Investing in Responsible Sourcing

Serving as a Business Partner to Create Sustained Value

In 2016 Lonza continued to address our sourcing needs and markets strategically. Our dedicated Global Strategic Sourcing function connects internal demand from more than 40 major R&D and manufacturing sites worldwide with the external global marketplace. Leveraging opportunities once again delivered significant cost savings while reacting creatively to supply constraints and pricing pressures. Thereby, we supported Lonza’s competitive market positions, as well as our top-line growth and bottom-line profitability.

Our sourcing teams work in close partnership with the businesses to purchase a diverse range of strategic raw materials and indirect products and services, with an annual spend in excess of CHF 1 billion. In our Specialty Ingredients businesses, our sourcing teams help to respond to consumers’ and customers’ desires for natural, organic and certified ingredients. We also ensure that Specialty Ingredients’ suppliers meet the requirements of food, cosmetic and biocide regulations across the globe.

In our Pharma&Biotech segment, we ensure that the raw materials purchased for medicines and biotech products adhere to stringent cGMP quality standards and regulatory requirements. In addition, suppliers to Lonza must adhere to the requirements defined in our Supplier Code of Conduct. This code defines standards of business ethics as well as labor, health and safety practices that all suppliers must meet. We routinely conduct audits of suppliers to ensure they continue to meet Lonza’s standards and are also engaged in responsible sourcing organizations.

Global Reach and Responsibility

Reflecting the global nature of our businesses, our suppliers are spread across the United States, European Union, China and Switzerland; and we do our utmost to capitalize on this global reach by looking for opportunities to consolidate global purchases across our value chains. We proactively manage relationships with the more than 400 suppliers worldwide who provide us with raw materials and other supplies.

Raw-Material Markets

Volatile and ever-changing supply conditions need our special attention at all times. Enhanced analytics and reporting of key raw-material price variances, as well as future price projections, all help us to make timely choices. Standardized risk analysis processes allow us to identify high-risk materials in a transparent way and take adequate mitigation actions. Despite the trend of a continued industry consolidation in Europe, we managed to expand our supply base for critical supplies. While commodity markets again allowed for beneficial buying conditions, global indicators have started to revert and trend upwards again.

Looking to the future, the Global Strategic Sourcing function in Lonza plans to continue focusing on value-added activities, searching for opportunities for closer cooperation and savings – wherever they might arise – and taking further steps towards best-in-class processes.