Before we engage in a new partnership, our suppliers sign our Vendor Code of Ethics (VCoE) Certificate of Compliance and we conduct a full facility assessment. If all zero-tolerance criteria and minimum requirements are met, we begin a business relationship together. If any violations are found during the assessment, a corrective and preventive action (CAPA) plan is put in place. This includes agreed-upon solutions, a timeframe for implementation, and key responsibilities.
During assessments, we meet with facility management, tour the site (including dormitories and canteens, if applicable), review documents, and interview employees and workers at all levels of the organization, including union representation. Our VCoE assessment tool is what guides our assessments, which can last a few days, depending on the facility. They end with a closing meeting with facility management where our team presents the findings, ratings, and a mutually agreed-upon timeframe for implementation of an action plan, if necessary.
Our zero-tolerance policies need to be followed at all times, without exception. We know that most suppliers will not achieve 100% rating across all other assessment criteria and in the spirit of continuous improvement, our partners develop Corrective and Preventative Action plans (CAPAs) with our support that blend training, consulting, and coaching to help them meet our standards. The CAPAs include root cause analysis, agreed-upon solutions, a timeframe for implementation and key responsibilities. This helps create change and rewards suppliers who improve conditions at their facilities.
Our rating scale feeds into lululemon’s general sourcing scorecard and is based on our assessment checklist. Suppliers are classified according to assessment performance. Our approach is to achieve change through supplier engagement and incentives. In cases where a supplier is not making improvements, we’ll reduce our business or move our business elsewhere as a last resort. When supplier partners perform well, we consider this score and may increase business when other sourcing criteria are also being met.
Our policy is to reassess a facility’s performance on-site at least every 18 months with all facilities and at least annually with strategic suppliers, subject to supplier performance.