Supply Chain Management

Supply Chain Management and Audits We expect our business partners to adhere to the same goals that Western Digital Corporation and its subsidiaries and affiliates (collectively, “Western Digital” or “we”) subscribes to in the manufacturing of our products. Accordingly, Western Digital works with its business partners to drive the goals set forth in the EICC Code of Conduct through our supply chain. We provide the training and necessary tools to our suppliers to enable them to comply with the EICC Code of Conduct, as well as to make sure they understand the goals of the EICC and why adherence to the Code of Conduct is important.

We perform audits of our suppliers on a regular basis to ensure that the Code is being enforced at the supplier level. We also request that our key suppliers use the EICC-validated Audit Process to ensure the effectiveness of the implementation of the EICC Code of Conduct at their sites. Western Digital Corporation will partner with its suppliers to address any gaps in compliance with the Code.

We have additionally provided capability training to our first-tier suppliers, performed supplier site audits, and tied adherence to the EICC Code of Conduct in our supply chain business review process. Our first-tier suppliers are responsible for the following tiers, with Western Digital Corporation involved as required to help resolve any issues.

Policy Regarding Conflict-Free Minerals Western Digital strongly disapproves of the violence in the Democratic Republic of Congo (DRC) and adjoining countries and is committed to supporting responsible sourcing of conflict minerals (gold, columbite-tantalite, also known as coltan, cassiterite, wolframite, or their derivatives tin, tantalum or tungsten (collectively the "3TGs")) from the region.  In furtherance of the goal of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of the 2010 United States Congress, Western Digital Corporation expects its suppliers to supply materials to Western Digital that are “DRC conflict-free.”  This means (1) any conflict minerals necessary to the functionality and production of supplied materials do not directly or indirectly finance armed groups through mining or mineral trading in the DRC or an adjoining country, or (2) any 3TGs in supplied materials are from recycled or scrap sources.  We also expect our suppliers to adopt policies with respect to conflict minerals in support of this policy and, throughout the supply chain, to require their suppliers to adopt similar policies.

California Transparency in Supply Chains Act (SB 657) The California Transparency in Supply Chains Act (SB 657) requires many companies, including Western Digital, to disclose on their websites the efforts they take to eradicate slavery and human trafficking from their direct supply chains. SB 657 requires disclosures regarding verification, auditing, certification, internal accountability and training.

  1. Supply Chain Verification and Auditing

    Western Digital’s commitment to global citizenship is strengthened by its commitment to the Electronics Industry Citizenship Coalition (EICC) and its adherence to the EICC Code of Conduct. This Code of Conduct addresses supply chain performance expectations for labor, health and safety, environmental practices, ethics and management systems.

    Western Digital requires that its suppliers make a commitment to adhering to the EICC Code of Conduct and requires that suppliers perform periodic self-assessments and authorize Western Digital to access the self-assessment, as well as any completed EICC audit reports. Western Digital also performs periodic audits of key suppliers. These audits are coordinated with these suppliers. While Western Digital does not engage third parties to conduct these audits, some suppliers have been audited by third parties retained by other EICC member companies.

    We believe that our suppliers' compliance with the EICC code reduces the risks of human trafficking and slavery in our supply chain. Western Digital and its subsidiaries expect suppliers to comply with the EICC code regardless of local business practices or social customs, and as may be requested by Western Digital, to demonstrate adherence to those codes.

    For more information on the EICC and to view the EICC Code of Conduct, visit http://www.eiccoalition.org/.

  2. Compliance with Slavery and Human Trafficking Laws

    Suppliers contracted to Western Digital are required to comply with all laws applicable to their business operations. Suppliers are also required to make a commitment to the EICC Code of Conduct.

    Verification. We conduct annual assessments of our suppliers, selecting those that cumulatively comprise of approximately 80% of our annual supplier spend, to verify that they are not at risk for violating anti-slavery and human trafficking laws. We do not use third-party verifiers. We ask our suppliers to have EICC audit them using the EICC program called “Workplace of Choice.” We also verify whether our suppliers use labor brokers.

    Auditing. Western Digital, as noted above, audits suppliers that cumulatively comprise 80% of our supply chain purchases on an annual basis to determine if they are complying with our company standards aimed at ensuring human trafficking is not tainting our products. We request our suppliers to apply to EICC to conduct an EICC VAP audit every two years. EICC will assign a third party to audit those suppliers. We receive the official VAP report once the supplier has completed the audit.

    Noncompliance with our company standards and/or the EICC Code of Conduct can result in corrective action or termination depending on the number of violations found and their severity. Our procurement and quality teams are responsible for administering these programs to ensure that manufacturing suppliers affirm compliance with the EICC Code of Conduct, including anti-trafficking and slavery provisions. If a violation of an EICC Code of Conduct is found during an EICC audit, the supplier must put in writing the steps it is taking to cure the violation and that document must be submitted to the EICC. The EICC will then re-audit the supplier.

    Internal Accountability. As noted herein, we require both our suppliers and employees to comply with the Western Digital Code of Conduct.

    Certification. Most of our manufacturing suppliers certify by contract or in terms and conditions that the materials and services incorporated into Western Digital products are made or provided in compliance with the relevant laws, including laws against slavery or human trafficking, of the country or countries in which they are doing business.

    Training. As noted elsewhere, we train both our employees and our suppliers on our Global Code of Conduct.

  3. Internal Accountability

    Western Digital requires employees to follow its Global Code of Conduct and Code of Business Ethics. Violations of the Code of Conduct or Code of Business Ethics may be the grounds for employee discipline, up to and including termination of employment. Contractors are also expected to conduct themselves in a manner consisted with these principles. Contractors who fail to comply may be dropped from Western Digital’s supply chain.

  4. Training

    Western Digital provides managers and its employees who have direct responsibility for supply chain management with knowledge and information regarding Western Digital’s requirements, including EICC compliance. Western Digital also regularly conducts training for suppliers on EICC related issues. In the 2016-17 time period, we have/will train 14 different suppliers on EICC compliance, including the EICC Code of Conduct and the EICC Workplace of Choice program.

Other Supply Chain Initiatives Western Digital is working with its suppliers to support participation in the EICC Carbon reporting system survey.

We also work with business partners to prepare them for early ISO 14064 Certification and have partnered with local universities to further this goal.

We require certain of our suppliers and contract manufacturers to report “environmental footprint data” for their facilities that support the manufacture of Western Digital products. The required data will include one or more of the following parameters: Hazardous and solid waste generation; energy consumption and GreenHouse Gas (GHG) emissions; and/or water consumption.

To prepare for any unexpected incidents that may occur in our supply chain, Western Digital has, since 2015, used the ISO 22301 Business Continuity System program. Several key suppliers have passed the ISO 22301 BCMS certification. This program will continue until we have successfully implemented the ISO 22301 BCMS throughout our supply chain.