Building and maintaining strong relationships with stakeholders throughout our supply chain is critical to our success as an organization.
For decades, our strong supplier relationships have supported our health services operations. With our combination with Express Scripts, our supply chain has expanded and now includes the management of pharmacy benefits and drug procurement.
Although the primary purpose of our supply chain is to serve clients and customers, we take advantage of compelling opportunities to drive economic, social, and environmental impact through engagement with suppliers, distributors, and partners.
Global Procurement and Third Party Management
Global Procurement and Third Party Management (GP&TPM) is the combined procurement organization across Cigna and includes legacy Express Scripts’ Corporate Procurement group. GP&TPM manages strategic sourcing, purchasing, and supplier relationship management.
In 2019, Cigna’s GP&TPM team managed more than $4.9 billion in goods and services provided by over nine thousand suppliers globally. Our suppliers provide goods and services that support our information technology, operations activities, and internal corporate functions.
GP&TPM coordinates the sourcing, contracting, and purchasing of goods and services as well as internal and external relationship management. We continually focus on providing best-in-class procurement practices based on four guiding principles:
- Abide by the highest standards of ethical business practices in supplier selection, negotiations, determination of contract awards, and the administration of procurement activities.
- Conduct our business in a manner that demonstrates fairness to our shareholders, customers, communities, and suppliers.
Customer and Market Focus
- Anticipate and meet the expectations and requirements of our customers and clients in order to provide unparalleled strategic value.
- Understand the trends and market opportunities that affect our business and utilize this understanding to develop and implement strategies that effectively deliver value to our stakeholders.
- Promote an environment that fosters collaborative behavior and values diversity, resulting in trust, respect, mutual commitment, and thought leadership.
- Value many perspectives and incorporate learnings from others to enhance our own understanding and appreciation of differences in style, opinions, or approaches to situations.
- Develop sourcing strategies that harness Cigna's cross-enterprise expertise in order to effectively utilize our knowledge and analytics while properly aligning our objectives.
- Strategically leverage our collective strengths, expertise, and best practices in order to optimize the value delivered to Cigna's individual businesses worldwide.
With the combination of Cigna and Express Scripts in late 2018 came the addition of Express Scripts’ Supply Chain group. Supply Chain manages three major areas of prescription drug spend: formulary and rebate management, retail pharmacy networks, and pharmaceutical procurement for our owned pharmacies. In 2019, our network contracts covered over 70,000 retail pharmacies.
Our goal in Supply Chain is to source the highest-quality pharmaceuticals for our customers, while negotiating agreements that produce sustainable value to assist not only employer clients, but also patients in their efforts to lower overall healthcare costs.
As clients continue to experience increased cost trends, we are working to combat these price increases by developing new and innovative solutions, including condition-specific programs encompassing member engagement tools and cost-containment strategies; traditional and value-based pharmacy network solutions; and cost-effective, clinically sound formularies supported by clinical rules ensuring members receive the right medication at the right time for the right price.
More than one-third (37%) of our commercial plans decreased prescription drug spending in 2019.
Supply Chain Management Responsibility
We expect our business partners – including suppliers, distributors, and vendors – to share our commitment to integrity in human rights and labor, business conduct, and the environment. In order to be considered a potential supplier, a company must read and attest that they comply with Cigna's Policy Guidelines, including our Supplier Code of Ethics. The latter is standard in Cigna’s supplier contracts as no supplier is exempt. In addition to addressing integrity in business conduct and the environment, the Code addresses integrity in human rights and labor – describing our expectations in the areas of community, child labor, human trafficking, forced labor, wages and working hours, health and safety, freedom of association, non-discrimination, and harassment prevention.
As part of our Supplier Code of Ethics, we explicitly prohibit the use of child or forced labor, and request that our suppliers demonstrate ethics, compliance, and integrity in the following three pillars:
Integrity in Human Rights and Labor
Integrity in Business Conduct
Integrity in Environment
We utilize a third-party risk management software platform to proactively monitor supply chain risks. Our supplier risk assessment evaluates 17 dimensions of risk, including risks related to financial solvency, privacy, and information protection. We conduct executive business reviews and utilize an “early warning system” that allows us to identify and address emerging risks among suppliers. Based on supplier risk assessment results, select suppliers’ internal controls for financial reporting, business operations, information technology, and compliance obligations under their contractual agreement(s) with Cigna are audited. All audit findings are reviewed and analyzed for discrepancies. If discrepancies are found, we then work with suppliers to develop and implement corrective action plans as warranted.
In 2019, we finalized our plan to launch a formal Sustainable Supply Chain program. The new program focuses on seven key areas: commitment, communications and reporting, supplier evaluation and selection, sustainable sourcing, generating business value, as well as partnerships and collaborations. We are launching the program with a supplier sustainability survey, which we will then leverage to create an engagement plan.
Promoting Diversity and Inclusion
Our history of promoting supplier diversity dates back to the 1970s. Each year we aim to identify new ways to expand contributions within local markets and deepen engagement with and support of small and diverse suppliers.
Supplier diversity expands and enhances our corporate relationships and experiences and contributes to our ability to better understand and serve our broad spectrum of customers. Cigna's program is designed to support its purchasing needs and engage the very best suppliers, including those who share our commitment to integrity, quality, and efficiency.
The success of small, minority, women, veteran, and LGBTQ+ owned businesses – as well as other underrepresented suppliers – adds to Cigna's success and to the communities we serve. Often, these suppliers can provide the best combination of total cost, quality, and service, which contributes to healthy competition and a level playing field for all potential and existing suppliers. Additionally, our supplier diversity work aligns with and furthers our company's diversity goals and objectives.
Cigna is a long-standing corporate member of various development organizations, including the National Minority Supplier Development Council (NMSDC), the Women's Business Enterprise National Council (WBENC), and the National Veteran Business Development Council (NVBDC). These organizations provide a direct link between large corporations and diverse suppliers. It is our goal to continue to cultivate these alliances to ensure an equal opportunity for all companies who want to do business with Cigna. To this end, Cigna furthered its commitment to these organizations in 2019 by sponsoring the annual conferences for NMSDC and WBENC.
Our annual economic impact statistics for 2019 are:
- $466 million in diverse spend; purchases from small1 and diverse suppliers.
- $865 million in economic contributions delivered through three channels: direct, indirect, and induced.
- 3,011 jobs supported at small and diverse suppliers.
- $175 million in earnings through jobs with small and diverse suppliers.
Additionally, we continue to work with our “prime” or Tier 1 suppliers, to encourage them to embrace our values and goals of including diverse suppliers in their supply chain. By encouraging our Tier 1 suppliers to do business with diverse suppliers and share this information with Cigna, we reflect a portion of this spend in our Tier 2 program. A Tier 2 supplier is a supplier that invoices a Tier 1 supplier for goods and services rendered.
In 2019, we established a goal to increase diverse spend (Tier 1 and Tier 2) to 15% by 2023.2
As Cigna and Express Scripts integrated in 2019, supply chain partnered with Diversity and Inclusion (D&I) to raise awareness about the benefits of supplier diversity and empower employees to take personal accountability for driving diverse spend within their business functions by providing them with resources on how to find diverse supplier opportunities and partnerships.
Our supplier diversity efforts gained recognition in 2019 from regional development councils for minority suppliers across the U.S.
Cigna’s Supplier Mentor Protégé Program & Supplier Development
In 2016, we launched our 18-month Cigna Supplier Mentor Protégé Program. Program participants are diverse suppliers who are paired with Cigna executives, who mentor them on how to develop strategies to strengthen and expand their businesses. During the program, each protégé has monthly meetings with their mentor and participates in quarterly onsite forums to learn about industry best practices from subject matter experts. This program typifies our commitment to helping diverse suppliers grow their businesses, so that they can continue to contribute to their local communities.
In 2018, we graduated our inaugural class of diverse suppliers. Instead of ushering in a new class in 2019, we sought to make improvements to the program by reviewing and integrating feedback from participants and mentors in addition to looking to similar programs for best practices. We look forward to relaunching an improved program in 2020 and are in the process of recruiting for our upcoming class.
Our commitment to the ongoing development of diverse suppliers extends beyond our Supplier Mentor Protégé Program. In 2019, we hosted several “road shows” to educate diverse suppliers in our local communities about how to do business with Cigna. Additionally, we provided scholarships to two of our suppliers to attend the Tuck Executive Education Program at Dartmouth Business School. The two scholarship recipients also received a year of mentoring from Cigna's Chief Procurement Officer.
Challenges and Opportunities
We are proud of the accomplishments that we have achieved to date, particularly as our Supply Chain and GP&TPM functions have grown in scope, size, and complexity since the integration. With that said, we are always striving to increase our support of D&I and environmental efficiency initiatives throughout our supply chain. In 2020, we are collectively focusing on the following:
- Advancing national, local and regional diverse partnerships by building on baseline metrics from our economic impact analysis.
- Increasing diverse spend within our key sales markets in 2020.
- Continuing the integration of diverse suppliers.
- Developing a robust, sustainable supply chain program that mitigates environmental, social, and governance risks; creates opportunities; and adds value.
1As defined by U.S. Small Business Administration, A Handbook for Small Business Liaison Officers, June 2010, https://www.sba.gov/sites/default/files/articles/Small_Business_Liaison_Officer_(SBLO)_Handbook_6_2010.pdf.
2In 2019, the baseline diverse spend was 10%.