• Home
• Responsibility
• CR Report 2005
• Human rights
• Suppliers

Suppliers

Our supply chain is complex, with over 75,000 suppliers worldwide. It ranges from major strategic relationships with suppliers that manufacture raw materials and packaging for GSK medicines through to local contracts for goods or services such as office equipment, cleaning and security.

We endeavour to ensure that all our suppliers follow the same high standards on human rights that apply to GSK. Given the size and global scope of our supply chain we recognise that some suppliers may not fully respect the human rights of their workers or local communities.

We have started to work with suppliers on these issues through the inclusion of human rights clauses in supplier contracts (see below).

We also cover human rights issues during our routine interactions with two categories of critical suppliers - the contract manufacturers that make GSK-branded medicines and consumer health products and the suppliers of raw materials and packaging to our manufacturing sites. Historically these suppliers have tended to be based in Europe and North America, but there is a growing trend towards sourcing these materials from other areas of the world such as Asia. We visit our critical suppliers regularly to review performance and to identify and resolve any issues, including any potential human rights issues. These interactions include:

• Pre-assessment of potential new critical suppliers through questionnaires, on-site reviews and Quality and EHS Audits. These assessments cover facilities which will directly supply GSK.
• On-going critical supplier reviews include follow-up visits by Procurement, Quality and EHS staff. We also hold global and regional supplier review meetings where senior GSK managers address and interact with suppliers on key issues.

It is important that our procurement teams understand our human rights standards. We provide training and guidance on human rights for GSK procurement staff as part of our Sourcing Group Management programme. This explains how we develop sourcing strategies and our criteria for supplier selection, including human rights. The training is compulsory for all new procurement staff.

Given the size and complexity of our supply base it is not possible to engage directly with all our suppliers on human rights. As well as our routine engagement with critical suppliers, during 2006 we will start a pilot project to assess the risk of human rights issues occurring among suppliers of services where there is a large labour input, for example cleaning or security.

We also engage with suppliers on environmental, health and safety issues, see Suppliers.

For an example of how we build long-term relationships with our critical suppliers and the benefits of this approach, see Working with our Ribena suppliers to improve biodiversity.

Supplier contracts
We are adding human rights clauses to our supplier contracts. These require suppliers to confirm that they comply with minimum wage legislation; provide a healthy, safe workplace free from discrimination; and do not use any form of slavery or exploitative child labour.

So far, we have incorporated human rights clauses into all central contract templates for use with new suppliers. Human rights clauses are also being introduced into contracts for existing suppliers as they are renewed.

Most contracts are renewed on a three-year cycle.

During 2005 we worked with our local procurement teams to incorporate human rights clauses into local supplier contracts. Given the size of the supply chain we have prioritised contracts into which the human rights clause must be inserted. The initial focus is:

1. Suppliers providing goods that are used to make GSK-branded products eg contract manufacturers, raw materials and packaging; and
2. Suppliers providing human resources eg cleaning services, security services, contingent worker services, outsourced services, testing, research and development services.

This scope will eventually be extended to all contracts.

Engagement with critical suppliers
Our critical suppliers must work to the highest quality standards and produce an uninterrupted supply of materials and services to GSK. If they do not, the safety, effectiveness or availability of our medicines could be affected. For these reasons, we seek long-term relationships with critical suppliers and regularly monitor all aspects of their performance, including human rights.

Critical suppliers must pass a detailed assessment before they can be selected. As well as looking at quality issues, we also assess their policies and procedures for health and safety, human rights, and environmental issues. These rigorous assessments reduce the risk of issues of non- compliance after the contract has been signed. Where suppliers do not meet our required standards, we work with them to agree a remedial programme which must be implemented or completed before we award any new business to them. All contract manufacturers must also be approved by the applicable regulatory authority before they can start manufacturing GSK medicines.

After a contract has been awarded we seek to develop strong, open relationships with critical suppliers. This includes formally agreed Supplier Reviews, to assess performance and identify and agree areas for improvement. After a Supplier Review the agreed action plan is signed off by GSK and the supplier. Where a supplier can’t or won’t improve their performance we will move our business to an alternative supplier.

We have launched a preferred global vendor programme to reduce the number of suppliers. As well as reducing costs and increasing efficiency this will make it easier to monitor and influence supplier standards.

Supplier audits
We conduct regular Environment Health and Safety audits of our contract manufacturers that include questions on human rights. (see Suppliers and contractors). In 2005 there were 41 audits conducted and no human rights issues of significant concern were noted.

Back to top