Goals & Performance
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.
|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.
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.
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.
|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 (%)|
|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
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.