with those who are best in class. For more information about risk factors associated with our supply chain, please refer to our Form 10-K.

87% of our direct material spend

was assessed on a quarterly basis for risk

New Suppliers

In implementing our supplier selection process, we use a Quality Supplier Onsite Assessment to screen 100% of our new direct material suppliers based on social and environmental criteria. For example, the assessment asks if suppliers have a program for tracking and managing water use and hazardous waste, and if they are located in high-risk water areas. The assessment also screens for human rights and labor practices criteria by asking, for example, if the supplier hires and pays all employees at or above local legal requirements and if the supplier refrains from using prison or forced labor.

Preferred Supplier Initiative

At the end of 2017, 54.3% of direct spend

was with preferred suppliers

The Ingersoll Rand Preferred Supplier List Program is a key initiative to identify and engage worldclass suppliers capable of partnering with us to create high-quality products for our mutual customers while enabling mutual profitable growth. This program promotes a supply base aligned with Ingersoll Rand’s core values. Preferred suppliers will be the first choice for early engagement on new product development and strategic sourcing programs and will have priority opportunities to extend their product and service offerings to Ingersoll Rand locations. At the end of 2017, 54.3% of direct spend was with preferred suppliers.

Ingersoll Rand hosts 3rd Annual Global Supplier Conference

In January 2018, Ingersoll Rand welcomed approximately 200 valued supplier partners to our 3rd Annual Global Supplier Conference. Attendees enjoyed the presentation of Ingersoll Rand’s annual supplier awards, business reviews by four of our strategic business unit presidents and a keynote address by Andrew Winston, author of “The Big Pivot” and a member of Ingersoll Rand’s Sustainability Advisory Council. “This year’s conference was especially powerful with our focus on sustainability,” said John Evans, Vice President, Global Procurement, at Ingersoll Rand. “In addition to the powerful keynote address focused on building thriving companies in our volatile world, supplier partners also attended a targeted breakout session led by Scott Tew, director of our Ingersoll Rand Center for Energy Efficiency and Sustainability, to learn how to further their own sustainability initiatives and better partner with Ingersoll Rand.”

Conflict Minerals Statement

Ingersoll Rand has conducted a reasonable country of origin inquiry (RCOI) regarding the minerals specified by Rule 13p-1 of the Securities Exchange Act of 1934, as amended (the “conflict minerals”), that were necessary to the functionality or production of products manufactured by the company for the fiscal year that ended on December 31, 2017. The company exercised due diligence on the source and chain of custody of conflict minerals using the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (the “OECD Framework”). For more information about our approach to conflict minerals, please click here.

Management Approach

The ability to establish mutually beneficial supplier relationships is key to our success. We have systematic processes in place to govern these relationships, ensuring our suppliers share our values and adhere to our standards of business ethics, health and safety, and environmental and social responsibility. As part of our enterprise risk management processes, we assess the sustainability and business continuity risks associated with our supply chain. The Ingersoll Rand Business Partner Code of Conduct, which includes our Global Human Rights Policy, is integral to our standard purchase agreement and communicates the social, environmental, quality and compliance expectations we have for our supply chain partners. Our Business Partner Code of Conduct requires that suppliers not violate basic human rights of life, liberty and security. No harsh or inhumane treatment—including sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse of workers—will be tolerated. Suppliers must have an effective environmental policy and conduct their operations in a way that protects the environment. Suppliers must also obtain and keep current all required environmental permits and meet all applicable environmental rules, regulations and laws in the countries where they do business.

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