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All products go through our product compliance process to ensure they are safe and compliant. This means that all materials must be approved prior to purchase through our approval process. The process is complemented by our test programme through which we ensure that our products are tested for hazardous materials. With very few exceptions, all our products are tested in the pre-production phase. For those products considered to be high risk, the testing is repeated during mass production. When we define our requirements, our policy is to comply with the EU requirements or the applicable national legislation, whichever sets the highest standards. In several areas, we go beyond the legal requirements.
This means that we for instance prohibit chemicals like triclosan, formaldehyde, phthalates (all types of phthalates), formamide and coating materials that are based on halogens (bromine, chlorine, fluorine etc.). We work continuously on improving and developing our FTC product compliance requirements leading to safer products. This is done in close cooperation with our suppliers helping them to understand and implement our restrictions. In 2019, we had three product recalls. We mediated the risk by immediately recalling all items in question.
Flying Tiger Copenhagen’s strategic quality programme aims to constantly improve the quality of our products through physical inspections during production. Here, we evaluate the general quality of the products in terms of durability and functionality but also issues such as hygienic standards and risk of mold development during production or the long shipment times from Asia to Europe. A team of quality inspectors, a quality manager and supporting personnel is established in Shanghai. The selection of the products subject to quality checks and description of the quality check points are performed at the headquarters in Denmark, while the inspections and handling are done by the local team and in the local language.
The stronger quality focus also creates a higher awareness among our suppliers, leading to a continuously higher quality level for all products.
In 2019, we purchased products from around 300 suppliers worldwide. Approximately 75 percent of our spend comes from suppliers based in China; 18 percent from suppliers based in the EU and the remaining 7 percent come from suppliers spread across the world, in countries like India, Nepal and Taiwan. Most of our direct suppliers are trading companies who source from a range of different factories, enabling us to offer a broad array of novel products across a variety of categories.
With respect to our supply chain setup, focus on responsible sourcing ensures that we account for human rights and labour rights adverse impacts on workers and communities in the production areas. Through our social compliance process, we work to ensure that factories selected for production on our behalf can meet our requirements, and that the people producing our products are treated with respect and provided with fair and safe working conditions. We have an ongoing focus on improving our social compliance process and our performance. In 2019, we strengthened our cooperation with the buying and product quality teams, measured progress on individual suppliers, allowing for even more systematic and transparent process and cooperation.
The process follows three steps:
1. Commitment to the Flying Tiger Copenhagen Supplier Code of Conduct.All product suppliers must sign the Flying Tiger Copenhagen Supplier Code of Conduct. The Code is based on international standards as defined by the United Nations (UN) and the International Labour Organisation (ILO). It defines our requirements in the areas of workplace health and safety, terms of employment, working hours, wages, environmental protection and business ethics. Among other things, it prohibits child labour, forced labour, dangerous or severely unhealthy working conditions and abusive disciplinary practices. No purchases can take place without a valid Code in place. Commitment to the Code must be renewed every 2nd year in writing.
2. Risk assessment and factory audits.Factories are selected for audit in a two-step process:
I. Factory information for all items is gathered from the BOM tool and items are automatically assigned a risk rating based on: i) country of production; ii) purchase volume; iii) product category.
II. The automatic risk rating is combined with a manual process looking at: i) brand exposure of product; ii) audit history and performance of factory, including sub-contracting practices.
Factories rated high-risk are selected for audit. On-site factory audits are carried out either by our China-based audit team or by Elevate, an organisation specialised in social compliance factory audits. All audits follow the Flying Tiger Copenhagen Audit protocol that consists of 115 questions and assess practices in the areas of ethics, sub-supplier management, human rights, labour practices, and the environment. Audits include a combination of site assessment, documentation review, management interviews and anonymous workers' interviews. Audits can be announced, semi-announced and unannounced, depending on progression of audits and types of findings in previous audits. All factories are evaluated from A (compliant) to E (Zero-tolerance) and most of the factories we used are rated C. We have a strategic target to raise the rating of the factories we use.
3. Improvement and remediationAll factories, apart from A rated factories, must implement a corrective action plan (CAP) within a defined timeline. The CAP is reviewed regularly until closure by Flying Tiger Copenhagen, and the factory must go through a re-audit to verify improvements. Re-audits are semi-announced or unannounced. Factories that present severe zero-tolerance issues are rejected (e.g. use of child labour, forced labour, severe safety and human rights issues, attempted bribery of auditor). In some cases, where good faith and procedural errors can be verified, the factory is put through a requalification process which includes training, a strictly monitored improvement plan and a re-audit. In case a supplier and/or factory is unwilling to improve, we will stop the collaboration permanently.
We do on occasion come across factories using child labour. We have a zero tolerance for child labour and strict rules for young workers (between 16 and 18). If we find child labour, the factory must immediately remediate the case and will be put on hold until further notice. We have entered a collaboration with The Center for Child Rights and Corporate Social Responsibility (CCR-CSR) in China that helps us with child labour remediation and prevention. CCR-CSR makes sure that every case is handled with respect to the individual child’s circumstances. They engage in dialogue with the family and ensure appropriate measures like enrolling in vocational schools and monthly living stipend throughout the remediation period.
In 2019, we have conducted more than 300 audits at factories in Asia. The most common issues that required improvement were ensuring a safe and healthy working environment and reducing overtime. Our target for 2020 is to maintain the number of audits and pursue greater transparency by introducing a pre-screening through the entire range of assortment, and further build the capacity of our suppliers.
In 2020, we will revise our sourcing strategy in order to further simplify our supply chain. We will also introduce more requirements to our existing and new partners, to further increase compliance and transparency in our supply chain.
We consider our audit processes a critical tool to ensure compliance in our supply chain. But we have also learned that to drive genuine improvements, we must combine these processes with proactive capacity building and training of our suppliers and their factories. We believe in fair partnerships based on transparency and trust, completed with the ability to check and drive improvement.
In 2019, we continued to establish a closer engagement with our suppliers. Our local office in Shanghai is growing, hosting now the quality, social compliance and merchandising teams. That allows us to keep closer dialogue with our supplier and develop long term the partnerships.
Bespoke training of our top 10 suppliers responsible for more than 60% of annual procurement is an integral part of our preventive and corrective action activities. In 2020, we will continue the supplier engagement work, with further strategic training, developing more concrete written guidelines, that can be shared with larger number of factories, as well as reviewing our policies and strengthening our internal commitment.
When you choose FSC®-certified goods, you support the responsible use of the world's forests, and you help to take care of the animals and people who live in them. Look for the FSC mark on our products and read more at flyingtiger.com/fsc
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