The combination of Zurn and Elkay in 2022 created a more complex supply chain with expanded size, country locations and breadth of sourced materials/products. Guided by our core value of continuous improvement, we conducted a deep examination of our combined supply chain to find opportunities to make it more resilient and sustainable.
Our global supply chain organization includes three leadership positions dedicated to overseeing critical areas of supplier diversity, supply chain sustainability and supply chain risk. Our team is also continuing to make improvements that balance the complexities of both domestic and global supply chains as they look across the combined supplier base.
Our supplier screening program uses a systematic approach to on-board new suppliers that includes supplier self-declaration and validation through internal supplier audits of key environmental and social performance indicators. The assessment process is designed to identify and assess both significant actual and potential negative environmental or social impacts, along with capturing associated actions. Key features include:
Our supplier assessment program is intended to promote awareness of environmental and social impacts and foster a transparent and responsible supply chain—one that observes human and labor rights and complies with applicable environmental regulations.
We require all suppliers to sign our Supplier Code of Conduct, as outlined in our Supplier Excellence Manual. The rules of conduct cover human rights and labor practices, environmental, health and safety standards, and ethics, integrity and compliance.
To ensure Zurn Elkay continues to build products under conditions which respect worker rights and the environment, we require suppliers to provide evidence of and commitment to a set of basic standards. We conduct periodic internal supplier audits, with a goal to audit our top suppliers every three years, to ensure they meet our requirements with respect to applicable laws and working conditions, including laws against human trafficking and slavery.
We prohibit our suppliers from participating in any form of bribery, kickbacks or corruption and engagement in any acts that would violate or cause Zurn Elkay to violate any law or regulation relating to anti-bribery, including the U.S. Foreign Corrupt Practices Act (FCPA).
We have committed to improving our product stewardship and transparency efforts, as well as reducing the toxic footprint in the supply chain. Currently, we are in the process of expanding Elkay’s robust screening programs across the rest of Zurn Elkay, including requiring suppliers to submit annual full material disclosures via Toxnot, a platform that manages compliance, transparency and reporting of all known chemical substances and finishes, coatings and additives used in the component or product. Another longstanding Elkay practice being introduced to the rest of the organization is a requirement for suppliers to provide annual affirmations of their own compliance to certain regulations including, but not limited to, the U.S. federal Toxic Substances Control Act (TSCA) and Lautenberg Chemical Safety Act; the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Prop 65); and the European Union's Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS).
Reexamining each company’s legacy supply chain goals, KPIs and strategies also allowed us to combine the best from both firms to enhance our efforts around supply chain sustainability.
We identified 12 internal KPIs that will help guide our supplier strategy and accelerate progress toward important issues such as recyclability. For example, we strive to use sustainable materials in our manufacturing and packaging to build a durable, lasting product that reaches the consumer in good condition. To advance that goal, in 2022, we added GRI metric 301-1 as a KPI to track the total weight of both renewable and nonrenewable materials used to produce and package our products. For more information, see ESG Content Index.
As a responsible manufacturer, our products are manufactured with recycled content whenever possible. Outlined below is the average recycled content identified in some of our major product groups:
Next year our ESG Content Index will include important steps to minimize risk with new suppliers, such as auditing all new suppliers against environmental, quality and social criteria.
We offer a Supplier Quality and Development Program to ensure that they share our understanding of critical issues, such as environmental and social impacts, and possess the tools to improve the sustainability of their operations.
Historically, Zurn Water Solutions used supplier surveys and audits (41 conducted in 2022 alone) to identify key sustainability risks and issues that we would incorporate into our Supplier Quality and Development Program. After combining Zurn and Elkay, we began developing a new process that will interweave the most effective elements of each company’s approach to help us gather more data and enhance our ability to track progress toward our goals.
The Zurn Elkay Supplier Management Council regularly reviews supplier risks, monthly performances and audit results. In the event we identify an incident or practice of noncompliance, we engage the supplier and review their plan to reach compliance. If their efforts are unsuccessful, we evaluate the business relationship and take appropriate corrective action, which may include further training, a formal development project to reach compliance, cancellation of a purchase order or termination of the business relationship.