68 I Jotun Group Report 2020 Jotun and society / Responsible purchasing
The COVID-19 pandemic represented a significant challenge
for Jotun in 2020. Border closure and lockdowns threatened
to interrupt the supply of critical raw materials to many of
Jotun’s 38 production facilities around the world. However,
by working closely with key suppliers, Jotun was able to
secure and deliver raw materials to ensure not only that we
could remain in business but reinforce our commitment to
responsible purchasing polices.
ANTICIPATING CHALLENGES
Jotun’s ability to manage these challenging conditions
is the result of the company’s long-term focus on risk
assessment and mitigation, working to build a strong internal
organisation and long-term relationships with both raw
materials and transportation suppliers. During periods where
restrictions related to the coronavirus pandemic were in place,
Jotun was able to coordinate with relevant suppliers. Because
of travel restrictions, Jotun relied more than ever on its
network of third-party inspectors to manage supplier audits
– a key function of the company’s efforts to encourage good
corporate behaviour.
Raw materials represent a significant portion of Jotun’s
overall costs. By effectively managing supplier relationships,
Jotun‘s Purchasing department can help reduce the per unit
cost of manufacturing paints and coatings. In 2020, Jotun’s
Purchasing department launched a simulation tool to help
personnel in finance and sales to calculate how changes in raw
materials prices can impact the cost of manufacturing Jotun
products, enabling them to adjust prices if necessary.
In addition, purchasing agreements allow Jotun to exert
influence on suppliers to ensure they comply with local Jotun
rules and Jotun’s Human Rights Policy, which are aligned with
the United Nations Guiding Principles on Human Rights and
the International Labour Organisation (ILO) Declaration on
Fundamental Principles and Rights at Work. As part of the
company’s purchasing agreements, suppliers are required
to comply with Jotun’s Supplier Integrity Declaration, which
covers a broad range of topics such as anti-corruption, use of
child labour, and employee working conditions.
MANAGING COMPLEXITY
As Jotun becomes a larger, more global company, managing
purchasing for both direct and indirect materials has become
more complex. To manage this complexity, the company will
continue to invest time and resources to build more efficient
and robust internal system support infrastructure. The
global purchasing organisation will play an important role in
helping to align Jotun’s business with relevant United Nations
Sustainability Goals, which is part of the company’s renewed
focus on environmental sustainability, especially Number 12
(Responsible consumption and production).
2021 FOCUS
In the year ahead, Jotun Group Purchasing will:
• Complete a review of existing relevant suppliers to ensure
they are in compliance with the EU’s Conflict Minerals
regulations, which came into force on January 1, 2021
• Implement new data management systems to improve
efficiency
• Introduce new standardised formats for managing both
direct and indirect purchasing agreements
• Digitise Jotun Purchasing training modules to strengthen
internal competence
• Build and share knowledge within the organisation on
Jotun’s role in the sustainability value chain
Reinforcing principles
In an unpredictable year characterised by severe challenges to raw materials supply and logistics,
Jotun’s investments in responsible purchasing practices helped keep the company in business and
strengthened its reputation as a good corporate citizen.