Results

We continue to develop our reporting of our supply chain’s performance. This year we have enhanced the way we report supplier performance and our efforts to improve working conditions throughout our supply chain.  Key information is reported through an interactive tool and can be viewed globally or by region. The online tool aggregates the results of HP’s audits and outlines the major causes of nonconformance. It also describes improvements our suppliers have made and links to case studies highlighting specific ways we’ve helped strengthen their capabilities. In addition to enhancing the way in which we report audit results, HP has also disclosed a list of our key suppliers. This list includes contract manufacturers, electronic manufacturing services providers, original design manufacturers, and commodity suppliers.  HP is sharing this list with the intent of promoting transparency and progress in raising social and environmental standards in the electronics industry supply chain.

Our SER program follows four phases that promote a continual improvement cycle in supplier companies (see table). HP has developed a network of local auditing teams along with independent verification efforts in the regions from which we purchase. We do not rely solely on supplier certification to external standards such as ISO 14000, OHSAS 18000 and SA 8000. Our experience has shown that standards vary even among certified companies and that some suppliers who are not certified have equally rigorous SER management systems.

We promote sustainable improvement in our suppliers’ factories. We believe that focusing on management systems and analyzing the root causes of nonconformances increases the probability of lasting change. To achieve this, in addition to auditing our suppliers, we provide training and support to build their internal capabilities.

Sustainable change in the factory requires participation at all levels: factory owners, senior management, product line and mid-level factory floor managers and workers. During 2006, HP started two capability building projects: the Focused Improvement Supplier Initiative (FISI) in China and the Central Europe Supplier Responsibility (CESR) Project.

» View capability building information

Audits conducted, 2004-2007 [cumulative]

Audits conducted Location Initial Follow-up # of workers at sites audited1 Greater China         China 111 98 266,500   Taiwan 11 2 15,000 Central Europe         Czech Republic 18 10 9,500   Hungary 13 4 12,000   Poland 4 1 400 Latin America         Brazil 9 3 7,000   Mexico 22 21 18,000 Asia Pacific         India 3 0 350   Indonesia 6 0 5,000   Korea 5 0 1,500   Malaysia 15 6 21,000   Philippines 5 1 9,500   Singapore 20 5 11,000   Thailand 10 7 39,500 Total 252 158 416,250

Total major nonconformances by EICC section for global audits of high-risk suppliers, 2005-2007 [% by section]
	Health and safety 30% Labor 25% Labor management system 16% Environment 12% EHS management system 9% General 5% Ethics 3%

The following chart represents the top ten provisions with major nonconformances in initial audits from 97 of our key supplier sites and the improvements measured through subsequent verification audits at those sites. The data include only sites for which verification audits were conducted; these sites tend to have higher initial levels of nonconformance than other audited sites.