Managing Supplier Performance
Approximately 50,000 suppliers in more than 100 countries provide the goods, services and raw materials required for Baxter's operations worldwide. In 2006, Baxter spent about $4.1 billion on supplies, with approximately 39 percent of the total spent on direct supplies – raw materials and other components used in Baxter products. A core group of 500 suppliers accounts for approximately 80 percent of Baxter's direct supplier spending.
The remainder of Baxter's supply chain spending in 2006 was for indirect supplies – goods and services that are not used in products. Baxter buys most of its indirect supplies from local and regional companies located near its operations. Baxter has entered into global supply agreements for certain travel services, corporate credit cards, PC purchases and outsourced IT services.
Supplier Standards
Baxter's Supplier Quality Standard and Global Business Practice Standards for Suppliers provide the framework for the company's selection and management of suppliers. These standards offer a consistent supplier-evaluation approach, define policies and set common expectations about ethical behavior when doing business with Baxter. Suppliers must be evaluated and approved by Baxter before any materials, components, products or services may be purchased. Both standards are included in contracts used during all supplier and contractor negotiations.
The Supplier Quality Standard specifically addresses sustainability issues, including indentured and child labor, employment standards, waste- and energy-reduction policies, and ethics. Baxter's Global Business Practice Standards for Suppliers, available in six languages, also cover child labor, as well as the management of confidential information, intellectual property, gifts and entertainment, conflicts of interest, trade compliance, fair employment opportunities, and environment, health and safety. Baxter expects suppliers to comply with both sets of standards and to understand and comply with all laws governing purchasing. Contracts may be terminated for suppliers who do not comply with these standards.
| GLOBAL BUSINESS PRACTICE STANDARDS FOR SUPPLIERS | ||
| English (pdf 102k) | French (pdf 1.1M) | Japanese (pdf 115k) |
| Chinese (pdf 1.7M) | German (pdf 1.1M) | Spanish (pdf 1.1M) |
Ethics training is mandatory for employees in Baxter's Purchasing and Supplier Management organization. Suppliers also have access to EthicsKit, a best practices guide to help suppliers create and implement business ethics programs.
Additionally, Baxter's direct supplies – product raw materials and components – are subject to validation procedures, such as storage and handling requirements, by regulatory agencies worldwide. Government regulators and Baxter also evaluate direct suppliers' processes, including quality systems and good manufacturing practices.
Within Baxter, many purchasing professionals have attained Certified Purchasing Manager (C.P.M.) and Accredited Purchasing Practitioner (A.P.P.) designations of excellence awarded by the Institute for Supply Management (ISM). Baxter has also adopted the ISM Principles and Standards of Ethical Supply Management Conduct.
Finally, Baxter has additional initiatives to manage supplier environmental performance. See Greening the Supply Chain for more detail.
