Takeda works with approximately 41,000 suppliers around the world for the materials and services we need to produce and distribute our products. Managing these supplier relationships and the flow of goods and services through our value chain is critical to the sustainability, quality and safety of our medicines — and the well-being of our patients — by ensuring continuity of supply.
Takeda’s Ethical Sourcing and Supplier Risk Management efforts are based on our values of Takeda-ism and Patient-Trust-Reputation-Business. This work is led by Takeda’s Procurement Center of Excellence (PCoE), which has three primary areas:
In addition to these focus areas, the PCoE has created two teams, Data Analytics and Program Management, which facilitate continuous improvement and increase procurement capabilities and knowledge in these critical areas.
The Ethical Sourcing and Supplier Risk Management program educates all Takeda colleagues about the program established for the evaluation of suppliers and other third parties. After the acquisition of Shire, we had to evaluate almost 50% of our supply chain to get every supplier in accordance with the same set of standards and expectations.
Takeda’s SCoC covers areas that include the environment, human rights, labor practices, safe work, data privacy, anti-corruption, business practices, animal welfare and management systems. The SCoC has been translated into 26 languages and integrated into sourcing projects. Our supplier code is consistent with the Pharmaceutical Supply Chain Initiative (PSCI) Principles, a set of industry supplier standards and expectations established and used by more than 40 member companies of the PSCI.
The PSCI is committed to promoting responsible supply chain practices through both supplier audits and supplier capability-building conferences and webinar training sessions. In addition to PSCI, Takeda joined the Pharmaceutical Environmental Group (PEG) and became involved in the Engagement Group and Climate Group to establish standards in greenhouse gas reduction efforts.
As a crucial initiative for delivering high-quality pharmaceuticals to patients, Takeda added six steps to the sourcing process to assess supplier risks from a holistic perspective, including sustainability and business continuity risks. The standard diligence process evaluates whether there are potential risks in the areas of animal welfare, EHS, labor and human rights, financial health, corruption and bribery, data privacy and information security. While this is not a comprehensive list of the risks Takeda screens for, it provides an overview of the type of information business stake-holders can expect to receive to make well-informed decisions when it comes to supplier selection.
If specific risks are identified during standard diligence, Takeda conducts enhanced diligence, with experts from across the company as well as external resources, as required. We also partnered with Takeda Business Services to design a more efficient and effective process for supplier registration and qualification, better ensuring the completion of due diligence and flagging of potential risks known as Integrated Due Diligence.
We have also furthered the use of EcoVadis, a digital supplier-sustainability assessment and scorecard system, to help monitor the sustainability performance of strategic, high-risk or other types of suppliers. The platform enables us to monitor KPIs for suppliers as a basis for supplier engagement and improvement. We see an opportunity to further advance supplier performance by increasing their ability to manage their own supply chain impacts.
When we identify supplier sustainability risks related to Takeda’s Supplier Code of Conduct principles, or if a supplier receives a low score from EcoVadis, we begin a program of onsite labor, ethical, EHS and management system assessments based on PSCI protocols using third-party audit companies. These assessments result in corrective action plans (CAPs) to improve a supplier’s sustainability performance that are periodically reviewed by Takeda and the supplier.
In FY2019, we committed to becoming completely carbon neutral by 2040, including a 50% reduction in Scope 3 emissions. This commitment will require comprehensive and long-term partnerships with our suppliers. Scope 3 emissions represent nearly 90% of our total carbon emissions across our value chain. That’s why engaging with our suppliers to reduce supply chain carbon emissions is so critical.
Ethical Sourcing and Supplier Risk Management help make sure that Takeda’s suppliers conduct business in line with our expectations, avoid exposing the business to any unnecessary risk and support the delivery of value beyond cost.
Measuring Supplier Sustainability Performance & Risk
Third Party Labor Rights
Respecting human rights, including third party labor rights is one of our greatest responsibilities, given our scale and potential influence. Our Supplier Code of Conduct outlines our commitment and expectations for suppliers on modern slavery practices, including child labor, forced and bonded labor, and human trafficking. Takeda’s approach to third-party labor rights is outlined in various statements:
Suppliers with certain spend thresholds go through standard due diligence and enhanced due diligence during onboarding, which includes human rights and labor assessments. As an active member of the PSCI human rights and labor working group we have worked to build more awareness around modern slavery and share industry best practices and have focused on management team development with several members participating in Social Accountability Auditor training.
As a global company, we source materials from around the world. We use the power of our spend to expand the diversity, equity and inclusion of our suppliers in a number of ways. For example, our Procurement Policy calls for including at least one small or diverse supplier in each request for proposal and requires our prime suppliers to provide second-tier reporting.
Our Supplier Diversity, Equity, and inclusion program includes, but is not limited to, fostering and maintaining relationships with small to medium enterprises, minority-owned businesses (or underrepresented groups or any group that a government deems to have minority status in the population), women-owned businesses, disability-owned businesses, LGBTQ-owned businesses, or Veteran-owned businesses.
Takeda’s Supplier Diversity, Equity & Inclusion program objectives are in keeping with Takeda Values of Patient, Trust, Reputation and
Our Program for Diversity & Inclusion:
“At Takeda, in keeping with our values of Patient-Trust-Reputation-Business, we are committed to conducting our business in a fair and equitable manner, including partnering with small and/or diverse suppliers.
We want to help develop and strengthen their business and ultimately utilize the power of our business to drive positive impact in the communities in which we live and work. Our suppliers are a critical component of our ability to provide Better Health for People and a Brighter Future for the World.”
- Jill Zunshine,
SVP & Head of Global Real Estate,
Facilities, and Procurement
Each year, at minimum, we mentor 4-5 local current and prospective suppliers through our formal mentoring program, leading to successful business growth and recognition for positive impact on the diverse community. Diverse suppliers are paired with a Procurement lead or business stakeholder for up to 1 year. Through this program, we assist diverse suppliers in further developing their businesses, through educational and investment programs. We continue to develop programs to address inclusion on both a local level and will soon be expanding our program on a global level. These programs include providing a new resource within our Company (initially launched in the US) to help our employees locate current and potential diverse suppliers for their sourcing needs. We continue to grow our development and advocacy through various NGOs throughout the US, such as Diversity Alliance for Science, WBENC, NGLCC, NMSDC, Disability:IN, and NVBDC and Globally, through groups such as WEConnect International.
The SP&I team facilitates supplier segmentation for areas of the business through a framework that, among other factors, includes risk and a sustainability rating. SP&I uses a supplier scorecard with objective data to measure and leverage supplier capabilities. This scorecard includes a KPI that tracks social and environmental risk and performance. The SP&I team also works with suppliers to identify external sources of innovation, remediate performance issues and provide continuous improvement opportunities. As we enhance our supply chain sustainability efforts, we expect to further develop our supplier relationship management efforts as well.
For our latest KPIs and Goals related to ethical source and supplier risk assessments, refer to our ESG Appendix