PURCHASING

The Company established a multi-disciplinary Purchasing Group in 2001, with representatives drawn from Premises, Finance, Personnel, Marketing, Solicitors, Head Office Management Group, IT and Operations Management units.

The aim of the Group is to ensure that a consistent approach to is adopted within the Company and that environmental, social and ethical issues form part of the decision making process in corporate purchasing.

The work of the Group may result in some significant changes at to how purchasing is undertaken within the Company. However the potential for Life Cycle Analysis and Supply Chain Assessment is seen as being able to provide substantial benefits, not least in our Risk Management Programme.

The Company actively seeks to establish a partnership approach with main suppliers, taking a shared interest in the issues of Environmental, Health and Safety, Employment Policies and Supply Continuity and Emergency Preparedness.

Stationery Provision

Northern Rock has a mutual agreement with its stationery supplier BLP to investigate new opportunities to purchase a wider range of environmentally friendly products. A "Green Agenda" review paper has been produced by BLP, detailing products, which may be changed to reduce environmental impacts. The ongoing programme involves detailed user test trials and cost benefit analysis.

Corporate Staff Uniform

The corporate staff uniform was renewed in 2005. As part of the procurement process the supplier's environmental policy was reviewed and confirmation sought that their own suppliers and manufacturers have acceptable working conditions and practices.

The assessment process included:

Wages, hours of work and entitlements.
Ensuring that children are not exploited: child labour is not used and that local legal requirements are met.
Health and Safety issues are addressed in the workplace and in any homes provided for the workforce.
No use of forced labour.
Physical punishment is not used or threatened to staff, and workers are not dominated or restrained by force.

In addition to having agents on site, regular visits are made by the supplier to ensure that all the above conditions are addressed.

Disposal of old corporate uniforms is also addressed by socially and ethically sound methods (see Solid Waste and Recycling).

An environmental review of all suppliers was commenced in 2002. The initial review was conducted on the Company's key suppliers, and existing suppliers were required to provide details of Health and Safety and Environmental Policy statements.

A new system was implemented during 2004 for all of our contractors, suppliers and consultants to be formally appraised against pre-determined questions. Their returns are analysed and scored accordingly. Only those who satisfy our required standards in a range of categories including experience, health and safety, quality control, financial performance, supply chain management and insurances are then accepted for entry onto our approved contractor schedule.

The approved contractor schedule will be in place for 3 years from January 2005 and a Certificate of Approval will be issued to all successful contractors.

A quarterly management review is in place for the continual appraisal of performance standards for all contractors to ensure that only those of the highest overall quality and those carrying the appropriate insurances remain on our approved schedule.

Northern Rock conducted reviews into the origins of the paper the Company uses to minimising our impacts from paper use. Research was carried out to identify suppliers of paper who could assist us in achieving our aims. The Company made the decision to purchase all our laser copy and computer paper from sources accredited to the Forest Stewardship Council (FSC) in 2002.

In conjunction with the paper agent Howard Smith and our stationery providers BLP and Dataform, suppliers of the paper were investigated. Working closely together, the benefits of using FSC paper were identified by all parties and Howard Smith, Dataform and BLP agreed to proceed with FSC Chain of Custody Accreditation requirements.

Thorough pre-testing of the paper was conducted on a variety of printers and photocopiers prior to full roll-out being undertaken and no problems were encountered.

During 2005 Northern Rock has reduced the number of sheets of paper used per employee by 10% against a total assets growth of 25%. Through the use of FSC approved paper Northern Rock has been able to substantially reduce the impact of the Company's operation on the environment with an approved chain of custody.

During 2004 Northern Rock developed a partnership relationship with Xerox Print Solutions to produce printing on-site at Head Office on behalf of Northern Rock. Xerox Print source their own environmentally friendly paper for this purpose and during 2005 used 12,865reams of paper for this purpose.

Toner Cartridges

Continuing the Green Agenda programme with our stationery provider, the Company has developed the range of remanufactured toner cartridges available for use on internal printers. The total weight of toner cartridges returned for recycling was:

Year	Tonnes Recycled	Recycling Rate	Cost Saving
2002	1.983	79%	c£47,500
2003	3.309	53%	28%
2004	7.75	42%	28%
2005	To follow	To follow	c£141,000

Northern Rock closely monitors the performance and failure rate of cartridges. The performance/failure rate of the remanufactured toner cartridges has been confirmed as at least equal to industry average and Northern Rock will continue the policy of using such cartridges wherever possible.

Fair Trade Coffee

Coffee used throughout hospitality in Head Office sites by catering providers Aramark is all FAIRTRADE. A range of FAIRTRADE products has been made available throughout all Head Office Gosforth catering and retail outlets from March 1st 2005.

Furniture

The Head Office development has required the sourcing of additional desks and furniture. Greenwood and Wood, the furniture suppliers, only purchase veneers from suppliers who are involved in and committed to the policies adopted by Forest Forever and are holders of the accredited FSC certification. Holding the FSC Certificate, which is accredited by the Soil Association, ensures that the forest of production has been independently inspected and evaluated according to the environmental, social and economic principles and criteria agreed by the FSC.

In addition, all deliveries undertaken by Greenwood and Wood are blanketed and wrapped, resulting in the use of zero packaging in terms of cardboard, plastic and polystyrene waste. The company has an active programme of waste minimisation and recycling and also operate a re-manufacturing division within its production facility, effectively re-working customers existing furniture where possible.

Chairs on the development have been sourced from the Wagstaff Group and are from the Enigma range. Environmental issues are given top priority in the design and production of the chair, being manufactured in the UK under the strict guidelines of ISO 14001. In addition, the chair is suitable for all body sizes and was originally designed as a specialised orthopaedic chair to provide full ergonomic solutions for back/neck problems. This addresses some of the Heath and Safety issues arising from the provision of staff seating.

Information Technology

The main provider of IT equipment to the Company is Hewlett-Packard (HP), in keeping with our ethical and human rights policies, it has been confirmed that all Hewlett-Packard's purchase agreements for components, subassemblies or complete devices contain the following clause:

"Seller warrants that in all countries where Seller does business, its operations comply with local, national and international applicable laws, treaties, conventions and regulations governing labour and employment, which are enforceable in the country in which business is performed including without limit specific measures forbidding the exploitation of children. HP checks compliance with the above statement during their regular quality audits. Northern Rock also actively checks that suppliers are aware of pending environmental legislation and ensures appropriate action is being taken where applicable. HP is fully aware of the E.U. WEEE and ROHS Directives and is actively working on compliance with both Directives before the respective enforcement dates (2005/2006). A team is working on European-wide take-back and recycling, and have Design For Environment guidelines in place, including actively preparing the transition to lead-free solder, etc."

See also information in Energy

Supplier Survey

The Company carried out a survey of our main suppliers in 2003, which proved a very worthwhile exercise Detailed questionnaires were sent to our suppliers. We now have a better understanding of our supplier relationships having collected valuable feedback, mainly positive but some negative. Many suppliers commented on the value to them of having the opportunity to express their views to the Company. Findings from the survey are being used in setting longer-term objectives for improved supplier relationships and a further survey was conducted in 2005 to establish trend patterns.

Findings from the survey are being used in setting longer-term objectives for improved supplier relationships.

Comments:

“ We value your instructions greatly. Northern Rock are extremely important clients to us”

“We would very much like to work with you again”

“We are very keen to work in partnership with Northern Rock to our mutual benefit”

“We see Northern Rock as a major customer in the forward planning of our company”

Comments:

“I wish to state my pleasure at your Social Responsibility policies”

“Along with The Northern Rock Foundation. Northern Rock is an equal opportunities employer. Northern Rock has many links to the community though sponsorship of sporting events.”

Comments:

“Good working relationship between the department and staff from this organisation”

“Some responses take a long time but these do relate to matters which are non-urgent”

“We have an excellent long-standing relationship”

“Responses are timely, however programme times are sometimes very tight which puts pressure on resources”

Comments:

“Very significant contribution to turnover of local office. Invoices always paid on time”

“Thoroughly professional approach allowed the timely conclusion of a high-value agreement”

“The growth of Northern Rock over the past decade has resulted in an increase in the level of service required from us and has assisted the growth of the company”

“ Very good payers”.

“The provision of more detailed specifications and drawings allows us to assess our materials quicker and there would be less queries.”

Question:

Describe which actions had the greatest impact on your business and why.

Comments:

“Regular remittance advice helps us manage our cash flow”

“The extent of the relationship and joint trading between our two companies provide a solid foundation to grow and maintain our operations in the North-East”

Comments:

“Some confusing procedures with reference to accounts and bill payments.”

“Northern Rock always pays on time.”

Comments:

“Northern Rock always pays on time”

“One of the best in regards to account payment”

“If any invoices are overdue contact points exist which means they are quickly rectified.”

Comments:

“We are not aware of areas that need improvement – all departments with which we deal are efficient and professional”

“Northern Rock always resolved any issues quickly and efficiently”

Comments:

“All areas are fine, no need for improvement from our perspective. Our contract is always very clear with the requirements in advance and places timely orders in line with our lead deadlines. Payment is always on time”

“I found this question ambiguous – all of the above points are handled in a first class manner by Northern Rock.”

“You have exceptional qualities at present. I cannot suggest any improvements”

“Objectives need to be assessed and procured at an early stage to achieve a successful outcome.”

“Northern Rock continue to be one of our most efficient customers in terms of order processing, billing and payments. However, clear unambiguous and consistent determination of requirements and priorities is challenged by differing opinions across departments.”

Design issues need to be addressed and agreed much earlier in the contract process to avoid conflict. This will deliver better cost certainly for all parties and avoid potential disruption of the contract programme.”

Summary 2005

Recycling of obsolete corporate uniforms to refugees in Serbia.
Paper use per employee reduced by 10%; against total asset growth of 25%.