We use approximately 10,000 natural and synthetic raw materials from over 100 countries to manufacture our products. They are the basis for manufacturing our approximately 30,000 different products in the areas of fragrances, flavorings, cosmetic active ingredients and raw materials, as well as functional ingredients. Our products consist mainly of value-adding preliminary products, meaning aromatic compounds and active components, in addition to carriers such as ethanol. We place a special focus on these ingredients in our sourcing strategy.
Long-term growth is only possible if we continue to be in the position to ensure both raw material availability and quality, while remaining competitive when it comes to pricing. Social and environmental circumstances have a significant influence on these aspects. That’s why implementing the highest standards in our procurement processes is not only a question of responsibility, but also of long-term profitability.
We are constantly adapting the organizational structure of our purchasing department to the changing conditions on the market. Procurement at Symrise is organized decentrally in the two business divisions of Scent & Care and Flavor & Nutrition so that we can manage purchasing processes in a more targeted manner and continually optimize the supply chain. The scorecard system successfully established in 2012 was further adapted to the specific needs of the purchasing department in 2013. It supports buyers with relevant key figures.
With our responsible sourcing model, we rely on close and continuous cooperation with our suppliers, on social and ecological commitment locally, and on strategic partnerships with our key customers.
- We secure our raw material supplies on a long-term basis
- We make a contribution to the conservation of biodiversity
- We help growers to diversify
- We improve growers’ living standards
- We increase local added value
- We reduce emissions from transportation
- We invest in renewable sources of energy
- We boost productivity by means of training courses
- We invest in local infrastructure
- We offer our customers responsible products
- We achieve high quality and yields
- We create transparency, for example by means of certification
In 2013, we purchased 208,000 tons of raw materials and processed them into products. Our relatively small process losses arise mainly from the extraction and distillation processes, which we reduce via recycling wherever sensible. For example, we purify solvents used in production processes in order to reuse them multiple times.
Local Value Creation
The emerging markets currently account for approximately 48 % of our business. We want to continue to expand our market share in this segment in the future. Our positioning in the most important country markets offers us not only a solid basis for business with regional and local customers, but also provides us with access to important raw materials. In 2013, we continued to follow this approach and expanded our operations in Madagascar, among other things.
To increase supply security regarding key raw materials, Symrise has for years successfully pursued a backward integration approach. With regard to important core competences, we have deliberately chosen locations for our international production facilities that have local availability of the raw materials primarily used. Our citrus initiative in Brazil and our vanilla initiative in Madagascar are just as much cases in point as the vegetables sourced from the immediate vicinity of the German site in Holzminden and also processed there. We not only purchase our raw materials in the local economy but are also integrated into “it”, produce in “it” and create value there.
This integrative approach provides us with numerous advantages such as a high yield, secure supply, top quality and the highest possible traceability. At the same time, we are supporting local socioeconomic structures and making a contribution toward local added value. In doing so, we not only save on costs and transport distances, but also reduce climate-impacting emissions. In 2013, we spent 59.3 % of our procurement budget on suppliers based in domestic and bordering regions of our main corporate locations. For the backward integration of our supply chain, we established corporate guidelines on due diligence and defined corresponding processes that also consider environmental and social risks.
Independent of the source, we place a high value on the sustainable, efficient handling of raw materials – internally and by our suppliers. With the help of a systematic management approach, we ensure that suppliers meet our standards: As part of this, new suppliers must provide information on quality, product safety and environmental aspects as well as on their sustainability programs, social responsibility guidelines within their supply chains and compliance with ethical standards. A truthful answer to this supplier acceptance questionnaire is the non-negotiable basis for Symrise entering into a business relationship. We require the safeguarding of general human rights, an undertaking not to make use of child labor or forced labor of any form, and compliance with statutory health and safety at work requirements. Furthermore, we expect our suppliers to allow their employees the right to freedom of assembly and collective bargaining, to observe at least the statutory provisions on working times and pay, and to make a clear commitment against discrimination and abuse. These standards constitute part of our Group-wide risk management system. As part of this, we carry out systematic risk and performance assessments of all suppliers on the basis of economic, ecological and social aspects. 10
The criteria for the risk analysis are:
- Purchasing volume with the supplier in question
- Strategic importance of the raw material
- Number of alternative sources of supply
- Result of the supplier qualification
- Supplier’s country of origin
The result of the analysis is a weighted global risk matrix, which represents the basis of our supplier audit plan. Raw material suppliers are not the only ones taken into consideration – freight forwarders and packaging suppliers are included as well.
We carry out audits for suppliers posing an especially notable risk stemming from the crucial raw materials they supply or regarding problems that have come to light in the assessment. The focal points of these audits are product safety, quality management, health and safety at work, the environment and social responsibility. If suppliers don’t meet our defined standards, we jointly develop and implement improvement measures. If these standards are still not upheld after such attempts, the business relationship is terminated as a last resort. Cases in which a supplier relationship was terminated due to a breach of relevant criteria did not occur in 2013.
The international platform of the Supplier Ethical Data Exchange (SEDEX) is a valuable tool with which we can more easily assess suppliers and deliver our own data to customers. Since 2006, we publish information on working conditions and employee rights, health and safety as well as on environmental and ethical business practices via this platform. Every Symrise production site has been SEDEX registered. Since 2012, we have also invited 250 of our most important suppliers to register with SEDEX and to disclose their data to us. Overall, 204 Symrise suppliers are now registered with SEDEX. Therefore we can assess about 50 % of our purchasing volume in terms of compliance with sustainability criteria in the supply chain.
Standards and Certificates
National and international legal requirements on the protection of natural resources comprise a core component of Symrise’s purchasing policy. For example, the use of animal and plant-based raw materials listed by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is only permitted throughout the Group if the supplier is able to prove their sustainability.
With an increasing number of natural raw materials, we are purchasing materials with certified origins. For example, palm oils and palm oil derivatives, which we use around the world, are mainly procured from sources that are certified by the Round Table on Sustainable Palm Oil (RSPO). Roughly 1,500 raw materials are available at Symrise for use in organic and fair trade products. This corresponds to about 15 % of our raw material portfolio in the EAME region. Our customers have primarily requested certified products in regards to iconic ingredients like vanilla or lavender. In 2013, Symrise became the first fragrance company to purchase CENSO-certified lavandin oil.
Another pilot project is our sustainable vanilla approach in Madagascar, where we helped a total of 2,457 vanilla farmers to become Rainforest Alliance certified in 2013. Our sustainable vanilla sourcing also impressed the jury in two preliminary rounds for the Supply Chain Management Award, where we were among the four finalists in 2013. Our vanilla initiative was also awarded the FIE Excellence Award in the sustainability initiative category in 2013.
Country-specific conditions can also impact our product portfolio: Particularly in the Middle East and North Africa, the demand for products that are certified kosher or halal is especially significant. These certifications are also becoming increasingly important in major parts of Asia as well as in the USA. Globally, 49 % of our raw materials are certified as halal and 51 % as kosher.
The proportion of raw materials of animal origin that we use is very low at approximately 2 %. Nonetheless, we place a high value on the responsible handling of animals and require our suppliers to comply with legal requirements and industry standards on animal rights. 11 Our purchasing department regularly reminds affected suppliers of applicable EU guidelines that establish minimum general standards to protect livestock. These cover topics such as feeding and watering, well-being, freedom from pain and injury, health, normal behavior as well as treatment that results in neither fear nor suffering. Beyond these legal regulations, Symrise has already specified, for instance, that it will only use egg products if the hens are kept in at least barn conditions.
We use very few genetically modified raw materials; they amount to around 2 % of our raw materials portfolio worldwide. 12 When we use GM raw materials, we comply with local regulatory requirements and with the most exacting food safety standards. Key criteria are consumer acceptance and the resulting demand. GM raw materials are used mainly in North America and Asia. In Europe, in accordance with our corporate policy, we use no genetically modified products.
Synthetic Versus Natural Raw Materials
End consumers increasingly desire products with natural raw materials. Natural raw materials already account for more than half of our portfolio and their share is constantly increasing. A complete conversion to natural raw materials, however, would result in complex social and environmental effects in many cases: A greater use of natural raw materials often leads to increased competition for land used for food production and can endanger the preservation of biodiversity due to the development of monocultures. Synthetic raw materials also often take less energy to manufacture than the energy required to harvest and transport natural ones.
It therefore cannot be our objective to completely switch to naturally occurring raw materials. Our focus is more on achieving a further reduction in our dependence on finite raw materials. We have therefore made the identification of alternative means of generating raw materials a focal point of our research. Irrespective of the source of the raw material, we attach importance to using resources sustainably and try to maximize our yields. We encourage our suppliers to follow this strategy as well.