Responsible Procurement Management and Sanofi (part 1)

We’re pleased to feature a guest post from Alis Sindbjerg Hemmingsen, who runs Responsible Procurement Excellence in Copenhagen and is an expert on all things CSR related...

 

Sanofi, a global pharmaceutical company, has recently released a quite detailed CSR factsheet on Responsible Procurement.You can access it here. Responsible_Procurement_May_2013(1)   I found it interesting and inspiring, so I would like to share my observations and recommendations with you here with the hope of inspiring you.

An approach based on risk criteria

Their approach to Responsible Procurement is pretty much based on “risk mitigation”.

In 2012 they revised and restructured their standards on Responsible Procurement because they wanted to:

• Create business value by stimulating and taking on board suppliers innovation

• Better monitor risk and hence fully embed CSR into a Procurement Risk Management model

• Monitor suppliers’ action plans

Risks are not addressed as stand-alone issues

As I see it, when it comes to risk, Sanofi have chosen to combine a CSR risk approach with a more traditional Procurement risk approach. They have done that in order to ensure that Responsible Procurement risks are not addressed as isolated or standalone issues, but are instead considered part of a comprehensive risk coverage. In addition to that they have a special risk process for those suppliers that receive priority attention.

The risk areas they identify are:

• Global: Natural, political, economic, technological and legal

• Operational: Supply (single source, dependency), finance, innovation strategy, long-range plan

• Compliance: governance, procedures and policies, business ethics (fight against corruption) and corporate social responsibility (social, labour, environment, supply chain)

Procurement geeks will notice that the risk areas look much like a typical supplier evaluation process. In 2012, Sanofi assessed each of their over 200 procurement categories and generated risk criteria in each area.

Suppliers are evaluated in order of priority

Sanofi has chosen an implementation strategy where they focus on key risk criteria, to allow them to select suppliers to be evaluated in order of priority. I like this approach – it makes it more likely to succeed as opposed to trying to focus on all suppliers, as many companies unfortunately do.

Based on a risk mapping per procurement category and a risk exposure mapping per country they have highlighted 34 categories as “high risk”. 111 categories were evaluated as medium and 71 categories as low risk. In 2012 they chose to work with the 34 “high risk” categories.

Generally I like that they have operationalized their CSR requirements. It feels like they have had a look at the supplier base and the existing procedures and ways of working in the Procurement department, and then decided on their approach. Again, this pragmatic approach increases the chance of real progress.

Their commitment includes supplier diversity

Section 2 of the CSR factsheet is all about “Sanofi’s commitment”. That is where they really caught my attention. The great thing about this section is that they clearly state that supplier diversity plays an important role.

As they say: “We want our supplier base to mirror our employees, patients and customers, bringing diversity of thought and experiences into our supply chain to drive innovation”.

It is not very often that companies include diversity actively in the Responsible Procurement approach. Since this is a global company with huge interests in the US, I guess it is a natural way to go.

What do they want to achieve?

When looking at their approach and commitment from a consumer point of view, I perceive a lack of concrete performance management measures. They do for instance tell us a lot about what they did in 2007 and 2011, but they mention nothing about the future - except that they want to educate their procurement professionals.

One of the ways in which Sanofi could live up to their aims and expectations is to lay out clearly what they expect from their suppliers and what they expect from their buyers. That will also allow others who deal with them to know what to expect – however, some of the expectations are outlined in their Code of Ethics.

Focusing could be key

In order for someone on the outside to understand where they are heading and at what pace, it would be good to know where they place their main focus. It seems like they get their inspiration from GRI, Global Compact, their membership of the Pharmaceutical Supply Chain initiative and the charter of inter-company relations in France. All great examples and important CSR sources.

And no-one believes that a company can focus on every aspect of CSR, so many companies have now started by prioritising those areas that bring the greatest value to the company. For those 34 categories identified by Sanofi as “high risk” what do they have in common? What is important to the company seen from a risk perspective? A brand like Sanofi needs to take a clear position, strategically and operationally. (Here’s my one-pager, “a Brand needs a Stand.”)

More tomorrow..

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