This applies across the full range of our purchasing activities, from promotional items to pharmaceutical ingredients, and includes any specialised work for which we use external contractors to complement our in-house effort, such as animal research. It also applies as much to our expanding business in emerging markets as it does to our existing supplier relationships.
Our Purchasing Leadership Group leads the development of our procurement strategies and objectives, including providing appropriate support to other functions, and is accountable for overall performance. Much of our buying activity is led by our Global Purchasing function, but many people outside that function are also involved in purchasing goods and services from external sources. Our CR Principles in Purchasing Practice guideline provides guidance for everyone involved in any purchasing activity on AstraZeneca’s behalf. The guideline describes the framework for developing and implementing the functional, regional and site-specific programmes needed to ensure that we effectively and consistently incorporate our CR commitments into our buying practice.
During 2007, we further enhanced our approach by including specific guidance on CR risk management and auditing of suppliers in our supplier management processes. A training module was also developed to promote understanding and support effective use of our CR Principles in Purchasing Practice guideline. Piloted in the UK during 2007, this module is now being rolled out to other countries.
We prefer to encourage improvement rather than automatically exclude suppliers based on unacceptable CR performance, but we will not use suppliers who are unable or unwilling to improve performance in a timely manner.
Integrating CR into the many thousands of supplier relationships we have around the world is a significant challenge. We are making progress but it will take time to interpret the high-level principles for local implementation and apply them appropriately to all our purchasing activities worldwide. CR considerations are included in all new contracts and master agreements in the US, the UK and Sweden – our three main business hubs where over 80% of our suppliers are based. Because of the huge number of suppliers we already had under contract in these countries, we are continuing to take the pragmatic approach of prioritising those that are most important to ensuring the continuity of our business, and discussing CR standards with these companies before reviewing the rest.
Alongside this work, we are now extending the geographic reach, focusing initially on suppliers in countries where we have other major marketing, manufacturing or research activities. These include Japan, China, India, Canada, Mexico and Puerto Rico, as well as more countries in Europe.
During 2007, using our internal audit mechanisms, we worked with our national companies in each of these countries to ensure that CR considerations are being included in all their new contracts and master agreements.
 In January 2007, we broadened the scope of our rolling programme of audits that include CR to cover formulation and packing suppliers in addition to chemical intermediate and active pharmaceutical ingredient suppliers. The training of auditors involved in this process continued during the year and, with the exception of a couple of new additions to the team at the end of the year, all 53 auditors have been trained.
We audited a total of 33 manufacturing sites at 29 different suppliers in 2007, and these audits included SHE, CR, quality and security of supply. The increased number of audits this year (17 suppliers audited in 2006) reflects the extended scope of our programme described above. Major findings relating to occupational health and safety at two of our suppliers have been discussed with, and satisfactorily addressed by the companies concerned.
We updated our supplier evaluation procedure in 2007 to ensure that our audit activities prioritise those groups with the highest potential to impact our business continuity and our reputation. A major step has been the further strengthening of the social elements of the evaluation, in particular human rights and labour standards. Training will be provided to auditors to support the addition of these strengthened areas to the evaluation procedure during 2008.
The new procedure requires all our high-risk category suppliers be audited at least once every four years. Medium risk suppliers are audited at the start of the business relationship and refresher audits are planned if there are any significant changes at the supplier. Between 2004 and 2007, we have conducted audits of approximately 82% of the total number of suppliers eligible for audit, and plan to audit the remainder during 2008.
To ensure a local presence in some of the important supplier markets for the future, during 2007 we established an Asian Sourcing Centre, with two locations – China and India. In June, we partnered with the Chinese Occupational Safety and Health Association (COSHA) to hold a two-day conference on process safety in China, with attendees from relevant authorities and universities as well as current and potential suppliers. The purpose of the conference was to promote excellence in process safety, and speakers included topic experts both from AstraZeneca and China.
In January 2007, AstraZeneca joined The Pharmaceutical Supply Chain Initiative (PSCI), a group of major pharmaceutical companies formed to help align the industry’s approach to integrating CR principles into purchasing practice. PSCI believes that a consistent approach across the industry would increase the industry’s influence in the supply chain and simplify processes for suppliers. AstraZeneca is actively participating in discussions on key aspects, such as core principles and what form implementation will take. We will review our participation during 2008 and formally decide our level of engagement going forward at the end of the year.
During 2007, we also launched a Purchasing sustainability project with particular focus on AstraZeneca’s environmental footprint and how our Purchasing decisions could be managed to improve our environmental impact.
The content of this page was externally assured by Bureau Veritas, February 2008 |