CNH Industrial adopts a responsible approach to the management of its supply chain, establishing relationships that go beyond commercial transactions, fostering long-lasting and mutually satisfying collaborations with qualified partners that share the Group’s principles. CNH Industrial has adopted the Sustainability Guidelines for Suppliers that provide the framework for responsible supply chain management. In addition to compliance with local legislation, the Guidelines call for observance of human rights and working conditions, respect for the environment and business ethics.

At December 31, 2014, CNH Industrial had approximately 5,850 global direct suppliers, focusing the relationships on quality improvement, cost reduction, product innovation and production flexibility.

CNH Industrial’s standards of environmental and social responsibility have been fully integrated into its supply chain management. Supplier selection is an operational phase of the procurement process and is regulated by specific procedures. It is based not only on the quality and competitiveness of their products and services, but also on their compliance with CNH Industrial’s social, ethical and environmental principles. The assessment process is built on objective criteria and tools aimed at ensuring fairness and equal opportunities for all parties involved.

Furthermore, in order to assess whether suppliers meet the sustainability standards set by CNH Industrial and, where necessary, take steps towards improvement and realignment, a monitoring process has been designed and implemented. It consists of an assessment questionnaire and a follow-up on-site audit, mainly focused on the following issues: human rights, environment, compliance and ethics, diversity, health and safety. The self-assessment questionnaire has been recently revised in 2014 in order to improve the process and to align it to worldwide recognized standards. In 2014, 115 suppliers were assessed through the questionnaire and 62 audits were performed worldwide. The analysis of the results highlighted the widespread implementation of sustainability initiatives, with a significant number of suppliers adopting their own social and environmental systems, setting specific targets and drafting periodic reports. In some cases, corrective action plans for areas in need of improvement were formulated in collaboration with suppliers. In fact, this monitoring process is considered also a way to promote the continuous improvement along the supply chain.

In line with previous years, several initiatives continued to promote the exchange of ideas and information, including Technology Days (10 events organized in 2014) attended by approximately 1,000 people where suppliers that are industry-leaders in innovation, technology and quality discussed specific topics and shared information on recent technological developments. Moreover, Supplier Advisory Councils were organized in all the regions. The Councils are intended to promote the exchange of information and opinions with leading suppliers that account for a significant percentage of the value of annual purchases in each region and for each segment.

Other initiatives were in place to incentivize supplier innovation such as the Supplier Performance (Su.Per) program, that encourages suppliers to be proactive by sharing the economic benefits generated by innovative methods and technologies that they have proposed. In 2014, 4 suppliers benefited from this program and 8 supplier proposals were implemented, generating economic benefits in favor of suppliers valued at $53 thousand.

Continuous improvement is also seen in World Class Manufacturing Purchasing, which has continued providing its advice to suppliers intending to implement the WCM system. During the year, WCM was implemented at additional supplier plants, reaching a total of 130 supplier sites. This means they now apply what is considered to be one of the world’s leading set of manufacturing standards. In addition, in order to promote good practice within the supply chain, a selected number of suppliers (more than 100) have been involved in responding to the CDP Supply Chain questionnaire to assess the strategies adopted to fight climate change and the initiatives already in place or to be implemented to reduce CO2 emissions.