Purchasing

A reliable and safe supply chain is essential to secure our production and remain efficient. Our purchasing requirements includes sustainability aspects alongside quality and commercial parameters.

Strategy

Novozymes’ purchasing policy takes into consideration sustainability as well as commercial and quality aspects. In order to identify risks and opportunities in the global purchasing processes, an advanced supplier performance management (SPM) system has been developed. Instead of relying solely on supplier self-evaluations, the supplier evaluation process is supplemented with media research, dialogue, and the critical insight of Novozymes’ purchasers. The system helps rank and compare suppliers according to risk and opportunity and provides an overview of the global supplier pool. The system is also designed to help the purchasing function identify the suppliers who typically pose the biggest risks. Suppliers with critical issues are subject to further questions or an audit.
 

Initiatives & activities

Supplier Performance Management system:

  • New suppliers: All new suppliers are introduced to Novozymes’ Supplier Guidelines, and our standards for responsible purchasing are included in purchase agreements with suppliers.
  • Evaluation process: Novozymes’ process for screening and evaluating our suppliers ensures a sustainable and systematic sourcing practice. The supplier evaluation process is based on the insight of skilled category managers who, using different media, collect the information needed to be able to identify risks and opportunities in relation to both new and existing suppliers. The category managers are supported in this process by the advanced SPM system, which consists of an integrated set of assessment criteria.
  • Assessment criteria: Novozymes' baseline expectations to suppliers comprise eight criteria regarding: Responsibility and innovation, Commercial aspects, Quality, Environment, Employee health & safety, Human and labor rights, Business ethics, and Supply chain. Please refer to Novozymes’ Supplier Guidelines.
  • Audit: Novozymes may ask our suppliers to provide information by filling in questionnaires and accepting visits or audits, especially when major engagements or products or services critical to Novozymes, are involved.

Local sourcing:

Novozymes purchases for approximately 4.5 billion DKK on raw materials, equipment, consumables and services of which the majority is spent on local sourcing within the regions where we manufacture our products. Our purchasers are located in these same regional sites, where they are trained in strategic sourcing within both global and local markets.
 
See also Raw materials and suppliers concerning food safety.
 

Management system & guidelines

Please refer to Novozymes’ general approach to Purchasing and Novozymes' position on responsible purchasing.
 

Targets & KPIs

  • 2012 target: 90% of total spend to be covered by the supplier performance management system.
  • 2012 target: Finalize action plans  which have been developed for all noncompliant suppliers in order to improve performance and secure compliance.
  • In 2012, we will continue working on improving our suppliers’ sustainability performance. Focus areas in 2012 will include further sustainability training of purchasers and supplier auditors.

Performance

  • In 2012, 93% of total purchase spend was covered by the supplier performance system.
  • In 2012, 11 action plans for noncompliant suppliers were finalized, through dialogue with suppliers to resolve commercial, quality and sustainability issues, in order to improve performance and secure compliance.