Novo Nordisk’s social and environmental responsibility extends throughout the value chain including the company’s suppliers. Novo Nordisk has implemented global standards for responsible sourcing in a first phase, asking direct spend suppliers to document performance in terms of compliance with laws and regulations, environment, health and safety, labour practices, business ethics, including safety and rights of clinical trial patients and healthy volunteers, animal welfare and sub suppliers. Suppliers in scope for the responsible sourcing programme are segmented based on the risk posed by a supplier.
Through Novo Nordisk’s Responsible Sourcing Programme Novo Nordisk ensures that business partners are meeting ethical, social and environmental performance standards. These are framed by the UN Global Compact and the Universal Declaration of Human Rights (UNDHR).
The company prefers to engage with suppliers to address breaches of quality, social and environmental standards. However, if a supplier repeatedly demonstrates a lack of interest or unwillingness to improve its standards, Novo Nordisk will take appropriate action, which could eventually mean withdrawal from the relationship.
A first step in implementing adherence to the standards is to more fully understand the social and environmental risks related to a global and expanding supplier base and to gather information on how many suppliers would potentially entail a risk to Novo Nordisk’s business, whether operational or a reputational risk.
Risk segmentation work began in 2008 and will be completed in 2009, with an aim to segment suppliers into high, medium and low risk groups. A correlating audit system undertakes pre-screenings with new suppliers and audits.
Expanding the coverage to all of the company’s approximately 38,000 suppliers requires a robust methodology to identify and assess operational and reputation ris.
To that end a methodology is being developed to segment suppliers based on spend, sector and geography. A detailed mapping of suppliers will be made in 2009.
Mapping of supplier base
Novo Nordisk has a diverse and increasingly global supply chain and mapping of suppliers based on ethical/reputational risk has been a key undertaking in 2008. This work will continue in 2009.
Given that quality is paramount to the products we produce and market, Novo Nordisk is keen to secure greater transparency and accountability in the supply chain also from a quality perspective. Against the backdrop of events in 2008 experienced by other companies, FDA regulation is expected to focus on companies’ ability to understand and manage quality related in the supply chain. Therefore Novo Nordisk’s mapping exercise has been initiated to respond to both quality and ethical risks.
Assessing suppliers’ performance
Suppliers are regularly evaluated on their performance. An audit system undertakes pre-screenings of new suppliers prior to contract signing and regular audits are carried out on approved suppliers.
A total of 32 audits - 13 pre-screening audits of new suppliers and 19 regular audits of approved suppliers - were carried out in 2008, the majority of them in China.
These resulted in four critical findings and termination of relationship with one supplier.