Supplier evaluation

Challenges

Supplier control is essential in ensuring that suppliers comply with Lerøy's requirements over time and contribute to the development of the Group's products, operations and services. Suppliers have an impact on the Group's reputation, production and profitability.

Our ambitions in this area

The Group shall at all times collaborate with the suppliers to generate profitable, ethical, sustainable high-quality products and services.

Action taken by Lerøy in the area

Lerøy has several thousand suppliers, a number of which we have worked with for many years and where both parties are very aware of requirements and expectations.  At the same time, Lerøy is constantly developing and has a constant need for new suppliers. Collaboration with our suppliers is essential if we are to ensure mutual development that will with time result in sustainable collaboration.

Lerøy carries out audits of suppliers as part of our quality assurance. The areas that are being revised include sustainability, food safety, compliance with regulations and ethical guidelines. Previously, audits of suppliers have been followed up locally.

Lerøy sees great advantages in centralizing parts of supplier follow-up in order to make expectations visible and closer cooperation. Lerøy has therefore developed, and pilot tested a supplier evaluation system in 2020 that gives us more structure in the follow-up. Due to the pandemic, the number of audits in 2020 has been limited.

Link Code of Conduct

How we measure our impact

The Group has organised its supply chain by establishing a centralised purchasing department that collaborates closely with the purchasing departments in the subsidiaries. The Group's supply chain is based on the Group's value chain. Due to the value chain's complexity, different needs are identified for the three main segments; Farming, Wild Catch and VAP, Sales & Distribution. Farming contributes to the largest share of purchases.

The supply chain mainly comprises Norwegian suppliers but, with the inclusion of subcontractors, has a global reach. The Group has more than 6,000 direct suppliers worldwide. The suppliers are diversified between suppliers to farming; feed ingredients, nets, boats, machines and equipment for salmon and trout farming, for wild catch; Boats, machinery and equipment for catching cod, haddock, saithe and shrimp and for VAP, Sales and Distribution; machines, equipment, packaging and input factors for the production of products for the market. It is estimated that the Group's procurements total approx. NOK 16 billion per year.

The Group aims to make major contributions to local communities, and makes use of local suppliers in the areas where we have operations. In Norway, which is Lerøy's most important operating location, 80% of purchases are made locally. By supporting local suppliers, we contribute to the economic development of the local community.

Results

Lerøy has established a supplier evaluation system for implementation throughout the Group in 2020/2021. Lerøy has also signed a number of framework agreements with strategic suppliers in 2020. The Group shall develop its strategic suppliers by entering into strategic collaboration/framework agreements at Group level, in order to ensure continuous improvement and optimisation of the supply chain over time.

Strategic collaboration requires both Lerøy and the suppliers to increase their level of collaboration and follow up areas where synergies, increased efficiency and improvements are key.

Target

In 2021, the goal is for all new suppliers to be evaluated, among other things, according to environmental and social criteria in the supplier evaluation system. We send out inquiries to suppliers with questions about various topics that must be answered.

Based on answers and documentation, risk scores are calculated on the suppliers within technical certifications, legal requirements, food safety, environmental criteria (sustainability strategy, climate footprint, reporting recognized standards/initiatives), social criteria (ethical guidelines / duty of care) and delivery ability. Further follow-up and measures will be based on the supplier's risk score (green, yellow and red). The number of new suppliers considered is measured in the system.