Ensuring Responsible Practices
As an organisation, we ensure responsible supply practices. We work closely with our suppliers and service providers to establish sound and sustainable procurement procedures.
We require suppliers to commit to the principles of the Roche Supplier Code of Conduct. The code defines our standards for business ethics, human rights, social responsibility, health and safety, environmental responsibility and management systems. It also requires that our suppliers cooperate with us on innovation, economic sustainability and supplier diversity.
In case a supplier doesn’t fully meet our standards, we offer to work with them to improve their performance. In the case of non-conformity, we suspend business with a supplier until their performance improves. If a supplier is unwilling to improve performance, we reserve the right to terminate the supply relationship with the supplier.
Our supply chain strategy includes a sustainability target to assess existing business critical suppliers and service providers, and to abandon those below expectations who fail to improve. By 2020, at least 90% of these suppliers need to meet our high standards for safety, health and environmental protection.
Supplier risk management and monitoring performance
We work closely with suppliers in a variety of ways to ensure the reliability, safety and continuity of supply of our products worldwide.
A coordinated approach
Our Global Procurement Compliance team and local procurement professionals, together with Group Safety, Security, Health and Environmental Protection, Pharma Partnering and other functions, assess and monitor our suppliers’ performance and supplier-related risks. This includes:
- using a risk-based approach to segment our supply base
- conducting due diligence and assurance visits to ensure supplier performance
- including sustainability clauses in supplier contracts and bidding processes
- collaborating with selected suppliers on performance improvement and monitoring progress
- sharing information and developing processes to ensure the integrity of the supply chain and the quality of materials within the supply chain
Managing supply chain risks and opportunities
Supply chain risk management covers the identification, assessment and mitigation of all operational risks, beginning at the earliest phases of development and continuing throughout a product’s lifecycle. This process allows us to identify, assess and mitigate risk and to identify opportunities to add value and drive innovation. We regularly review and update risk management plans to reduce risks and ensure continued supply of our pharmaceutical and diagnostic products.
We implement risk management plans appropriate to the level of risk. Our primary risks include:
- Economic Risks, such as bribery and corruption, business integrity risks, supply chain interruption, tier 2 supplier risk, insolvency, counterfeiting, theft and cyber attacks.
- Environmental Risks, such as hazardous materials, improper waste disposal, spills, climate change risk and biodiversity risk
- Social Risks, such as child labour, violation of human rights, excessive overtime, poor working conditions, exposure of workers to hazards, violation of data privacy, non-compliance with supplier diversity regulations
We regularly review and update risk management plans with the aim of reducing risks and ensuring continued supply of our pharmaceutical and diagnostic products.
When working with suppliers on risk management, we often identify opportunities that create value for both parties, such as innovative ideas to improve processes and efficiency, reduce environmental footprints or make the workplace safer.
Assessing supplier risk
We segment our suppliers using a risk-based approach. For example, business critical suppliers, of which we have around 1,000, provide goods or services that meet one or more of the following criteria:
- strategic or business-critical for Roche, such as providing key components or services with few or no alternatives
- may have considerable social, environmental or economic impact
- supply exclusively for Roche, using Roche know-how or processes
- produce mainly for Roche in a significant volume
- involve considerable work on Roche premises
- considered to be a major supplier to Roche
- operate in a high-risk industry or country
We conduct detailed risk assessment and due diligence of business critical suppliers, focusing on the following important areas:
- Supply chain interruption risk, like natural disaster, force majeure or logistics risk
- Financial risk, like insolvency
- Contractual risk
- Risk related to Ethics, Social/ Human Rights, SHE = Safety, Health & Environmental Protection and resulting potential risk to Roche's reputation
- quality risk
In addition, we conduct category-specific risk assessments. These include innovation risk from the loss of intellectual property, environmental risk from waste management service providers or animal welfare related risk. Our risk assessments have been expanded to fully integrate tier 2 supplier risk, human rights risk, data privacy risk and biodiversity risk. We are also assessing risk related to anti-microbial resistance (AMR) in conjunction with antibiotics manufacturing and we continue to reduce our risk exposure in this area.
We have a dedicated animal welfare program which includes a focus group to properly address risks in this area.
Depending on the outcome of our risk assessment, a supplier may be classified as low, medium or high risk. High-risk suppliers pose a material risk to Roche, demanding implementation of a risk mitigation plan.
We conduct supplier sustainability audits at our business critical suppliers in the spirit of assurance visits with the aim to foster the relationship, create transparency and help them in case we find improvement opportunities. Using a risk-based approach we audit the highest-risk suppliers with highest priority. Where we have findings from the audit we work with the supplier to close the necessary actions.