In 2017, only approximately 16 percent of our purchases were from new suppliers.
At Hormel Foods, our multifaceted supply chain includes suppliers of hogs, turkeys, ingredients, packaging materials and transportation.
Supplier Responsibility Principles
All of our suppliers are required to follow our Supplier Responsibility Principles to ensure the quality of products and services we receive from our suppliers follow our commitment to responsible environmental and social performance. In partnership, we deliver quality products and add value to society.
We expect every one of our suppliers (domestic and international) to operate according to our ethical business practices. All of our purchases are from suppliers that are compliant with our sourcing policy, and we strictly enforce suspension of any supplier not in accordance with such policies. Additionally, we have established supplier quality management (SQM), which evaluates our suppliers based on quality, delivery, service, technology and price. Our ingredient suppliers are subject to additional measurements to further ensure quality and food safety. Suppliers that exceed our established standards are eligible for our annual Hormel Foods Spirit of Excellence Awards. In 2017 alone, we recognized 90 suppliers for their performance.
To exemplify our commitment to supply chain sustainability management, we require third-party food safety audits of all of our ingredient suppliers. In addition to the third-party food safety audits, in 2017 we conducted an additional 87 food safety supplemental audits. If suppliers are found to be noncompliant, appropriate action is taken — up to and including termination.
Hormel Foods values the long-standing relationships we have established with our suppliers. In fact, in calendar year 2017 only approximately 16 percent of our purchases were from new suppliers. We are continuously looking for ways to assess our current supplier relationships to ensure that environmental/social risks are addressed and mitigated. To that end, in 2014 we completed a category-level assessment process to identify risks. As a next step, we are working with our suppliers in categories where risks have been identified. In 2016, we assessed 41 suppliers on environmental and social risks. In addition, we completed a high-level water risk assessment of our top suppliers in 2017.
Supplier Diversity Program
In addition to ensuring our suppliers comply with the food safety standards recognized by the Global Food Safety Initiative (GFSI), we make a concerted effort to give diverse companies such as small, women-owned, minority-owned and veteran-owned businesses the opportunity to supply quality products that meet our company’s growing business needs. As a result of our supplier diversity program, in calendar year 2017 we purchased 23 percent of our resources from diverse businesses (small businesses, women-owned businesses, minority-owned businesses and veteran-owned businesses). This percentage includes independent family-owned hog farms.
Palm Oil Sourcing Policy
Hormel Foods recognizes the unique environmental and social risks associated with palm oil. These risks require additional due diligence in sourcing, education and training to ensure the palm oil in our supply chain is not associated with human rights issues, deforestation or plantation expansion on carbon-rich peatlands.
While Hormel Foods is a relatively minor user of palm oil, we realize that responsible sourcing of even the smallest amount of this ingredient can make a difference. Therefore, we are dedicated to only purchasing palm oil from suppliers that comply with our sourcing principles.
In 2015, the Hormel Foods Palm Oil Council updated our palm oil policy and action plan. We had made an initial commitment to purchase only fully traceable palm oil by the end of 2014. We met this commitment by working with our suppliers and achieved traceability to the mill level. In the spirit of continuous improvement, our updated commitment is to ensure that by 2019, we will purchase only sustainable palm oil that is fully traceable to the plantation level. We remain on track to achieve this goal.
In addition, in 2015 all of our suppliers published sourcing policies for their entire operations that meet our principles and implementation timelines.
To read our full palm oil policy and action plan, please visit our corporate website.