Purchasing - Group Policy

All purchases shall be made on the basis of sound commercial practices. These include long-term requirements, quality, security of supplies, environmental considerations, price, as well as terms of payment and delivery. When negotiating with suppliers, the Group Purchasing function shall act in a firm and determined - but fair - manner.

As a principal rule, purchases shall be made on the basis of the requirements of production and times of delivery must be the best achievable times for production. Main suppliers will be kept constantly informed of long-term requirements.

The most favourable purchases for the Group will be achieved through purchases on Group basis. These purchases shall be performed in accordance with partnership and framework agreements as well as on the basis of clearly formulated specifications.

As a principal rule, the Group will co-operate with suppliers for whom quality, the environment, ethics, flexibility and security of supplies have high priority. Furthermore, suppliers should be financially sound and of a size enabling them to indemnify Grundfos in case of failing supplies or declining quality.

In order to achieve close co-operation and high security of supplies, the Group will aim at purchasing large volumes from each supplier.

For strategic reasons it may be necessary to spread purchases geographically; for the same reason focus shall at any time be directed on purchases from low-cost countries.

In co-operation with Grundfos’ factories, the Group will constantly evaluate possibilities of outsourcing.

The Group Purchasing function shall ensure that transport is coordinated and carried out in the most environmentally friendly and economical way.

In order to achieve mutual advantages, partnerships must be established with key suppliers. Such co-operation involves the commitment to exchanging experiences and jointly working towards reducing Grundfos’ purchasing costs.

Where possible, purchases shall be made direct from manufacturers.

All other things being equal, Grundfos’ customers shall be given a preferential position as suppliers.

The flow of information between suppliers and Grundfos must be automated through the use of information technology to the greatest possible extent.

Terms of payment must always be considered an active parameter and purchases must be adapted to the Group foreign exchange policy.

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