The group’s most significant differentiator is our ability to manage an extensive footprint and supply chain at a low cost. We also take our responsibility seriously when it comes to promoting ethical and sustainable business practices in our supply chain.
Our supply chain is instrumental in realising our group’s strategy. It is therefore vital to responsibly source products and proactively address supply chain risks that could disrupt our procurement, distribution and retail channels.
We prioritise collaboration with suppliers and business partners who share our strategic vision. We rely on these partnerships and long-term relationships to build a transparent and sustainable supply chain.
We recognise the increasing frequency of extreme weather events globally and are mindful of climate risks that can disrupt our supply chain, livelihoods and the availability of materials, resources and services. To mitigate these risks, we are exploring opportunities to diversify our supply chain across different geographies, increase local sourcing and expand our product range to include environmentally friendly options.
We require our suppliers to fully comply with all relevant national and industry-specific laws in their respective jurisdictions. When non-compliance is identified, remediation action is taken.
Our supplier code of conduct aligns with UNGC principles, advocating human rights, labour standards, anti-bribery and corruption, and responsible consumption and production. The SDGs serve as the basis for monitoring supplier compliance and addresses various critical aspects, including:
- Lawful employment relations
- Non-discrimination
- Elimination of harassment and abuse
- Transparency and anti-bribery and corruption: promoting ethical trading partnerships
- Abolition of child labour: the employment of underaged groups is regulated by law
- Abolition of forced labour: the freedom to choose to work
- Equal opportunities: no discrimination is applied in hiring, compensation, access to training, national origin, religion, age, disability, gender, marital status, sexual orientation or political affiliation
- Freedom of association: the freedom to belong to organised trade unions and collective bargaining councils
- Avoidance of excessive working hours and meeting minimum wages
- Health and safety
- Environment: upholding environmental laws and responsible environmental practices
Supply chain visibility and supplier code of conduct roll-out
Due to our decentralised management structure and the complexity of supply chain management across various industries, operational businesses hold and manage their relationships with suppliers. In FY23, the Pepkor Sourcing and Services team focused on improving supply chain visibility.
We centrally mapped more than 1 000 contracted trade suppliers across the group’s CGM retailers. We distributed the updated supplier code and a binding MoA for suppliers to sign, acknowledging their compliance. To date, 94% of CFH suppliers have signed the MoA.
We piloted a Supplier Self Assessment Questionnaire (SAQ) for 125 non-trade suppliers to gauge their adherence to the supplier code, yielding valuable lessons to be incorporated in improving our supply chain visibility and how we can collaborate with suppliers on this.
Given the group’s diverse product and service categories, suppliers are evaluated based on criteria relevant to their specific offerings, value and relevant legislation.
In South Africa, suppliers are required to provide their B-BBEE compliance status for record and procurement purposes.
The group is committed to investing and growing local sourcing opportunities in a manner that makes sense within our context. We support the South African government’s 2030 R-CTFL Master Plan for the clothing manufacturing sector, which encourages a competitive, sustainable and dynamic R-CTFL value chain. The aim is to increase procurement and supplier development.
The group’s direct contribution to this initiative is:
- Being a signatory to the plan
- Continuous engagement with government
- Supporting local cut, make and trim suppliers through local procurement
- Employment created in PepClo, the group’s clothing manufacturing facility, the second largest in South Africa and the largest on one site
- Social policies: this forms part of supplier agreements and we will continue to work closely with suppliers to improve transparency and encourage responsibility
- In FY23, 246 million units were sourced locally
- PepClo employs 1 800 people and produces 12 million units annually, including affordable schoolwear sold in PEP and Ackermans stores
