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Using procurement power to improve lives in the DR Congo  

 

 

In the midst of the world’s deadliest conflict, there is a beacon of hope. Proof that it’s possible to pioneer a new way of working – and a new model of cooperation throughout the supply chain – that also improves the lives of the most vulnerable people.

 

Nyabibwe, in the Democratic Republic of Congo (DRC), is a busy mining town nestled in a picturesque landscape. But for decades the nation has been torn apart by warlords. The DRC is rich in minerals – gold, tantalum, tungsten and tin. The latter is a crucial component in the solder of electronics and also found in many Philips products.

However, armed groups run off with profits accrued by the country’s increasingly profitable mining industry.

 

But not at Kalimbi, one of several mines in Nyabibwe.

At Kalimbi, Philips – as part of a unique collaboration with the Conflict Free Tin Initiative (CFTI) and affiliated companies – has worked to ensure that the mined tin is not tainted by violence or war. Profits don’t go on guns, but are reinvested into the local economy. Armed groups do not oversee production, but instead the community itself, after having undergone specialist training, helps to manage things.

 

This two-year-old initiative, launched in September 2012, is an example of sustainability in action, where sourcing and procurement decisions have had positive impacts on local lives, far removed from our own company. Although Philips is not sourcing directly from the mines and relies on its supply chain, the company has still been able to make a meaningful contribution in driving legitimate mining locally, underlining our commitment to sustainability and to do business with a good cause.

 

We’ve done this by partnering with key stakeholders in the DRC, as well as with the Dutch government and other multi-nationals (who also use tin in their products) to do things differently.

 

We’ve installed a system which effectively traces where the tin comes from and monitors the entire supply chain, sometimes involving seven or more separate tiers including mining, trading, exporting, smelting and manufacturing. We do not directly buy from the DRC but by working with different stakeholders along the supply chain, we have insights into how the mine operates.

 

Legitimate trading operations mean that the local job market thrives, that families enjoy steady incomes, and that young people in vulnerable communities have opportunities to develop their skills.

 

The pioneering Conflict-Free Tin Initiative has been a challenge but an inspiring one and the results are worth the challenge. We have created a market for conflict-free minerals in a part of the world riven by conflict and hopefully the Kalimbi model of procurement can be replicated throughout the DRC’s thousands of mines 

My colleague Boukje Theeuwes, Philips’ Supplier Sustainability Manager, who’s visited Kalimbi and has been essential in setting up this initiative, says it best: “Philips put itself in a vulnerable position by being the forerunner for such a unique initiative. We did so for three reasons. First, our commitment to sustainability compelled us to take action and support meaningful improvements on the ground. We felt it was morally wrong to go for the easy way out and did not want to contribute to a boycott on all minerals from central Africa. Philips committed to redirect its supply chain and buy legitimate tin from the DRC. This was an important market signal which supports the investments needed to develop a verifiable conflict-free business in the region.

 

Secondly, we wanted to learn – to see what could be possible, how it can be replicated and improved. And third, to improve the daily existence of people less fortunate than ourselves, to transform their health and safety and inspire them to take control of their own lives. Now the challenge is to grow this scheme throughout the country so it becomes a standard, not a one-off.”

 

All the partners involved are beginning to see that this pioneering new business model is reaping extraordinary dividends, not just for the entire supply chain but for the people at source. And it’s also vital for customer loyalty. The legitimacy of the raw materials used in our products is, of course, essential to our reputation and we know that responsibly-sourced materials have become increasingly important to our customers and consumers. In this way, our procurement strategy has helped to radically transform the supply chain sustainability of Philips and our suppliers.

 

The astonishing results of this pilot scheme show the importance of thinking differently and acting responsibly, as well as the vital role procurement plays in developing sustainability. We have demonstrated to the rest of the market that legitimate, conflict-free business is not simply a concept – it is, in fact, a compelling reality.

Fredrick Spalcke

Executive Vice President and Chief Procurement Officer

Before joining Philips in 2012, Fredrick worked for several multinational companies in executive leadership roles, building a successful international career with a strong track record of restructuring and delivering results, based on a broad experience in Corporate Strategy, M&A, Logistics and Procurement.

 

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