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SUSTAINABILITY REPORT

Tyson Foods is committed to responsible, legal, and sustainable procurement practices. We encourage our supply partners to recognize the role they play in helping us assure our customers and consumers of the safety and quality of our products. Each year, all Tyson Foods Team Members, including members of the Board of Directors, are required to affirm their commitment to the principles described in our Code of Conduct and supported through our Doing What’s Right program. We view our supply partners as a critical element in fulfilling our commitment to Doing What’s Right. Accordingly, in appropriate circumstances we strive to include requirements in our supply contracts that emphasize the sustainability objectives that are shared with our more than 7,500 supply partners.*

During fiscal years 2010 through 2012, Tyson Foods spent approximately $10.85 billion on goods and services. We believe it is important to support the economic development of communities. Therefore, we seek to purchase goods and services from ‘locally-based’ supply partners who are located in the same county, an adjoining county, or the same state as a Tyson Foods operation.

We also seek to enter into relationships with supply partners who share values similar to Tyson Foods, especially in the areas of legal and regulatory compliance; product safety and quality food products; animal well-being; labor and human rights; environmental protection and resource conservation; employee health and safety; sustainability; and ethical and honest business transactions. In our Request for Proposal (RFP) process, we include and evaluate key elements related to sustainability as part of the selection criteria for designated procurements. Many of our major supply partners maintain documented, formal sustainability programs. Moreover, each year Tyson Foods acknowledges our best-in-class suppliers with our Supplier of the Year event. The recognition is based on:

  • Supply-chain performance,
  • Total cost of ownership,
  • Quality and technical support,
  • Customer-service performance,
  • Sustainability initiatives, and
  • Other performance metrics observed throughout the year.

We are also committed to continual improvement within our supply chain and procurement process. For example, we regularly host strategic meetings with major suppliers to discuss key business successes and opportunities. We routinely conduct supplier satisfaction surveys to identify ways to further enhance our relationships with our supply partners. We also continue to hone the skills of our procurement Team Members with an advanced training curriculum focused on leadership, procurement skills, category management, and other core competencies. Other examples of our commitment to continual improvement within our supply chain and procurement process are shared below.

  • Supplier Code of Conduct
    In 2010, Tyson Foods finalized its Supplier Code of Conduct. The supplier code is applicable to our U.S.-based suppliers and sets forth the principles and high ethical standards we expect our supply partners to work toward throughout the course of our business relationship. These principles and standards include assuring compliance with legal requirements; sharing a desire to provide safe, quality food products; demonstrating a commitment to animal well-being; respecting the rights and safety of others; protecting the environment and conserving natural resources; and conducting business in a sustainable manner. Initially the supplier code was distributed “CEO to CEO” to our supply partners that made up 80-percent of our fiscal-year supply spend. Acknowledgement of the supplier code is now one of the required documents when setting up the initial agreements, procedures, and paperwork for a new supplier.
  • RFX Workflow
    In fiscal year 2011, we implemented an internal RFX (where X stands for proposal or quote) Workflow system that interfaces with our Contract Management System. The RFX Workflow system enhances our efficiency as it allows us to complete the RFX process in a consistent and systematic manner that also aligns with our Sourcing Policy and Procedures. The Workflow system also allows us to communicate more effectively internally and with our supply partners, and store our RFX documentation electronically along with our legal contracts.
  • Contract Management System
    Tyson Foods’ Contract Management System (CMS) provides an electronic workflow for documenting the development and implementation of legal contracts and associated processes. The workflow of our CMS facilitates the usage of electronic documents as contracts are revised, thus reducing paperwork. In addition, the system allows our Purchasing Team Members to document the RFP process electronically. RFPs involve multipage documents communicated to multiple suppliers. Again, utilizing the CMS for electronic documentation of this process significantly reduces the need for hard copies to be printed. In addition to the CMS, our Purchasing Team Members began using encrypted digital signatures in 2012 that reduce the need for paper even further because a hard copy no longer needs to be printed for signatures to be added to legal contracts.
  • Supplier Partner Diversity
    Tyson Foods continues to seek opportunities to partner with minority-owned and women-owned businesses. To keep supplier-diversity initiatives at the forefront, we set goals within our purchasing and sourcing departments to challenge our Team Members to look for new suppliers as well as ways to further utilize existing suppliers. We participate in several organizations, both local and national, to support supplier diversity, and we report our spending with diverse businesses to both customers and the government. In fiscal year 2012, the company’s spending with women-owned businesses increased more than five percent over fiscal year 2011. Additionally, our fiscal year 2012 spending with minority-owned businesses increased approximately 11.5-percent over our fiscal year 2011 spending.
  • Environmental Protection and Resource Conservation
    Our Purchasing Team Members seek to enter into supply-chain partnerships that can positively impact our company’s environmental performance. Some examples include:
    • From fiscal year 2011 to 2012, the company reduced the consumption of hydraulic fluid by 11,145 gallons through improved equipment maintenance practices and a supplier program that monitors fluid usage and lost or wasted oil. This program also includes a used-oil analysis that helps extend oil life and determine proper drain intervals for our locations.
    • Our processing plants continue to use plastic, modular belting that is made of 100-percent recyclable material. The top supplier for modular belts facilitates a reclamation process of the belts through a third-party manufacturing facility.
    • Tyson Foods, in conjunction with the top electric-motor manufacturer and distributor, conducted installed-based evaluations at six processing plants. This process reviews the entire electric-motor base and focuses on stock-keeping unit consolidation, motor optimization for energy efficiency, and other energy savings. Substantial energy and efficiency improvement have been realized through the projects that resulted from these reviews.
  • Packaging Optimization and Sustainability
    Each year numerous projects are undertaken to reduce the amount of packaging required to deliver products to our customers and consumers. These projects must be in support of our first packaging priority which is to ensure the wholesomeness, safety, and shelf-life of our products. Below, we highlight one of our recent packaging optimization initiatives.
    • In fiscal year 2012, Tyson Foods’ Case Ready Pork Group undertook a package-consolidation project. While the final consumer package remained unchanged, the mastercase (the corrugated shipping box received by the customer) was optimized. This initiated a chain reaction of packaging optimizations, which benefitted both our company and our customer and resulted in the following annual reductions:
      • 211 truckloads of corrugated boxes, equivalent to a savings of 37,878,978 square feet of corrugated material.
      • 60,058 wooden pallets.
      • A 20-percent reduction in the number of cases needed for product shipment.
      • 2,953,872 cubic feet of shipping and warehousing space.
      • A reduction of 761,472 square feet of bag materials.
      Tyson Foods considers this project a great success, not only from a packaging-optimization standpoint, but also from a cost-reduction one for our Case Ready Pork customers. Moreover, Tyson Foods received the 2012 Excellence in Sustainability award from Wal-Mart Stores, Inc., for this packaging change.
    The Tyson Foods packaging group engages and recognizes our supply partners in continuous improvement efforts to reduce material usage, increase packaging material and container efficiencies, and identify emerging packaging technologies that reduce our environmental impact. These efforts include:
    • Implementing packaging programs in support of our Reduce, Reuse, Recycle philosophy
    • Supporting supplier initiatives directed at zero landfill contributions
    • Identifying packaging suppliers with manufacturing facilities that align with our world-wide meat and poultry operations to reduce transfer costs and support our ‘buy locally-based’ programs
    • Partner with our suppliers to extend our reach, understanding, and application development of sustainable packaging practices through various world-wide organizations

*Note: We rely on many third-party resources who are independent contractors for various goods and services. This includes but is not limited to contractors, consultants, and suppliers, and their associated employees, agents, and subcontractors. For simplicity, we refer to these third-party resources as “supply partners” in this report.

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