Illinois Tool Works, Inc. Supplier Expectations

About Illinois Tool Works, Inc.

Illinois Tool Works, Inc. (ITW) is a Fortune 200 global diversified industrial manufacturer of value-added consumables and specialty equipment with related service businesses. The company focuses on solid growth and strong returns across its worldwide platforms and businesses. These businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW’s 2012 revenues totaled $17.9 billion, with more than half of these revenues generated outside the United States.

Our Expectations

ITW has been committed to innovation and to providing best in class products and services to our customers for over 100 years. Our suppliers are an important part of ITW’s success and in continuing to meet and exceed our customers’ expectations.

ITW’s focus on profitable growth, continuous improvement, our 80/20 approach to business, and other efforts demonstrate our commitment to performance and to increasing our capability to serve and delight our customers. At ITW, we also expect our suppliers to meet certain performance standards, as well as to continuously improve their capability and value in their business relationship with ITW. By focusing on the following key areas and expectations, ITW expects to achieve continued business success with engaged suppliers, resulting in a mutual benefit to both ITW and its suppliers.

Quality
  • Suppliers should provide high quality products and services, which are free from defects.
  • Suppliers should employ defect prevention methods and tools in their operations, including but not limited to:
    • Design Failure Mode Effect Analysis (DFMEA),
    • Process Failure Mode Effect Analysis (PFMEA),
    • Control Plans, and
    • Effective durability and reliability testing and inspection to find and eliminate defects.
  • ITW expects zero warranty issues with respect to the products or services. For any breach of warranty, ITW requires prompt root cause problem solving and other actions to ensure containment and correction of issues.
  • Suppliers should respond promptly to and close gaps identified in any supplier assessments with proposed corrective action plans. Suppliers must demonstrate a commitment to development and continuous improvement of overall capability.
Delivery / Lead-Time / Inventory
  • Suppliers should strive for 100% on-time delivery (on the date identified in our purchase order, statement of work, or other method such as Kanban) per our routing guides where applicable.
  • Suppliers should seek ways to reduce lead times, consistent with ITW’s core business process of producing to a market rate of demand (MRD). Decreasing lead times and being more nimble is important to ITW’s overall success and customer satisfaction.
  • Suppliers should seek out inventory reduction opportunities in their own operations, as well as in ITW’s integrated supply chain. This may include the following:
    • Reduced set up times in supplier operations;
    • Vendor managed inventory at ITW locations;
    • Consigned stocking arrangements; and
    • Review of planned safety or buffer stocks at all locations in the supply chain.
Service / Communication
  • Suppliers are responsible for ensuring that they clearly understand ITW’s expectations at all times. Suppliers should strive to exceed these expectations in our dealings.
  • From time to time, unplanned or unexpected critical issues will arrive, and in this regard, ITW expects our suppliers to act with urgency to help solve issues as they occur.
  • ITW expects suppliers to use appropriate e-enabled communications as required by our local units. This may include e-enabled forecasts, purchase orders, supplier confirmation of commitments to on time delivery, ASN’s, invoicing, payments, and other e-enabled transactions.
Safety
  • Suppliers should use safe operating practices to ensure the safety of your employees and others who may visit your facilities.
  • Suppliers should ensure their own product designs are free from design issues which may lead to or cause injury.
  • Suppliers should use best industry practices to ensure that all services are performed in a safe manner.
Innovation and Technology
  • As an industry leader, ITW has a long heritage of innovation. Similarly, we also expect our suppliers to foster and develop innovation of their own. Suppliers should also work with and support ITW as we innovate great products and services for our customers.
  • We expect our suppliers to invest in innovation which will improve both their products and processes. ITW encourages collaboration with our suppliers related to new product development, which will lead to growth in our respective businesses.
Commercial Value
  • Suppliers are expected to continuously improve the value proposition of goods and services provided.
  • Continuous improvement in year-over-year total cost is required of ITW suppliers. Targeted cost reduction expectations shall be communicated by ITW sourcing personnel.
Sustainability
  • Suppliers are expected to conduct their business in a safe and sustainable manner, consistent with all applicable laws and regulations. These laws include, but are not limited to:
    • REACH,
    • RoHS, and
    • Conflict Minerals
  • Suppliers must focus on reducing the overall environmental impact of their activities and related carbon footprint, land filled waste, and water usage. Suppliers should aim for a 1% year-over-year reduction in absolute greenhouse gas emissions.
  • Achieve ISO14001 certification or meet the requirements of such.
  • Suppliers are expected to give back to the communities in which they operate and to be positive community partners.
  • Suppliers are expected to support sourcing to capable, competitive diverse “minority or women owned business” sub-suppliers. We also recognize that sourcing locally within communities, where possible, helps create stronger communities.
  • ITW expects suppliers to comply with all applicable laws and regulations around the globe, including those pertaining to human rights, as well as environmental, health and safety laws that protect the well-being of employees and laws against slavery, human trafficking and child labor.
Business Continuity
  • It is incumbent on suppliers to perform your own business risk assessments in order to anticipate and mitigate business risk. Minimally, a proactive review of the following risk issues is recommended:
    • Propensity for Natural Disasters at site locations,
    • Management Succession,
    • Legislative Impacts,
    • Labor Disruptions or Shortages,
    • Financial Solvency,
    • Potential for Disruption within Supplier’s Supply Chain,
    • Business Ethics and Compliance,
    • IT Systems effectiveness and security, and
    • Power interruption potential and impact.