Novartis Is Putting Ethics and Sustainability at the Top of Its Procurement Strategy
Corporate ethics have been a big subject in the news over the last couple of years.
From high profile data leaks to accusations of tax avoidance and even voter fraud, many organizations have found themselves in the firing line for one reason or another. This has led to a spotlight being shone on the backroom practices of many companies and a far tighter regulatory environment in which they must operate. Sadly, if industry fails to adequately regulate itself, then it's inevitable that governments will eventually step in and do it for them.
Companies are now realizing how important it is to act in an ethical, responsible, and sustainable way across all their arms, and pharmaceutical giant Novartis is making it a core part of its supply chain strategy.
Novartis
As an international manufacturer of pharmaceutical products, Novartis deals with a massive network of suppliers every day.
These suppliers are similarly international in nature and operate in a vast and wide range of differing political and regulatory environments. This means it isn't always easy for companies such as Novartis to ensure their own standards of ethics and sustainability are being upheld by every other link in their supply chains. However, this is something Novartis is working hard to change.
With a strategy dubbed "Responsible Procurement", Novartis is setting out a series of guidelines and rules which it expects any supplier which wants to do business with it to adhere to.
"Novartis is committed to being a leader in good corporate responsibility and this commitment is embodied in the Supplier Code," says Novartis in its Supplier Code. "The Novartis Responsible Procurement program has been created to extend the Novartis commitment to corporate responsibility to suppliers."
The program lays out requirements in five areas which pose the greatest threat to ethical operations - Labor Rights, Health, Safety and Environment, Animal Welfare, Anti-Bribery, and Data Privacy. What's more, Novartis has in-house experts in all these fields who are permanently employed to advise and assist with enforcement and revision of these conditions, which means Novartis can be constantly reassessing and developing its strategy as it moves forwards, remaining agile to the ever-shifting socioeconomic landscape of the global procurement marketplace.
"Responsible Procurement involves more than ticking the compliance box," said Chief Procurement Officer for Novartis, Wolfgang Rauch. "It's about taking responsibility to safeguard and improve ethical standards among our suppliers and using our expertise to help them find lasting solutions to complex issues."
This means, if a supplier falls short of these standards, but demonstrates a willingness to improve, Novartis will deploy resources to work with those companies to bring them up to scratch. Rather than simply refusing to do business with them, Novartis would rather help the industry grow for the benefit of all involved.
Risk Management
Novartis is launching a third-party risk management program which will further strengthen its ability to address key risks in its procurement operations and help it identify those suppliers which fall short of those standards and establish ways in which they can be helped to improve.
The program consists of a detailed assessment which identifies areas of concern around areas of governance, collaboration across risk areas, capabilities enhancement and action tracking.
"The objective of the TPRM program is to implement an integrated approach to third-party risk management through one end-to-end process underpinned by a single technology solution, delivering quality and efficiency improvements," said Novartis in a press release. "With this new model, we expect to gain depth and breadth, and move toward a comprehensive supplier risk management framework that includes all key risk areas. We believe this new state-of-the-art model will bring consistency and rigor to how we qualify and manage supplier risks, while being simpler, scalable and more transparent. We expect it to be operational globally in 2019, following a phased regional rollout."
Final Thoughts
Companies large and small have a responsibility to operate in a way that is both ethical and responsible. Companies which have the resources and power to do so, such as Novartis, have an additional responsibility to ensure that all the suppliers they do business with follow similar standards and to assist them in improving.
You can hear more about sustainability strategies in procurement at ProcureCon Direct 2019, taking place in July at the Rancho Bernardo Inn, San Diego, CA.
Download the agenda today for more information and insights.