At Hormel Foods, our multifaceted supply chain includes suppliers for hogs, turkeys, ingredients, packaging materials and transportation. We recognize the crucial role of the supply chain in our ability to operate responsibly. While it is a complex undertaking to understand and measure the impacts of the supply chain, we took a first step by developing Supplier Responsibility Principles in 2010. We launched them to our key suppliers in fiscal year 2011.
These principles define our expectations of our suppliers within specific areas of corporate responsibility such as quality and product integrity, safe work environment standards, animal care processes and environmental management procedures. Just like everyone within Hormel Foods, we require all participants in our business to consistently meet these standards and demonstrate their commitment to transparency and honesty through ethical business practices.
We purchase 99 percent of our raw materials, equipment and services domestically within the regions where we manufacture our products. To describe the various factors of our production process, the diagram below illustrates the components that go into the creation of a Hormel Foods product and the resulting outputs. These components are also areas for which we have direct responsibility. Agricultural commodities and distribution/consumption fall outside of our direct responsibility since the majority of these items are purchased from independent farmers. We acknowledge that we can, however, exert influence over the procurement of these commodities. We believe that the development of the above-mentioned Supplier Responsibility Principles will help to uphold our values and principles throughout our supply chain.
Evaluation of Suppliers
At Hormel Foods, we pride ourselves on continuous improvement throughout our entire business operations. Through our Supplier Quality Management (SQM) program, we extend the challenge to our suppliers to help us better our company. Through our SQM program, we measure suppliers based on quality, delivery, service, technology and price. Our ingredient suppliers are subjected to additional measurements to further ensure the quality and food safety of our supply chain. In fiscal year 2011, we conducted 146 audits based on GFSI standards of our ingredient suppliers; if suppliers are found to be out of compliance, appropriate action is taken, up to and including termination of partnership.
Suppliers who exceed our established standards are eligible for our annual Hormel Foods Spirit of Excellence Awards. In 2011, we awarded 80 suppliers for their performance.
Our policy states that Hormel Foods will provide a respectful and inclusive environment where our employees, customers, consumers and suppliers grow and succeed, and we are committed to this in practice. Our supplier diversity program gives diverse companies such as women-owned and minority-owned businesses the opportunity to supply quality product options that meet our company’s growing business needs. Working together, we provide the highest quality materials and services to our internal and external customers on a timely basis at the best economic value. Suppliers can submit their business for consideration at https://suppliers.hormelfoods.com.
In fiscal year 2011, we purchased 15 percent of our resources from small businesses. Of these small businesses, 1 percent were women-owned or minority-owned businesses. This data includes the independent family-owned hog farmers.