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31 May 2018

Value Chain Management

Value Chain Management

For SCG, sustainability in the supply chain from upstream to downstream is essential to its sustainable business operations. Therefore, it creates Sustainable Value towards suppliers. SCG intends to the selection process of suppliers with the capacity to conduct business ethically, with professionalism and preparedness to adapt to changes that impact sustainability under the risk management plan. We also value co-generation of opportunity with our suppliers, under an efficient assessment program.

Target

  • 80% of Procurement Spend come from Suppliers who commit to comply with SCG Supplier Code of Conduct by 2020
  • 100% of Focused Suppliers participating in the Supplier Development Program for Sustainability by 2020

Strategy

 1. Select and assess suppliers with the capability for sustainable business

Select suppliers on the basis of commitment to comply with SCG Supplier Code of Conduct, and capacity for sustainable business. Conduct for assessment and certification of suppliers annually and continuously in order to mitigate risk in the supply chain

 2. Assess risks and classify suppliers into groups

Conduct spend analysis and business risk assessment, taking into account

Environmental, Social and Governance (ESG) factors. Prioritize risks that may affect SCG business. The results are then used to classify suppliers and frame a strategy and supplier development plan corresponding with the risk.

 3. Develop supplier’s capability towards sustainability

Organize and plan a development program aligned with the risk, while seeking to strengthen the supplier’s competitiveness to facilitate their grow alongside SCG.

 4. Raise awareness, knowledge and people’s competency

Establish a Procurement Sub Academy Steering Committee to enhance the knowledge and competency of employees. Share knowledge, information, operational guidelines with procurement entities in both public and private sectors with an emphasis on procurement and sustainability. This is to ensure that our people work effectively in line with targets.

Supplier Risk Assessment and Segmentation

SCG conducts assessment of supply chain risk management on an annual basis. In 2017, streamline supplier segmentation process to align with risk and significance by applying an enterprise risk management framework and spend analysis with increase clarity in considering factors impact to business to classify Critical Supplier and incorporating details on Environmental, Social and Governance (ESG) risk factors to identify High Potential Sustainability Risk Supplier. To ensure effectiveness of supplier management, SCG conducts various approaches such as Diversified Source of Supply, Supplier Assessment, Corrective Action by providing supplier advice to improve their work processes to in line with Green Industry standards (Go Green Together) as well as Supplier Development for Sustainability Program with Focused Suppliers or potential suppliers who have capacity and commit to work and grow sustainably with SCG.

Supplier Strategic Approach

Supplier Governance and Assessment

SCG has developed Supplier Code of Conduct to offer guidelines to encourage our suppliers to behave as good citizens and Conduct business with ethics, transparency, labor caring practices, human rights, compliance with laws and responsibility to society and the environment

Moreover, SCG conducts supplier assessment and certification programs to manage risks, define mitigation plans, and evaluate performance based on jointly developed mitigation plans.

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