Goals & Performance

Goals & key performance indicators

Our supplier objectives are aligned with the Roche Group strategy and include key performance indicators and targets as shown in the table below. These targets are bonus-relevant for our procurement staff in Roche Pharmaceuticals.

Key Performance Indicator
End of Dec 2016 Target value Target year
Business critical suppliers risk-assessed each year 100% 100% year-on-year
Procurement managers trained in sustainability & compliance and Roche Supplier Code of Conduct 100% 100% year-on-year
Business critical suppliers committed to sustainability principles in Roche Supplier Code of Conduct 100% 100% year-on-year
Procurement managers trained in anti-corruption 100% 100% year-on-year
Business critical suppliers audited1 65% 80% 2018
Number of suppliers that completed the Roche Supplier Code of Conduct online training 12,200 15,000 2018
Supplier contracts and bidding processes include clause2 95% 100% 2018
Procurement spend with preferred suppliers (%)3 85% 90% 2018
Number of environmental footprint reduction projects (Scope 3 GHG) with suppliers4 50 100 2018
Cost savings due to reduction programs for Scope 3 emissions4 1'000'000 CHF 2,000,000 CHF 2018
Innovation events and success stories with suppliers per year 10 15 2018
Supplier diversity - Small Business spend in the U.S.5 $917 m $1'000 m 2020

1 Audit Target: This refers to approximately 1.000 Business Critical Suppliers, where we have the highest risk exposure. For our Diagnostics division this also includes quality audits.
2 Roche Supplier Code of Conduct (or equivalent) clause included in 100% of all contracts with Business Critical Suppliers.
3 Preferred Suppliers include critical, strategic and leverage suppliers, plus suppliers that are in scope of Supplier Diversity programs.
4 Cumulated number since 2015. We aim to reduce Scope 3 GHG emissions by min. 10% with the involved suppliers by end of 2018 and reduce Total Costs of Ownership to get the savings.
5 Small Business: As defined by the U. S. Small Business Administration.

Spend analysis

In 2016 our total spend with suppliers was approximately CHF 17.3 billion: CHF 10.9 billion by the Pharmaceuticals Division and CHF 6.4 billion by the Diagnostics Division. The spend with the top 1,000 suppliers accounted for 75% of Roche’s total spend. Approximately 5% of the total spend was with suppliers in non-OECD countries. Spend by region and by category is shown below.

Roche_Spenddata_Performance_Region_2016_EN
Roche_Spenddata_Performance_Kategorie_2016_EN

Supplier Audits

In 2016, we conducted 1’011 audits of global suppliers and service providers and many further ones at local suppliers. Based on a prior assessment of the potential risk associated with the suppliers we performed audits in all spend categories and across all countries and industries we source from. Priority was given to high-risk industries and countries. We audited global as well as local suppliers and service providers.

We transformed our supplier sustainability audits into assurance visits with the aim of fostering the relationship and creating mutual benefit. We conducted 133 supplier sustainability assurance visits worldwide. 43 visits were made in the direct spend area (goods that go directly into production) and 90 at service providers. Regionally the majority of these assurance visits were conducted in non-OECD countries, with emphasis on Asia, Latin America and Eastern Europe. The main findings related to health & safety, management systems and quality.

Most of the suppliers and service providers followed up on the findings from audits via agreed-upon corrective action plans, and we helped them with this if needed. The degree of implementation of these actions was verified via follow-up audits. We found 8 suppliers and service providers with critical issues and terminated the agreements with three of them on the grounds of unethical behavior.

Roche collaborates on supplier audits with other pharmaceutical companies under the umbrella of the  Pharmaceutical Supply Chain Initiative (PSCI), using a unified joint audit protocol. In 2016, 51 supplier audit reports and self-assessment questionnaires were shared under this protocol, up from 32 in 2015.

Global Supplier Audits
TOTAL 2016
Total number of global supplier audits worldwide 1011
Supplier quality audits 878
Supplier sustainability assurance visits 133
Sustainability assurance visits by internal auditors 32
Sustainability assurance visits by external auditors 101
Number of Suppliers with critical issue or discontinued 8
Findings in sustainability assurance visits by category (%)
Ethics <10%
Labor 10 - 25%
Health & Safety 25 - 50%
Environment 10 - 25%
Management Systems 25 - 50%

Of all the audits conducted, the ranges provided indicate the percentage of findings in each category. Roche helps its suppliers follow up on these findings

Environmental Footprint Reduction with Suppliers

In 2016 we completed environmental footprint reduction projects with 50 suppliers that either had a high footprint or were ready to collaborate with us on reduction of our Scope 3 emissions. We reduced CO2 emissions by 10% on average and generated savings of approximately 1 Million Swiss francs.

The projects were also part of our annual submission to the Carbon Disclosure Project (CDP) which award Roche a position on the Climate A List. We will work to further expand our collaboration with suppliers on Scope 3 emissions reduction and save a total of 2 million Swiss francs by end of 2018.