Takeda works with approximately 60,000 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 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.
In FY2019, the Ethical Sourcing and Supplier Risk Management program dedicated itself to educating 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. In addition, almost 50% of Takeda’s employees are still learning about the process and how the integrated, holistic approach was born out of Takeda’s strong values.
To make sure these values continued to be part of our end-to-end operations, we established similar KPIs for FY2019, although adjusted to accommodate for the number of integration-related activities that were taking place throughout the supply chain. Each cluster agreed to, and is held accountable for, sustainable procurement goals that include:
Spend targets with small and diverse suppliers.
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 FY2019, Takeda, along with other member companies, organized PSCI Supplier Conferences in China and India. In addition, PSCI organized multiple webinars for supplier development, including a Modern Slavery webinar that Takeda played a key role in developing.
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. In FY2019, Takeda conducted due diligence across 2,183 suppliers. 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. In 2019, Takeda improved our use of the platform and gained access to an additional 123 EcoVadis scorecards. 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. In FY2019, Takeda conducted onsite assessments at 19 suppliers in six countries. These assessments result in corrective action plans (CAPs) to improve a supplier’s sustainability performance that are periodically reviewed by Takeda and the supplier. Since starting the supplier PSCI sustainability audit program in 2016, we have achieved a 33% CAP closure rate of all initial supplier audits, excluding any follow-up assessments.
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. As we begin to work toward our new goal, we plan to conduct annual Scope 3 reporting projects to measure progress and engage suppliers to commit to GHG reduction activities. For FY2020, we focused on engaging the top 35 suppliers responsible for Takeda’s highest Scope 3 GHG emissions by launching pilots, and by hosting sessions on sustainability and our 2020 Partner Value Summit.
representatives from 163 suppliers participated.
supply chain sustainability workshops held on topics such as renewable energy and challenges associated with Scope 3.
Finalized agreement to work on pilot projects to further sustainability goals for both suppliers and Takeda.
In 2019, Takeda gained access to an additional
EcoVadis scorecards for better monitoring KPIs for suppliers and engaging them meaningfully.
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
Much of our supply chain resides in emerging markets where worker protections are often not very robust. Respecting human rights, including the rights of workers, 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. We also strengthened our Supply Chain Human Rights and Labor initiatives through various policies and position statements:
In addition, suppliers with certain spend thresholds go through standard due diligence and enhanced due diligence during onboarding, which includes human rights and labor assessments. In FY2019, we led a working group within PSCI and developed a webinar to bring more awareness around modern slavery and share industry best practices. We’re also focusing on management team development with several members participating in Social Accountability Auditor training.
Recognizing our role as a good corporate citizen, we constantly seek to make contributions that benefit society and use our shared knowledge to find better solutions for patients. Part of this commitment is to support and uphold internationally recognized human rights throughout our operations, supply chains and within the communities where we operate. A team is currently working on enhancing our approach to human rights, including understanding and responding to emerging human rights and issues, and protecting vulnerable groups.
As a global company, we source materials from around the world. We use the power of our spend to expand the diversity 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. In 2019, we updated our internal training courses to explain what supplier diversity means to Takeda and provided internal updates and stories about our supplier diversity program that highlight these suppliers to our employees.
In the U.S., we continue to work toward a goal to increase our spend with small and diverse businesses. In FY2019, with the combined spend of legacy Shire, we achieved $354 million in spend with small businesses and $574 million with all diverse businesses (small and large).
To identify small and diverse suppliers that meet our needs, representatives from our Supplier Diversity Program and Procurement leaders participate in a variety of advocacy events. We also joined WEConnect International to continue growing our supplier diversity program internationally. One barrier to increasing business with small and diverse suppliers is suppliers’ lack of knowledge about our needs and the task of supplying a large, global company. We introduced several initiatives in FY2019 to address this by:
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 as of FY2019. 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.
|Number of supplier
codes of conduct
obtained from top
spend, strategic and
|Add 50||92||Add 50||89||Add 70||78|
|Number of PSCI
|Number of EcoVadis
CSR & sustainability
|Add 100||131||Add 125||233||120||123|
1 Over half of the supplier audits scheduled for FY2019 were cancelled due to the COVID-19 pandemic.
spend (small business)
|$131 million||$234 million||$161 million||$179 million||$275 million||$354 million|
spend (all diverse
small and large
|$190 million||$187 million||$190 million||$231 million||No official target||$486 million|