Responsible sourcing
The quality of a pharmaceutical product must be unquestionable. To Novo Nordisk this also implies assurance that the product was manufactured with a high focus on the environmental impact and with respect for international labour standards.
Our social and environmental responsibility extends throughout the value chain. By investing in initiatives that drive improved performance by our suppliers and subsuppliers Novo Nordisk achieves two things: we mitigate risks and act on our responsibility.
Global sourcing is an intricate web of interconnected parties, from suppliers of raw materials to agents purchasing goods on the company’s behalf. Often, supply chain relationships are long-lasting and close, with skills and knowledge being developed and shared. This makes fertile ground for sharing better practices, including responsible business principles.
Novo Nordisk expects suppliers to adhere to the company’s standards for managing environmental impacts and respecting human and labour rights. Selected suppliers are assessed before contracting a business relationship. All existing suppliers are regularly evaluated on their performance.
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.
Performance 2006
Systematic evaluation was introduced in 2001 for the company’s more than 300 key suppliers in production.
This was based on annual self-evaluation questionnaires, supplemented by audits conducted by Novo Nordisk internal auditors.
As of 2005, all significant purchasing, including via service companies, has been incorporated in varying forms in this programme. In 2006, 11 audits were carried out, the majority of them in China.
See below for the following 2006 performance:
- Value of purchase evaluated as a percentage of total value of purchase
- Geographical distribution of suppliers evaluated
- Performance
Managing a global supply chain
As Novo Nordisk expands its supply chain operations globally, there are cost benefits to be gained. However, this must not compromise company standards and the Novo Nordisk Way of Management.
In 2006, the supply chain programme was reviewed to assess its effectiveness in mitigating risks and improving social and environmental performance. As part of the review, the company consulted selected suppliers in China and Brazil to obtain feedback on the current programme and to identify areas for improvement. Stakeholder engagement has contributed to framing this new approach.
The conclusion of the review was to strengthen risk management and place greater emphasis on suppliers of Novo Nordisk-branded products and suppliers with production in countries where enforcement of social and environmental legislation is weak.
Since a higher share of the Novo Nordisk supplier base will be shifting to developing countries, business risks will increase, but so will the opportunity to engage with suppliers with a view to ensure compliance with Novo Nordisk and global standards, thereby often raising the bar locally.
This more focused approach aligns well with Novo Nordisk’s global sourcing strategy. Any prospective supplier regarded as high-risk will be pre-screened and assessed prior to approval. Approved suppliers regarded as high risk will be evaluated periodically on their social, environmental and ethical performance as part of the annual business evaluation, which covers both commercial and quality aspects.
Roll-out of standards
In 2007, Novo Nordisk will issue Responsible Sourcing standards. These standards will be an integral part of doing business with Novo Nordisk. The standards are classified in six categories: general compliance with laws and regulations; environment; health and safety; labour practices; ethics; and subsuppliers. The new standards will also cover clinical trials and animal welfare, so that suppliers and contractors to different parts of the organisation are informed of all the company’s expectations in a single standard. Click here to download the brochure 'Doing business with Novo Nordisk'.
The aim is to engage with suppliers to promote implementation of these standards. The company recognises that while standards and assessments may uncover areas in need of improvement, they will not necessarily result in improvements per se. Therefore, the company will develop an engagement programme, targeted towards a few key suppliers that face challenges in implementing these standards. This programme will be piloted in 2008 and will build on Novo Nordisk’s experience in working with stakeholders to drive change.
It is critical to our business that our suppliers, anywhere in the world, are absolutely reliable in terms of quality, environmental and social standards and commercial stability. Without such a strong supply chain, we risk jeopardising our ability to deliver our products in a timely manner to people who rely on them. And that is a risk that we are not willing to take.
This page has been assessed by PricewaterhouseCoopers as part of its assessment of Novo Nordisk’s statement that it reports ‘in accordance’ with GRI. Please refer to Audit and assurance for a full description of the nature of assurance offered.
