SUPPLY CHAIN MANAGEMENT

Transparency in supply chains

Ingersoll Rand is committed to operating its business with the highest standards of corporate responsibility. We operate within a framework of principles, guidelines and policies aligned with our ethical, social, and environmental responsibilities. Specifically, Ingersoll Rand is committed to monitoring and eradicating any form of slavery or human trafficking both within its business and our supply chains. Our policies reflect the steps that we have and will take to ensure that we act ethically and with integrity in all of our business relationships and to implementing and enforcing effective systems and controls to ensure slavery and human trafficking is not taking place within our business or supply chains. To that end, we have a Supplier Code of Conduct, that we provide to our suppliers and expect them to follow.

 

We expect suppliers to be committed to uphold workers' human rights and to treat them with dignity and respect. We specifically require that suppliers not use forced, bonded, or indentured labor, involuntary prison labor or child labor. Suppliers are required to ensure that their employees and all direct or indirect subcontractors and agents acknowledge and adhere to these principles. In the event suppliers do not adhere to the principles in our Supplier Code of Conduct, appropriate action may follow.

When choosing suppliers, we perform appropriate due diligence to verify that the supplier is reputable and qualified. When appropriate, the due diligence may include diligence for labor issues. We also audit our suppliers based on risk, and, when appropriate, audit for labor issues, including slavery and human trafficking. Our sourcing and supply chain management team performs these evaluations based on the Supplier Code of Conduct and other supplier audit frameworks without the help of third parties.

 

Our Supplier Code of Conduct is incorporated in the Ingersoll Rand Code of Conduct. The Ingersoll Rand Code of Conduct sets out the global standard of conduct expected of employee's’ within the business and acts to reinforce our efforts of countering slavery and human trafficking throughout the business. All Ingersoll Rand employees are required to read the Ingersoll Rand Code of Conduct and complete periodic certifications affirming that they will comply with the Code and Company policies. In addition, all employees are trained on the Code of Conduct. Violations of the Code or Company policies are taken seriously and can result in disciplinary action up to and including termination.

 

This statement is published in accordance with The California Transparency in Supply Chains Act of 2010 (SB 657) and the United Kingdom's Modern Slavery Act 2015 both of which are designed to address the issue of slavery and human trafficking.

This statement has been approved by Ingersoll Rand's board of directors.

 

SUPPLIER CODE OF CONDUCT

SUPPLY CHAIN STRATEGIES

Supply Chain Strategies

Our top five strategies:

  1. Consolidate our supplier base to generate cost synergies while maintaining/improving quality and lead time, and enhance our commitment to in-region/for-region sourcing. 
  2. Assess 100% of supplier spend to determine spend “at risk” due to: (a) sole or single sourcing; (b) current buy of less than 25% in region of consumption; and (c) inability to buy 100% in region of consumption (if needed).
  3. Establish standardized systems, reporting and metrics to create an ongoing, comprehensive view of the supply chain. 
  4. Prioritize, standardize and implement existing best practices across the combined entity. 
  5. Achieve net working capital (NWC) improvements through inventory reduction.

PREFERRED SUPPLIER PROGRAM

Preferred Supplier Program

We concentrate on identifying our critical and strongest partners in order to consolidate our supply base, generate cost synergies, and support our in-region/for-region sourcing strategy. We want to work with our best partners to drive sustainability throughout our supply chain, as well as give these partners the opportunity to bid on new business as we execute supply chain consolidation and in-region/for-region sourcing strategies. Ingersoll Rand defines a critical Tier I supplier as one in the Top ~80% of cumulative spend, which a significant portion of our business, as well as our impact on the environment.

SUPPLIER RISK MANAGEMENT

Supplier Risk Management

STANDARDIZED PROCESSES AND BEST PRACTICES TO MANAGE SUPPLIER RISK

To manage the sustainability risk of Ingersoll Rand’s global suppliers, the supply base is assessed annually based on percent of spend with Ingersoll Rand, operational criticality and business contingencies. In 2022, we assessed our top 1,300 critical Tier I suppliers (representing ~80% of spend) for sustainability performance and risk. From this assessment, suppliers are identified as critical or non-critical to ensuring Ingersoll Rand’s production continuity.

The assessment process encompasses four aspects:

1. INTEGRITYNEXT—ONGOING ASSESSMENT OF SUPPLY BASE

In order to continually assess the sustainability risk of our supply base, Ingersoll Rand has established an independent third-party partnership with IntegrityNext. The comprehensive assessment program through IntegrityNext evaluates for potential risks in environmental protection, human rights and labor, anti-bribery and anti-corruption, health and safety, and supply chain responsibility (including conflict mineral compliance). Through IntegrityNext’s data validation process they are able to work with our critical suppliers who have a yellow or red status and create a corrective action plan to improve their standing. Using a four-step process with IntegrityNext, we can quickly identify and request corrective action as needed for sustainability risks.

Step 1

Real-Time Monitoring

Step 2

ESG Assessment

Step 3

Validation Service

Step 4

Compliance Profile
IntegrityNext scans around one billion messages every day to ensure we know the risks associated with 100% of our suppliers as early as possible (news, authorities, social media etc.). IntegrityNext uses a pre-built ESG and compliance self-assessment. It automatically obtains the assessment and certificates from our suppliers to confirm their compliance with the relevant sustainability standards. Each time a supplier uploads a certificate to the IntegrityNext the certificate and associated responses for content validity and validity date, and requests confirmation of validity from the accreditation body. In this way, not only is an initial check carried out, but the effect of any improvement measures introduced are also checked, and findings are reported to Ingersoll Rand.

After the supplier has finished its self-assessment, a compliance profile will be generated: 

Status Green = Approved (no risk, no action needed)

Status Yellow = Sustainability Risk (corrective action plan will be addressed)

Status Red = High Sustainability Risk (corrective action plan will be addressed immediately)

2. ONSITE ASSESSMENTS

We manage the risks of supply chain disruptions through various standardized processes, which include enforcing our Global Supplier Quality Manual, implementing Supplier Corrective Action Request (SCAR) Agreements, and implementing formal correction action plans as necessary. The SCAR process follows an 8D-based problem investigation and solving method, which involves the supplier conducting root cause investigation and implementing corrective actions. If required, our Supply Chain and Quality teams may conduct in-person, On-Site Assessments (OSAs) to directly identify the root cause and implement countermeasures with the supplier. To address on-site suppliers with recurring quality, delivery, or sustainability issues, our Supply Chain teams regularly monitor and hold weekly meetings. During these meetings, they review high-risk suppliers in detail. Additionally, the Supply Chain teams present a monthly executive summary to the plant and operational leadership team, highlighting suppliers with the most significant business impact concerns. These sessions provide a comprehensive overview and facilitate decision-making at a higher level within the organization. 

3. CONFLICT MINERALS

Ingersoll Rand does not source raw materials or minerals; rather, we acquire finished and semi-finished components and products from a vast network of companies worldwide. The nature of these relationships is intricate, necessitating Ingersoll Rand’s efforts to educate these suppliers about the significance of responsible sourcing. Additionally, we emphasize the importance of their transparency, as it plays a crucial role in fulfilling our annual Securities and Exchange Commission disclosure obligations under the Dodd-Frank Act.

4. SUPPLY CHAIN REPORTING OR QUANTITATIVE KPIs AND TARGETS

To ensure comprehensive visibility into the performance of our supply chain, we employ a diverse range of KPIs. The table below highlights a few essential KPIs, which are either mandatory for conducting business with Ingersoll Rand or directly assess the progress made towards the strategies mentioned above.

Responsible sourcing

Our commitment to responsible sourcing is expressed in our Conflict Mineral Policy, and downstream expectations of our suppliers are clearly articulated in the Ingersoll Rand Supplier Code of Conduct.

WORKING WITH US

Customer satisfaction is a priority. We are committed to better understanding customer perspectives and refining our offerings to meet and exceed their expectations for reliability, energy efficiency and sustainability.

 

Our products are distributed by a number of methods. Sales are made across the U.S. through branch sales offices and through distributors and dealers. Non-U.S. sales are made through numerous subsidiary sales and service companies with a supporting chain of distributors in over 100 countries.