Bayer's Core Values on Sustainable Supplier Management
Ethical and sustainable practices make good business sense, in addition to their contributions to corporate responsibility. In a world of increasing awareness regarding the importance of responsible attitudes to the environment, diversity, inclusion, and fair labour practices, integrating sustainability into every facet of procurement has become a business imperative.
Besides the complexity and lack of visibility that frequently accompany activities in the pharmaceutical and life science supply chains, procurement professionals face a demand to create and sustain greener and more socially-responsible supplier relationships and avenues of supply.
The life science giant Bayer has set up a dedicated procurement sustainability team responsible for enforcing the company’s standards through initiatives such as sustainability evaluations, frameworks, bespoke corrective action plans, webinars, and face-to-face training sessions. This strategy is driving change and paying dividends in a number of ways.
Bayer Lays the Ground Rules with its Supplier Code of Conduct
Bayer regards adhering to sustainability standards within the supply chain as a critical factor in the value chain as a whole. The company’s “Sustainability in Supplier Management” approach aims at conducting business with suppliers in line with certain core values.
To this end, Bayer’s recently updated Supplier Code of Conduct lays down the ethical, social and environmental standards that the company applies to its partners. The code contains specifications on aspects ranging from people and labour practices to environmental performance, in addition to the governance and management systems needed to facilitate these matters. Bayer also publishes a detailed guidance document which provides examples illustrating how suppliers can implement Bayer’s expectations.
Bayer verifies supplier adherence to its code principles through online assessments, conducted by an external sustainability rating provider, or on-site audits performed by external auditors.
Bayer Has a Dedicated Procurement Sustainability Team
Within the organisation, Bayer has a dedicated procurement sustainability team responsible for oversight into whether its suppliers adhere to the company’s standards. According to Bayer CPO Thomas Udesen, the team has “full autonomy when it comes to driving sustainability.”
Janina Lukas, one of Bayer’s procurement sustainability managers, is responsible for developing and implementing tools and frameworks which enable suppliers to improve sustainability performance, and positively affect these issues.
Lukas lays out the scale of the problems facing the procurement sustainability team, and its commitment to finding solutions: “Over 20 soccer fields worth of forest is lost to deforestation every minute. There are more than 40 million people in modern slavery, while one person will die early every five seconds from air pollution by 2050. Big businesses like ours can either add to or help reduce these numbers – we’re determined to do the latter.”
Bayer Has a Process for Improving Supplier Sustainability
Bayer implements a four-step management process to improve sustainability practices within the supply chain:
Bayer takes a highly integrated approach which builds on strong collaboration across teams and functions between procurement, business partnering teams, key countries, and the company’s own health, safety, and sustainability function.
A sustainability evaluation of each partner is the first stage in the process, and as Janina Lukas explains: “These are carried out by a third party and provide a supplier evaluation score, assessed across environmental, ethical and social practices.” It’s her job to help improve a supplier’s sustainability performance, if they are found to be noncompliant.
Specially tailored corrective action plans, webinars, and face-to-face training sessions help round out the process. A portfolio of dedicated tools is currently being developed.
Bayer Acknowledges that Sustainable Change Requires Help
Sustainability initiatives require investment on Bayer’s part - both in terms of personnel, and the time spent in rolling out the various projects. CPO Thomas Udesen acknowledges that this requires help.
“One company, regardless of its size, cannot achieve these aims on its own,” Lukas says. “It needs to be done across the entire value chain; we need our suppliers to support and implement these standards.”
Bayer also recognises that the company’s own personnel and supply base should reflect the diversity of its globally dispersed customer base. So Bayer’s Supplier Diversity Programme provides comprehensive training, extensive resources, and opportunities for suppliers to strengthen their own businesses in this regard.
Bayer Participates in External Sustainability Initiatives to Drive Change
To help establish new sustainability standards for the company’s supply base, Bayer has joined two industry initiatives: the “Pharmaceutical Supply Chain Initiative” (PSCI) and “Together for Sustainability” (TfS), an initiative co-founded by Bayer.
In both initiatives, sustainability assessments and audit results from suppliers are exchanged through digital platforms. Data sharing via these platforms enables both sourcing and supply organisations to better allocate their resources, and to improve sustainability standards within the global supply chains of their respective industries.
The initiatives also conduct capacity-building activities for suppliers, in the form of training courses, workshops, and events.
Bayer Recognises the Business Value of Sustainable Procurement
Bayer’s commitment to sustainable procurement has the potential for a global effect. As Thomas Udesen explains: “We have €24bn spend across over 100,000 suppliers worldwide, all of whom we can directly influence on sustainability. That’s millions of lives we can have a positive impact on, whether it be through reducing greenhouse gas emissions or improving labour relations.”
Udesen also recognises that sustainable procurement makes economic sense.
“It’s good business to do so,” Udesen says. “Reducing waste, creating a cleaner environment, improving working conditions – all these outcomes will translate into more dollars and dimes for Bayer, whether that be through using less energy or having happier staff.”
Sustainable procurement will be a key topic at ProcureCon Pharma 2020, taking place in March at the Hotel Palace, Berlin, Germany. Download the Agenda for more information and insights.