Supply Chain

Taking responsibility

Our responsibility does not end at our plant gates. In our partnerships with over 10,000 suppliers worldwide, STIHL demands responsible labor and business practices in every respect, as well as environmental protection and transparency throughout the supply chain. Together with the companies that supply the companies of the STIHL Group, we are creating an optimum balance of quality, price, availability, and legal certainty – all while keeping an eye on efforts to reduce emissions and conserve resources.

SDG 8 - Decent work and economic growth

Organization and responsibilities

In the interest of efficiently consolidating needs and ensuring the supply of commodities and raw materials, the STIHL founding company plays the leading role within the purchasing network and defines the purchasing strategy for the entire STIHL Group. Its duties are set out in internal guidelines and standards to ensure standardized processes and procurement principles. The director of purchasing reports directly to the STIHL AG Executive Board member for Manufacturing and Materials and works with the responsible senior managers to develop the global STIHL purchasing strategy. Procurement teams consisting of representatives from Purchasing, Quality Assurance, and Procurement Logistics work hand in hand across departmental boundaries to ensure the efficient Group-wide implementation of the strategy and the procurement principles. Commodity managers oversee procurement and the activities for an entire product group. Leading buyers maintain contact with suppliers, work with the commodity manager to carefully select suppliers for individual products from the product groups, and negotiate prices. The structure is rounded out by commodity buyers, who keep an eye on the individual markets so as to incorporate specific local requirements and criteria into the product group procurement strategy.

As an international business with production companies across the globe, Group companies make purchases around the world to cover our needs. Within our production network, we strive to procure raw materials and upstream components for manufacturing on the continent where they are processed whenever possible to keep transport distances to a minimum.

Local purchasing volume1 of production materials
(production companies only)

Purchasing volume of essential production material
by type of material1

Sustainable purchasing decisions

Because we make many key components of our products ourselves, a significant portion of our purchased materials is attributable to raw materials and upstream components such as steel, magnesium, plastic, or electronic modules. Our vertical integration in excess of 50 percent allows us to protect our expertise and manage the individual steps of the production process to ensure STIHL quality. The operation, maintenance, and repair of our equipment, IT services, and technical services account for the lion’s share of our indirect purchasing needs.

Between now and 2024, we plan to develop a strategy for raw materials that are critical from an environmental perspective in order to ensure that our products are manufactured with the greatest possible conservation of resources in mind. The goal of the strategy is to make their procurement more sustainable or to find substitutes as soon as possible. In addition, we intend to draw up an action plan by 2025 that aims to reduce the use of hazardous chemicals in our own manufacturing processes and in our supply chain.

Fiscal year 2021 sees materials shortages and supply bottlenecks

The STIHL organization faced tremendous challenges in 2021. High demand for our products was paired with difficulties in obtaining important materials. Like other businesses, STIHL had to contend with significant restrictions on availability and supply bottlenecks, especially for components made of steel (such as punched and turned parts) and entire assemblies made out of steel, as well as electronics components and plastics. For quality and testing reasons, it is not always possible to switch to other materials on short notice. However, Manufacturing and Materials succeeded in keeping the impact on our production and on supplying our customers to an absolute minimum, thanks in part to our long-standing and trusting relationships with our suppliers.

Supplier management

We get to decide where we buy our materials, components, and services. We plan to expand our main purchasing criteria (price, quality, and logistics) to include sustainability-oriented aspects. To this end, Quality Assurance launched the Sustainable Supply Chains project in 2020. Its aim is to make sustainability an integral part of supplier management at STIHL. Sustainability already plays an important role when (pre)selecting and onboarding a potential supplier. Our code of conduct for suppliers is an obligatory element of any supply contract. An international reporting system is in place to continuously monitor and audit existing suppliers. It also helps us support them in stepping up their commitment to sustainability if need be. Suppliers are required to take corrective measures if the annual risk analysis reveals noncompliance with stipulated sustainability aspects. As a last resort, the relationship with a supplier can be terminated if the measures do not produce satisfactory results. For greater transparency and sustainability throughout our supply chains, we started analyzing potentially critical supply chains in 2021. The first three pilot supply chains are magnesium, cobalt, and textiles. Going forward, we will conduct three in-depth investigations of high-risk supply chains every year to derive and implement appropriate improvement processes. To analyze our mineral procurement supply chains, we are working with the Responsible Minerals Initiative (RMI). We joined the initiative in 2021 in order to make the procurement of minerals for our products more sustainable. With over 400 company members, the RMI is a cross-sector organization that is dedicated to promoting responsible mining, handling, and purchasing of minerals around the world.

The advancement of our supply chain management approach is helping us contribute to the United Nations Sustainable Development Goal “Decent work and economic growth” (SDG 8) by promoting minimum social standards in our supply chains and enforcing human rights requirements, including the ban on child labor, as well as fair and safe working conditions.

STIHL supply chain management

Code of Conduct for Suppliers

The active support of our suppliers is essential to further enhancing sustainability in our supply chains. Back in 2015, we introduced a code of conduct for suppliers. In it, we describe our vision of sustainable and responsible business practices. We expect the companies that supply us to also act in accordance with our principles of corporate social responsibility. The code of conduct is based on the principles of the United Nations Global Compact and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work. The code of conduct has since been reworked with regard to social, environmental, and governance aspects. Now that it has been revised and expanded, it defines even clearer criteria that our partners have to meet.

In addition to full compliance with human rights standards while providing fair and safe working conditions for staff, STIHL now requires its suppliers to exhibit greater commitment to protecting the environment. The focus lies on an approach to doing business that conserves resources, the recording and reduction of greenhouse gas emissions, and the sustainable procurement of (raw) materials. The code of conduct also contains provisions aimed at systematically preventing discrimination and corruption as well as ensuring data protection. Forty-five percent1 of our largest suppliers have already signed the STIHL code of conduct. The aim is to roll out the new code of conduct to all STIHL Group suppliers by the end of 2023, with the global STIHL purchasing organization to receive training to this end. We plan to introduce appropriate control mechanisms such as disclosures and audits to check whether suppliers are complying with the code of conduct.

1 Production companies only, not including ZAMA Group.


Ensuring sustainable supply chains can be difficult. We have teamed up with seven other companies that face a similarly wide range of challenges to form SustaiNet, a network designed to expedite and enhance the process of building sustainable supply chains through regular exchange among peers. In addition to amassing shared knowledge, members share experiences and discuss progress on a monthly basis. The insights gained through SustaiNet are used to help meet the requirements under the German Act on Corporate Due Diligence in Supply Chains and incorporate sustainability into the company’s day-to-day business.

The long haul

STIHL and its suppliers act in accordance with applicable human rights standards – as we have from the very start. Engineering management specialist Sarah Kruner and her project team make sure that social and environmental standards are respected throughout supply chains at STIHL, from compliance with human rights guidelines and fair working conditions all the way through to environmental protection.

Ms. Kruner, you are in charge of the Sustainable Supply Chains project. Why is this kind of project necessary, and what are the greatest challenges?

There are nonnegotiable minimum social standards, like the protection of human rights. But environmental aspects are important too. Only by working in tandem with the companies that supply us can we succeed in protecting the environment and using resources sparingly throughout our supply chain. Our project allows us to create the foundation for uniformly incorporating these aspects into our everyday purchasing processes and supplier management approach as deciding factors across the Group. Still, every supply chain comes with a particular set of challenges that we need to approach specifically. Think about the procurement of raw materials such as magnesium. Now compare it to purchasing textiles for protective clothing. The suppliers and supply chains could hardly be more different.

How do you approach these challenges?

Right now, we’re examining three very different pilot supply chains and taking note of our experiences with regard to transparency, risk, and Scope of influence. The insights gathered here will enable us to select the right focal points for every facet of our product groups. SustaiNet, which was established by STIHL, helps us in the process. Regular exchange and consultation with other companies allows us to find solutions together and create synergy effects while combining our abilities to influence things.

»Human rights are nonnegotiable minimum standards.«

Sarah Kruner
Specialist for supply quality process development

Where exactly do we currently stand in the project, and what steps are next?

Right now, we are in the middle of implementation. We introduced our new, updated code of conduct at the start of 2022. We are currently training our staff and business partners and setting up multipliers to make sustainable procurement a part of everyday life at STIHL. But with over 10,000 suppliers, that isn’t going to happen overnight. We have to give the process a bit of time.

What role does the German Act on Corporate Due Diligence in Supply Chains play, which is set to become binding in 2023?

The Act on Corporate Due Diligence in Supply Chains gives us a legally binding framework that defines the requirements for responsible management of supply chains. Our project is geared toward that, and the milestones are defined accordingly. Thanks to our longer-term focus on sustainable supply chains at STIHL, the law has not caught us off guard. On the contrary, we are very well prepared for its introduction, and we strive to go above and beyond the new requirements. In my opinion, the act helps to steer supply chains toward more sustainability and raise awareness in the public debate. Nevertheless, I think it’s important to define a standard legal framework at both a European and global level.

You have revised the Code of Conduct for Suppliers and expanded it to include further details. What have been the initial reactions and thoughts among your business partners?

Generally, the clear definition of requirements for a business relationship with STIHL has been well received, since it makes our expectations known to suppliers. That way, both sides can refer to the Code of Conduct for greater certainty and predictability. Still, we are aware that complying with the new Code of Conduct will mean certain initial investments for some suppliers, as well as the corresponding financial consequences. That is why we recognize our partners’ sincere efforts and work with them to define shared development paths. On the other hand, our supplier network already features some very sustainability-minded companies from whom we can learn a thing or two.

The German Act on Corporate Due Diligence in Supply Chains in a nutshell

The goal

To improve the protection of basic human rights and the environment while enforcing the ban on child labor in particular.


Who is subject to the act?

From 2023 on: all companies in Germany with more than 3,000 employees.


What are the key issues?

Companies must take responsibility for their entire supply chain. The requirements are staggered according to internal operations, direct suppliers, and indirect suppliers.


How will the act be enforced?

Violations of the act may result in fines of up to 2 percent of a company’s global revenue for the previous year. In the event of serious breaches, businesses may be excluded from public procurement contracts for up to three years.

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