Supplier Management and Contracts

Signing supplier contracts is the primary condition for cooperation between Arçelik and its suppliers. Suppliers are obliged to fully comply with the terms of the contract. Contracts are also the commitment of long-term cooperation between the two parties. Supplier contracts include business ethics, environmental and quality requirements, as well as commercial matters.

After our suppliers are approved, the quality and shipment performances are closely monitored and the performance results are shared with the suppliers through the supplier portal. According to the performance results, audits carried out within the scope of improvement studies are carried out by employees who have received auditor training within Arçelik.

Our suppliers are obliged to query the policy, contract and quality conditions at their suppliers. Arçelik revises the conditions of its sub-supplier, if necessary, or checks it on site.

Our suppliers are analyzed and classified according to the royal method and play an active role in determining our overall supplier strategy. In the Kraljic methodology, the following criteria are taken into consideration;

• Supplier annual purchase cost

• Supplier performance (Quality, Shipment)

• Supplier dependency level

• The price level of the supplier according to its alternatives

• Technical and innovation expertise of the supplier

• Supplier's response and cooperation speed

As part of overall supplier strategy, we define critical supplier as those who are amongst the 90% of purchasing volume significant impact on company operations in terms of high purchasing volume, critical components provided or being nonsubstitutable. Additionally, we assess the compliance of our suppliers with supplier business ethics rules, which include Arçelik’s expectations for legal practices, working conditions, ethical rules, occupational health and safety, and the environment. We plan corrective actions for nonconformities that arise as a result of the audits and check the actions taken regarding these plans in the following audits. Moreover, we assess the suppliers* based on the data provided to understand their level of maturity in terms of ESG integration into their business based on our internal assessment. As a second step, we hire third-party auditors to conduct ethics audits to the suppliers to monitor their social and governance performance. The results of these audits and our own assessment are combined to scale the performance of the suppliers as high, medium, or low risk (acceptable, good and excellent).

* 400 suppliers making 90% of purchasing volume

Arcelik’s top direct material suppliers which are publicly traded are listed with their ISIN codes: TRINSEO EXPORT GmbH (ISIN: IE0000QBK8U7), KAREL ELEKTRONİK SAN.VE TİC.A.Ş. (ISIN: TREKREL00019), DOW TÜRKİYE KİMYA SANAYİ VE TİCARET (ISIN: US2605571031), INEOS Styrolution (ISIN: XS2108560306), BOREALIS AG (ISIN: AT0000A24UY3)