Supply Chain Transparency and Performance

In 2018, our combined annual spend was $10.6 billion for direct and indirect commodities. The Ingersoll Rand global procurement team sources commodities from abroad, multi-tiered supply base. Using our Preferred Supplier List Program and Supplier Council, we promote business with strategic suppliers who best align with our expectations on quality, service, and value. We also operate with an “in region, for region” philosophy, which allows us to deliver products to market quickly, implement local preferences, reduce freight costs and improve our quality and reliability by being near our supplier partners.    

$10.6 Billion

spent on direct and indirect commodities

90%

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

95%

of our direct material spent was assessed for risk quarterly in 2018

Supplier Environmental Assessment

New suppliers that were screened using environmental criteria

90% of controllable spend suppliers have agreed to our Business Partner Code of Conduct

Supplier Social Assessment

New suppliers that were screened using social criteria

90% of controllable spend suppliers have agreed to our Business Partner Code of Conduct

We have a 2020 target for 90% of our direct material spend to be assessed for risk quarterly. We exceeded our goal in 2018, reaching 95% of our direct material. Understanding our suppliers’ environmental and social performance enables us to manage risk and collaborate with those proven best in class. For more information about risk factors associated with our supply chain, see our Form 10-K.

Ingersoll Rand Business Partner Code of Conduct

Our Business Partner Code of Conduct (BPCoC) outlines the standard terms and conditions we expect of all suppliers. We require suppliers to accept and agree to it whenever entering into a contract or accepting a Purchase Order. Our target is for 100% of all new suppliers to agree to our BPCoC by 2020; at the end of 2018, 90% of controllable spend suppliers have agreed.

Our BPCoC outlines expectations that suppliers do not violate basic human rights of life, liberty, and security. No form of harsh or inhumane treatment will be tolerated, such as sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse of workers. 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.

New Suppliers

Through our supplier selection process, we use a Quality Supplier Onsite Assessment based on social and environmental criteria to screen 100% of our new direct material suppliers. 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 screens for human rights and labor practices criteria by asking, for example, if the supplier’s hiring and compensation practices meet or exceed local legal requirements and if the supplier refrains from the use of prison or forced labor.

Preferred Supplier List Program

The Ingersoll Rand Preferred Supplier List Program is a key initiative to identify and engage world-class suppliers capable of partnering with us to create high-quality products for our customers while enabling mutually profitable growth. This program builds a supply base that aligns with our core values. Preferred suppliers are prioritized for early engagement on new product development and strategic sourcing programs and are given precedence to extend their product and service offerings to our locations. At the end of 2018, 49.6% of direct spend was with preferred suppliers.

On Site Assessments

As part of our enterprise risk management processes, we assess the sustainability and business continuity risks associated with our supply chain. Ingersoll Rand performs On Sight Assessment (OSA) audits as part of our supplier development process. The process covers about 1,500 suppliers over a three-year period and, in 2018, about 82% of our direct material spend. Our goal is to increase spend with suppliers who have completed the OSA process.

The OSA process, which is led by a team of 40 engineers who report to the vice president in procurement, addresses several categories including: environmental protection; human rights and labor relations; product compliance; EHS & compliance and sub-supplier management. We complete the process on a regular basis, including reviews of audit results and follow-up monitoring of findings.

Suppliers are required to achieve a minimum score of 80% to do business with us. We work with suppliers to understand their score and put together action plans for improvement.

In 2018, no suppliers were identified as having significant actual or potential negative environmental impacts. 

Ingersoll Rand hosts 4th Annual Global Supplier Conference
In January 2019, we welcomed approximately 200 valued supplier partners to our 4th Annual Global Supplier Conference where sustainability was at the forefront of the conversation. In addition to sharing our new renewable energy projects, the conference included the presentation of our annual supplier awards, business reviews by four of our strategic business unit presidents and breakout sessions tailored to supplier suggested topics. In one breakout session, we discussed sustainability partnerships in which we introduced our new Sustainability Expectations and development plan for furthering their own sustainability. 

Conflict Minerals Statement
Ingersoll Rand conducted a reasonable country of origin inquiry (RCOI) about 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, 2018. Through due diligence, we identified 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”). Read more about our approach to conflict minerals.  

 

Management Approach

2020 Targets

Reach 100% of new suppliers agreeing to our BPCoC and increase direct spend with Preferred Suppliers to 60%.

Oversight

Our Supplier Sustainability Manager and Senior Manager of Sustainability are responsible for leading the sustainability efforts of our supply chain, including diversity and inclusion within the supply chain.

Approach

Approach: As part of our enterprise risk management processes, we assess the sustainability and business continuity risks associated with our supply chain. Our BPCoC is integral to our standard purchase agreement and communicates the social, environmental, quality and compliance expectations we have for our supply chain partners.