2021 challenged all organizations globally to effectively manage their supply chains due to a variety of well-known factors such as COVID-19 lockdowns, pent-up demand, raw material cost increases, increased shipping costs, and cargo wait times. To help minimize potential supply chain risks, TPI works closely with our suppliers to implement action plans such as qualification of secondary and tertiary suppliers, localization of the supply base, and pre-orders raw material and/or feed stocks as necessary.
To help maximize supplier quality and cost-savings, we leverage our dedicated supplier model for our customers worldwide. We implement and integrate our rigorous procurement and quality management systems to maximize customer satisfaction and minimize quality issues.
Our dedicated supplier model reflects the demands of our customers. Contracts with our suppliers provide guaranteed capacity and cost-effective material solutions that enable customer participation in quality management while protecting the confidentiality of proprietary product designs. Our global supply chain parallels that of our manufacturing facilities – optimizing labor and logistics costs with proximity to market – to ensure the most competitive cost structure possible. We have the resources and expertise to place supply exactly where our customers need it.
By planning and implementing quality measures up front with our suppliers we reduce risk, minimize occurrences of non-conforming material, and improve the timely launch of new products. We cascade Advanced Product Quality Planning (APQP) and APQP for Wind (APQP4Wind) throughout our supply base. These are structured methods of defining and implementing the steps necessary to mitigate risk, achieve the desired product quality and performance, and meet our customer’s requirements. APQP has been the backbone for maturing performance at manufacturers and suppliers for decades in the automotive industry with APQP4Wind being a variant of the standard for the wind industry. TPI mitigates risk across the supply chain by establishing clear product quality assurance demands, leading a robust material approval process, and documenting compliance and conformance at each step.
We purchase materials, products, and services to support production across our global manufacturing facilities. The largest category within our global procurement spend is direct raw materials. The majority of raw materials for the products we manufacture include advanced fiberglass fabrics, select carbon reinforcements, core materials such as balsa wood and foam, epoxy resins and adhesives for assembly of molded components, gel coat or paint for preparation of cosmetic surfaces, lightning protection systems, and attachment hardware, including steel components. Our raw material supply chain encompasses over 550 suppliers in more than 30 countries, with a supply spend of approximately 63% of our net sales in 2021, and we continue to enhance our use of local and regional suppliers to ensure a continuous and uninterrupted supply of materials to support our facilities and reduce transportation distance and carbon emissions. During 2021, we audited more than 30 suppliers which accounted for approximately 54% of our annual supply spend. We audited these suppliers on a range of topics important to TPI such as EHS, quality, process control, ESG and DE&I.
Regional Raw Material Supply Chain Spend
Supplier Sustainability Program
One of our top priorities is to strengthen our ESG opportunities throughout our supply chain. To help achieve our ESG goals, we have established a supply chain sustainability program to require and inspire our suppliers to engage with us around sustainability priorities while increasing transparency, consisting of three pillars:
- Develop a clear understanding of sustainability objectives and progress
- Strengthen and accelerate supplier engagement and sustainability performance
- Embed sustainability learning and criteria across our supply chain procedures and processes
We have set goals with our top suppliers across key ESG topic areas, including safety, carbon neutrality, waste management, and DE&I.
We continue to further integrate ESG criteria into our supplier selection and management processes. During the supplier sourcing process, we evaluate prospective suppliers’ compliance with ESG criteria and incorporate them into our commercial contracts. For example, we consider independent certifications for social and environmental standards, such as Forest Stewardship Council (FSC) certifications for balsa wood.
Human Rights and Supplier Due Diligence
We have implemented policies and procedures to help us evaluate the integrity of our third-party business partners. These policies – which address areas such as child labor, corruption, safety, and sustainability – are incorporated into all TPI purchasing documents and are available on our website. We have documented standards for suppliers and monitor performance throughout the supplier lifecycle. We do this by using an independent vendor assessment tool, conducting audits of our suppliers, and including TPI’s expectations for compliance and ethical behavior in our Supplier Code of Conduct and Human Rights Policy.
TPI also implemented a continuous supplier monitoring system which looks for changes in governmental sanctions lists and other outlets. As part of a proactive approach, suppliers are reviewed weekly, and findings are addressed as quickly as possible to ensure that suppliers meet TPI’s expectations.