Supply Chain Management

 

 

Introduction

The Company recognizes that proper governance, oversight and compliance with regulations related to procurement is critical to the sustainability of our businesses and to meeting customer expectations. Hologic’s Procurement and Supplier Quality Guidebook is shared with our suppliers, with the stated purpose of clearly communicating Hologic’s quality requirements and commercial expectations for suppliers of raw material, components, sub-assemblies, original equipment manufacturers, contract manufacturers and service providers. Our Supplier Quality Guidebook contains our Supplier Code of Conduct, and enables us to:

• Build solid partnerships with strategic suppliers.
• Support suppliers in manufacturing best-in-class products.
• Ensure partners sustain an ongoing commitment to quality.
• Help partners execute customer-focused objectives.

•>

Supplier Compliance

As a global company, Hologic is required to comply with numerous standards, regulations, directives and laws, as part of maintaining a Quality Management System (QMS). Our suppliers are required to follow these same regulations.

1. Supplier Code of Conduct

General Principle: Hologic suppliers’ plants operate in compliance with the laws of their respective countries and with all other applicable laws, rules and regulations.

Environment: Hologic suppliers’ plants comply with all applicable environmental laws and regulations.

Child Labor: Hologic suppliers employ only workers meeting the applicable minimum legal age requirements. Suppliers must comply with all other applicable child labor laws.

Wages and Hours: Hologic suppliers set working hours, wages and any overtime pay in compliance with applicable laws.

Supplier Discrimination Policy: Hologic suppliers hire, train, compensate, discipline and terminate workers solely on the basis of their ability to do the job assigned, not based on their race, color, gender, ethnic or national origin; sexual orientation; religion; age; maternity or marital status; or any other trait not pertinent to their professional performance.

Supplier Gift Policy: Hologic suppliers and employees do not accept gifts from entities that deal with Hologic that could imply a conflict of interest or that have more than modest value.

2. Supplier Non-Disclosure and Confidentiality

All Hologic suppliers are required to sign and adhere to non-disclosure agreements. In addition, we expect suppliers to instruct their employees not to discuss any information relating to Hologic business that falls outside of their defined responsibilities. This includes, but is not limited to, any information concerning current or planned products, designs or volumes.

3. Supplier Use of Intellectual Property

Designs, drawings, CAD data, test results, process sheets, validation protocols and data, and incoming inspection information that is provided to suppliers and/or developed by a supplier and paid for by Hologic are considered to be the property of Hologic. This information must be safeguarded and transferred upon request. In addition, any use of Hologic assets or intellectual property for any purpose not related to Hologic products and/ or operations requires prior written permission from Hologic. Suppliers may not display or use the Hologic logo or any products or branding without written permission from Hologic.

4. Supplier Notification

Suppliers must notify Hologic in a timely manner of any event that could impact the supply or quality of product. We consider our suppliers an extension of our manufacturing processes and a critical part of our success, and therefore, we provide necessary support, whenever possible, to address any disruption of supply.

5. Business Continuity and Risk Management

To prevent potential disruptions of supply, which can have a direct impact on our customers and their patients, we ensure that our suppliers (and their suppliers) have well-defined, documented plans to identify and mitigate supply chain risks. These plans identify risks and mitigation plans related to single, sole sources of supply, impacts to the supplier’s physical plant or infrastructure, and/or the availability of raw material. The plans should be reviewed and updated regularly and made available to Hologic for review.

Supplier Diversity Program

A diverse supplier base provides focus on the highest standards of quality, strengthens our ability to meet customers’ needs, and connects us with our customers, their patients, and our shared communities. Hologic continuously pursues supplier diversity, both voluntarily and through a range of federal, state, and local requirements that require that we develop and track efforts to use suppliers within classifications such as Minority-Owned, Veteran-Owned and Woman-Owned.

Risk Management and Governance

Hologic recognizes the importance of managing, monitoring and measuring our suppliers’ performance closely. We have a defined Supplier Quality Management (SQM) process that includes the following:

• A consistent and integrated process to classify, evaluate and approve suppliers.

• Processes to execute supplier performance monitoring to ensure specified requirements are met, including an approach to review suppliers’ performance and scoring.

• Processes to manage supplier-and Hologic-initiated changes to products, processes and/or services, and to ensure compliance with specified requirements for products, processes and/or services provided to Hologic by suppliers.

Supplier Tiers and Classification

Our suppliers are classified based on their potential risk level, and the impact the supplied product or service could have on the form, fit or function of the Hologic finished product or quality system. These classifications influence how we interact with our suppliers and how critical suppliers are identified.

Our supplier segmentation procedure also establishes additional guidelines for how we interact with our suppliers. The process for categorizing Hologic’s suppliers promotes greater partnership with key suppliers to foster R&D collaboration, improve quality, reduce risk, improve on-time delivery performance, and reduce cost. We track the annual spend with our most critical suppliers. Annually, or as needed, our supply chain teams review our current supplier segmentation to determine if any changes are warranted. Supplier classifications are defined as follows:

Strategic Suppliers: Have the ability to meet and/ or exceed the requirements of preferred suppliers, plus are willing to make investments at risk to provide access to cutting edge technology or services that provide Hologic a marketplace advantage.

Preferred Suppliers: Have the ability to meet and/or exceed our quality, delivery and service requirements. In addition, these suppliers provide best-in-class pricing, prototyping, technical support and innovation. Preferred suppliers shall be allowed to work with R&D and sustain engineering on new projects and changes.

Core Suppliers: Suppliers deemed acceptable for business that do not meet the preferred or strategic classification. They meet an acceptable level of quality, delivery, service and cost. New suppliers start at this level.

Restricted Suppliers: Are not meeting the business needs of Hologic or are a potential new supplier to be used in a limited capacity. Restricted suppliers require authorization from management before any new business is awarded or are incorporated into new or revised product designs.

Unapproved Suppliers: Continue not to meet Hologic’s quality and business expectations. These suppliers have been removed from our approved supplier list and should not be used.

Supplier Performance Monitoring

Supplier performance is monitored per Hologic’s performance monitoring process. This includes product quality and service metrics, as well as on-time delivery. Our process enables us to monitor and assess our suppliers’ ability to consistently meet requirements and is tracked via supplier performance monitoring scorecards.

Supplier Risk Management

We have a formal process to identify potential risks in the supply chain. We perform supplier continuity risk assessments, conduct supplier monitoring as described above, and manage risks based on our supplier segmentation guidelines. Our supplier risk assessments are performed from three vantage points: quality risk, supply continuity risk, and information services data risk. The approaches and scope vary for each type of assessment, and the breadth of evaluation will always vary, as the risks differ and are inherent to the nature of business relationships with each supplier. We maintain tracking metrics on the percentage of the supply chain covered by risk assessments.