Back to content Communications Demant’s Communications business, EPOS, operates with contract manufacturing and has thus no in-house production. In this case, suppliers are mainly manufactures located in the East Pacific region with whom we work closely to ensure conformity with Demant Third Party Compliance Code to bring high-quality electronics to market. Global Operations, including Contract Manufacturing, Planning and Global Quality and Support, is responsible for handling the partnerships. Activities in this area cover maintenance of prod- uct documentation to make sure that product information is up to date and correct. It also covers strategic procurement, to secure availability and pricing on larger, material components, such as semiconductors as well as procurement of end-prod- uct with our suppliers. Working closely with our partnering manufacturers is key to our operations, and we have teams that oversee this locally with support from EPOS headquar- ters. As part of the Demant Group, EPOS is subjected to the Demant Group Code of Conduct with reference to Demant Third Party Compliance Code in supplier contracts. Main suppliers hold relevant certifications, including ISO/EN14001, ensuring that the production complies with environmental standards and compliance obligations. EPOS do not oversee audits of its manufacturing partners, as this is outsourced to a third-party partner, SGS. Naturally, EPOS is responsible for conveying Demant standards, includ- ing our Third-Party Compliance Code, to our third-party audi- tor. If the audits show non-conformity, we classify it as minor, major or critical and have procedures in place to ensure the proper corrective actions and appertaining follow-ups. In 2021, we included two new manufacturers to our audit list, meaning that we cover approximately 95% of all procurement. The remaining 5% account for softer production partners such as earpads for headsets. Due to the geographical location of our manufacturing part- ners, we work with an extended supply chain. This can entail a risk of uncertainty from production to distribution, which is mainly within Europe. Coronavirus and the impact on global supply of semiconductors in particular has further emphasised this. To mitigate this risk, we work dedicatedly with sub-sup- pliers to our manufacturing partners to ensure material components, including long-term contracting. We have been willing and able to meet price climbs as well as adjust procure- ment to ensure necessary components and inventory. EPOS’ target is that all Tier 1 partners will approve and sign the compliance code during 2022. Demant ∙ Sustainability Report 2021 160
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