1. Siemens Healthineers Australia company structure, operations and supply chains
Siemens Healthineers AU’s main operations are as a supplier of medical devices, parts, consumables and reagents and a provider of associated services for the following healthcare portfolios:
- Diagnostic Imaging;
- Advanced Therapies;
- Laboratory Diagnostics; and
- Point of Care Diagnostics.
- Customer Services including product related services; remote services; and education & skills management
- Enterprise Services including asset management and managed equipment services; transformation and advisory services; managed departmental services and staffing and capacity solutions and
- Digital Health Services (including population health management; digital ecosystems; teleradiology services and imaging IT).
Globally, Siemens Healthineers AG is present in over 70 countries. The Siemens Healthineers AG group operates production facilities and uses manufacturing facilities, R&D facilities, office buildings and warehouses. As at the date of this Statement, Siemens Healthineers AG has manufacturing locations in United States (14), Germany (5), United Kingdom (4), China (3), Canada (2), India (2), South Korea (2), Ireland (1), Brazil (1), Spain (1) and Luxembourg (1).
Siemens Healthineers AG procurement function is managed globally and is responsible for managing the procurement organised by material fields within commodity management. Australian specific aspects and local procurement is handled by Siemens Healthineers AU.
In FY19, the Siemens Healthineers AG group of companies’ total procurement volume was EUR7.4bn, representing spend with 36,000 suppliers globally with the main purchasing countries being US, Germany, China, Great Britain and Japan. The main commodities being sourced are medical devices, real estate, travel, externally manufactured reagents, logistics, Instruments Original Equipment Manufacturing (OEM-I), plastic parts & advisory services.
In Australia, Siemens Healthineers AU’s total supplier spend in FY19 was over EUR200M, with the vast majority of this spend comprising sourcing from Siemens Healthineers AG’s global manufacturing locations. The remainder comprises purchases of goods and services from 440 third party suppliers. Of Siemens Healthineers AU’s third party suppliers, all but a handful are direct first- tier suppliers, based in Australia.
The main goods and services procured from Siemens Healthineers AG’s manufacturing locations were goods and services required to operate as a supplier of medical devices, parts, consumables and reagents and associated services.
Siemens Healthineers AU’s third party sourcing in Australia comprises the following goods and services:
Logistics, including airfreight, duties and road transportation
Travel related services
Repair and Maintenance Products/Machines on-site
Installation & Deinstallation Services for Medical Systems
Real Estate, including rent of office locations
Turnkey Construction for Medical Equipment Installations
Other commodities representing less than 1% of total spend
2. Risk of modern slavery practices in the operation and supply chains of Siemens Healthineers AU
Policies and governance
Globally, Siemens Healthineers AG requires that all employees and managers, suppliers and third party intermediaries comply with all applicable laws and regulations based on – amongst others – the Universal Declaration of Human Rights1, International Labour Organisation’s International Labour Standards, the United Nations Convention against Corruption2 and OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions3.
Every Siemens Healthineers AG group company employee, including managers and the managing boards are required to agree to comply with Siemens Healthineers AG’s global Business Conduct Guidelines. These Guidelines mandate how we conduct business, act within our company and in relation to external business partners on various topics that include basic working conditions and human rights.
With respect to business partners, Siemens Healthineers AG have globally applicable policies and procedures in place that ensure a uniform risk-assessment of all our business partner relationships focussed on human rights (including conflict minerals), corruption, conflict of interest, antitrust, confidentiality and data privacy, gifts and hospitality.
All of Siemens Healthineers AU’s business partners must adhere to the Siemens Group Code of Conduct for Suppliers and Third Party Intermediaries (“Code of Conduct”) which sets out the standard of ethical, lawful and sustainable conduct expected from our business partners. We have made responsible business practices a core element of our supplier management processes.
The Code of Conduct is based on – among others – the Ten Principles of the United Nations Global Compact4 but also reflects the Siemens Healthineers AG “Business Conduct Guidelines”. Through the mandatory Code of Conduct, Siemens Healthineers AU’s suppliers commit to minimum standards for the following:
- Legal Compliance;
- Prohibition of corruption and bribery;
- Fair competition, anti-trust laws and intellectual property rights;
- Conflicts of interest;
- Respect for basic human rights of employees;
- Prohibition of child labour;
- Health and Safety of employees;
- Environmental protection;
- Supply Chain (2nd tier suppliers); and
- Conflict Minerals.
Due Diligence of suppliers in the Siemens Healthineers Australia supply chain
As a manufacturer of medical devices and in vitro diagnostics, Siemens Healthineers AG holds the responsibility for ensuring the finished product’s conformity with applicable quality and regulatory requirements. Siemens Healthineers AU is the Australian importer and sponsor of Siemens Healthineers AG medical devices. Regulatory and quality system requirements such as International Standards Organisation’s ISO 13485 – Medical Devices, to which Siemens Healthineers AG is certified, requires the manufacturer to establish appropriate controls for all products and services obtained from both “external” and “internal” suppliers. A key part of this is ensuring that our suppliers agree contractually to abide by the Code of Conduct.
Siemens Healthineers AU maintains appropriate supplier quality management processes that meet applicable local legal and regulatory requirements as well as the requirements established by Siemens Healthineers AG. We evaluate and review our sustainability principles as part of the overall supplier quality management process at the following levels:
- Supplier Qualification: our supplier management processes ensure that all of our third party suppliers are onboarded following the same process
- Supplier Evaluation: our third-party supplier monitoring is based on a harmonised risk management framework that depends on the specific scope of delivery and product impact. This process describes how we ensure that feedback is provided to the supplier about any deficiencies with the products or processes.
- Supplier Development: activities aimed at sustainable cooperation between Siemens Healthineers and our suppliers as well as the continuous identification and realisation of optimisation opportunities.
3. Action taken to assess and address these risks, including due diligence and remediation processes
Assessment and mitigation of modern slavery risk
To ensure that Siemens Healthineers AU minimises the risk of modern slavery and the potential exposure to geopolitical risks including human rights, we utilise a risk-based methodology, including the Systain Consulting GmbH Sustainability indicators and global scores based on the most recent Organization for Economic Cooperation and Development (OECD) and Transparency International / Corruption Perception Index (TI/CP).
While Siemens Healthineers AG’s group of companies globally has robust processes in place to manage workplace relations, within our own organisation, we understand that the potential exposure to modern slavery is heightened when purchasing goods and services from third party suppliers. As a result, in the last 12 months Siemens Healthineers AU has, as a part of our supplier quality management process, improved our new supplier onboarding process by integrating additional risk-assessment methodology in FY18. This methodology allows us to categorise suppliers from lower / higher risk countries based on OECD and TI/CP Indexes as a determining factor for the supplier categorisation.
In addition to this, we assess all our existing suppliers with spend over EUR50,000 in Australia against Systain Consulting GmbH sustainability indicators. In FY19, the results of this assessment were as follows:
- 96.59% of suppliers (including associated Siemens entities) were categorised as low risk;
- 2.95 % of suppliers were categorised as medium risk; and
- 0.45% of suppliers were categorised as high risk.
Siemens Healthineers AU proactively engaged with a number of suppliers that fell into medium and high-risk categories, requiring these suppliers to complete a corporate responsibility self-assessment. This assessment focuses on a selection of important minimum requirements relating to governance in the supply chain. Based on the answers given by the supplier, corrective actions are generated in case of insufficient answers. The corrective action plan is then monitored, and in line with our supplier quality management framework, subsequently closed when the implementation is successfully completed.
If implementation of the required corrective actions proves ineffective, Siemens Healthineers AU will endeavour to resolve the issue in cooperation with the supplier. If the resolution is unsuccessful, Siemens Healthineers AU has the right to terminate the business relationship with the supplier.
4. How Siemens Healthineers Australia assesses the effectiveness of these actions
Our Compliance System – Management responsibility is the focus
Siemens Healthineers AG continuously develops our compliance system in order to adapt it to changing requirements according to our global business. Detection Modules (as explained below) monitor adherence with the requirements and principles of the Code of Conduct. Siemens Healthineers AU is required to comply with the global Siemens Healthineers AG compliance system through its chain of command.
Corporate Responsibility Detection Modules
We apply a risk-based approach to the identification of sustainability-related risks in our supply chain. This considers both internal and external information sources that enable us to focus our risk mitigation activities where they are most needed. Possible actions include the initiation of a development plan, a sustainability audit, or the termination of the relationship with the supplier.
- Internal - The internal approach is based primarily on our supplier qualification process and on regular supplier audits, which include an assessment of any change to modern slavery risk. These processes are designed to systematically identify potential risks in our supply chain that relate to corporate responsibility. Suppliers that perform below a certain threshold are evaluated individually to determine the next steps.
- External - To identify risk we also make use of external sources. Examples of such sources are Non- Governmental Organisation databases, media reports or whistle-blower information channelled through an independent Ombudswoman or ‘Let Us Know’ reporting hotline. A report of a suspected case of any breach against the requirements of the Code of Conduct is kept confidential and put through a clearing process to determine the next steps e.g. an Incident Driven Inspection.
The following risk-based Detection Modules exist within Siemens Healthineers AG:
- Corporate Responsibility Self-Assessment (CRSA): a company-wide standardized online questionnaire to evaluate suppliers' compliance with the Code of Conduct. The CRSA is repeated at defined intervals.
- Supplier Quality Audits: used to verify and continuously improve the quality and capabilities of suppliers. They may be conducted on a scheduled or ‘as needed’ basis.
- External Sustainability Audits: Siemens Healthineers AG has appointed internationally recognised auditing companies which conduct these on-site audits based on the principles outlined in the Code of Conduct.
- Incident Driven Inspections: carried out in cases where a suspected violation of the requirements of the Code of Conduct has occurred.
The ideal outcome of the above Detection Modules is an ongoing development of the supplier that, after the agreed implementation time, corrects all deviations from the requirements of the Code of Conduct. Should the Detection Modules demonstrate irreparable conditions, or should the proposed actions not be implemented by the supplier, Siemens Healthineers AU has the right to terminate the purchasing contract.
Grievances and Remediation Processes
All allegations of possible compliance violations are responded to in accordance with formal company-wide processes.
Siemens Healthineers AU:
- will examine all reports, investigate the relevant facts and take appropriate measures,
- does not tolerate any retaliation against complainants or whistle-blowers.
- maintains confidentiality and provide whistle-blower protection in accordance with applicable legislation
- will take appropriate action in the event of demonstrable violations, including disciplinary consequences.
- will apply the same principles to allegations of wrongdoings brought by suppliers and other third parties, to the extent legally permissible.
Globally, Siemens Healthineers AG has appointed an independent Ombudsperson to receive, monitor and assess possible violations in a confidential manner.
Our whistle-blower hotline “Let Us Know” provides a secure and confidential channel for reporting suspected non-compliant or otherwise problematic actions.
This Statement was approved by the Board of Siemens Healthcare Pty Ltd.
DATED: 7 July 2020