Approved Supplier Base ASSA ABLOY suppliers in low-cost countries are listed, graded and tracked in a supplier database. The database ensures transparency and access to data for the sourcing organization. Supplier audit reports – both for quality and sustainability – are included in the database. At the end of 2009, 178 active suppliers had surpassed the minimum standards for quality and sustainability. These suppliers represent 40 percent of the Group’s sourcing in low-cost countries. Another 37 suppliers were rejected and 29 were blacklisted as they did not follow recommendations for improvements. ASSA ABLOY’s long-term strategy is to develop the base of active and approved suppliers so they can take on all sourcing activities. Currently the total number of suppliers in China is about 1,000. To ensure that bad suppliers are not used again, the database not only lists approved suppliers, but also those that have not been approved yet and those that have been rejected. Sustainability audit results override quality audit results regarding non-compliance. In 2010, the supplier database will be available on the Group intranet for access by selected purchasers. Confidentiality is ensured by assigning user rights and by limiting updating rights to accredited and trained administrators. Traffic light system A sustainability screening audit is normally followed by awarding the supplier green, yellow or red status. Green means that the supplier is accepted. Yellow means that the supplier needs to improve within specific time frames. Red means that the supplier is not approved for sourcing. Red or yellow status can be upgraded through a carefully outlined improvement plan, well-documented progress and firm commitments from the supplier. If the supplier does not improve, it is automatically given red status, and then only immediate action can prevent the supplier from having all purchasing stopped. No purchasing from new suppliers should be approved before they have been awarded green status. Contracts with suppliers will be terminated in case of non-compliance problems that are not remedied within an agreed time frame.