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Sustainable Procurement Management

Sustainable Procurement Management

Our close relationship with our business partners allows us to improve the standard and quality of our raw materials through knowledge sharing and activities that expands our notion of sustainable business development and growth

GRI 308-1, GRI 414-1
ISO 26000 ISO 9001 ISO 14001 ISO 45001 and TLS 8001

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Management approach

Through our sustainable procurement policy, we work closely with our business partners and stakeholders to create awareness and understanding of responsible approach towards sourcing of raw materials and development of internal processes to manage and monitor potential areas that may result in human rights or environmental violations in our supply chain.

Policy : Sustainable Procurement Policy

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Stakeholders :

Customers, Communities, Suppliers, and Business Partners

Short-term goals :

  1. More than 99.5% of raw materials and packaging are according to specifications
  2. More than 90% of raw materials delivered according to schedule
  3. Procure more than 1% of revenue from asphalt business of green product
  4. At least 0.5% of revenue from asphalt business procured locally

Long-term goals :

  1. Improve internal processes to increase efficiency of procurement
  2. Utilize data analytics to better manage procurement processes

2023 Key Performance(s) :

  • 95.65% of raw materials and packaging quality are according to specifications
  • 100% of raw materials and packaging delivered according to schedule
  • Green Products Procured: 1.06% of revenue from asphalt business
  • Local Procurement: 0.51% of revenue from asphalt business
  • Supplier ESG Audit for 10 Suppliers: Self-Assessment 6 Suppliers and On-Site Visit 4 Suppliers
  • Conducted awareness workshop for our buyers on Climate and Greenhouse Gas Management

Local Procurement

In 2023, we made efforts to expand our support for communities near our factory. In addition to promoting local products, we also broadened our concept and approach to community support. This included procuring and utilizing contractors from the surrounding communities of our branch factories in Thailand, amounting to a total of 55.16 million baht. This figure indicates a decrease compared to the previous year, which aligns with the economic and market conditions.


Total Local Procurement (Million Baht)

Green Procurement

We are dedicated to continuously promoting the procurement of environmentally friendly raw materials, products, and services for use in our production processes and operations. However, in 2023, the value of green procurement amounted to only 113.75 million baht, representing a decrease from the previous year. This decline can be attributed to changes in the government’s policy, specifically the reduced use of Natural Rubber Modified Asphalt Concrete. Consequently, the demand for raw materials used in the production of such products significantly decreased


Total Green Procurement (Million Baht)

Supplier Management

We are committed to the consistent of good corporate governance, which encompasses the establishment of policies and guidelines for sustainable procurement. Our goal is to enhance the value of goods and services from producers, service providers, and suppliers, focusing on value improvement from production to delivery, while also championing social responsibility throughout our company group’s value chain. Our key suppliers fall into two primary categories as follow:

  1. Primary Key Suppliers (Critical Tier 1 Suppliers): These are direct suppliers listed in our vendor database, providing goods and services to us. We continually evaluate these suppliers cover environmental, social, governance, quality, pricing, delivery performance, labor standards according to predetermined criteria that our business group has been specified
  2. Critical Non-Tier 1 Suppliers: These vendors supply goods or services to our Primary Key Suppliers (Critical Tier 1 Suppliers).

In addition to identify critical supplier, beside considering from trading value, the company will consider other criteria as follow:  

  1. Supplier who provide raw materials or main packaging that significantly impact on production, operation, and competitive  advantages    
  2. Supplier operating within Monopoly or Oligopoly markets.   
  3. Services capability, consistency, continuity, and long-term relationship 
In 2023, Tipco asphalt company limited procured goods and services from 903 supplier, of which 46 were identified as critical suppliers(Tier 1 Supplier)(5% of the total supplier). Among these, 34 suppliers provided raw materials and 12 supplied packaging containers. However, there were no new critical suppliers identified in 2023, and an analysis of supplier within the critical non-tier 1 supplier group has not yet been conducted.

Sustainable Supplier Selection and Evaluation

When seeking and selecting potential new partners, the procurement department collects vendor information and evaluates their capabilities based on the organization’s predefined criteria and standards. This evaluation encompasses quality, pricing, delivery, Thai labor standards, human rights compliance, workplace safety, social responsibility, and environmental preservation. Vendors meeting the company’s criteria are included in the registered partner list for further procurement consideration.

For partners already registered, the procurement team will conducts the re-evaluation twice a years, covering the following topic
  • Quality standards
  • Pricing
  • Deliver Performance
  • Lead Time
  • Credit terms
In 2023, there were no issue or withdraw from partners registration regarding the re-evaluations conducted in May and December
 
To evaluate ESG capabilities or conduct a Supplier ESG Audit, an annual supplier audit will be performed. This audit encompasses economic, social, environmental, and corporate governance topic. Additionally, Follow up the risk management standard in which indicate risk arise from supplier (ESG RISK), ensuring compliance with the “Ethics of supplier” guidelines at least once a year.
 
Methodology assessment:
  • Self-assessment
  • on-site visits
  • Online site visits, considering the situation and environmental factors each year.
Criteria for selecting suppliers for ESG capability assessment include:
  • Suppliers of raw materials or new packaging not readily available in the market.
  • Current suppliers of raw materials or packaging containers. 
For evaluating current suppliers, The following considerations apply:
  • Suppliers in the raw material and packaging group who identified as critical suppliers(Critical Tier 1 Suppliers).
  • Previous trading value.
  • Resumption of orders after 400 days of inactivity.
However additional conditions may be applied beyond the established criteria to align with the company situation and operations each years
In 2023, There are 10 supplier ESG audit, of which 6 suppliers were self Assessment while the other 4 suppliers were on-site Visit. Upon assessment inspection, There were no ESG risk or any complain arise.
Assessment Topics
% of Critical Tier 1 Suppliers (2023)
Post-Delivery: Product Quality
100%
Post-Delivery: Suitable Pricing
100%
Post-Delivery: Payment Duration
100%
Post-Delivery: Delivery Capability
100%
Post-Delivery: Delivery Duration
100%
ESG Assessment: Supplier on-site assessment
8.7%
ESG Assessment: Self-Assessment
13%

Developing and Supporting Suppliers

We recognize the significance of nurturing resilient local businesses that can achieve self-sustainable. Our group of companies is fully committed to nurturing the growth of business management expertise among local partners, especially those situated near our branch factories.
 
This dedication also extends to promoting the procurement of environmentally friendly products and services, as well as raising awareness among partners about the environmental impacts of production processes. Our objective is to enhance our business operations through the implementation of environmentally conscious procurement policies and by providing support to partners who embrace eco-friendly practices.
 
Above all, we understand that the long-term success of promoting sustainable local sourcing and environmentally friendly procurement relies on the development of knowledge and the creation of awareness. Our procurement and supply chain personnel play a pivotal role in driving these initiatives with steadfastness and integrity. As a result, we are fully committed to enhancing their learning in these domains.
 
In the past, we have facilitated the growth of partners through the Green Network, a level 5 green industry program that instills a green industry mindset among partners and collaborators. This has yielded improved understanding and acceptance between the industry and the community, leading to resource and energy conservation, cost savings, and competitive opportunities. In the year 2023, the Phra Pradaeng and Rayong factory achieved a level 5 green industry certification from the Green Network, highlighting our continuous dedication to a green supply chain. We remain committed to assisting partners and collaborators in obtaining green industry certifications.

The elevation of sustainable business operation awareness

We are committed to good corporate governance and ensure equitable and fair treatment of our partners, aiming to promote sustainability in the supply chain through the following sustainable procurement policy:

  • All partners are treated with equity and fairness.
  • The supplier selection process is conducted transparently and without corruption.
  • Negotiations regarding payment terms are conducted fairly to support suppliers cash flow.
  • we strictly adhere to the terms agreed upon in our agreements.
In 2023, company upheld an average payment period of 44.37 days to suppliers and creditors, ensuring adherence to agreed-upon terms without any complaints from partners regarding missed or delayed payments from partners
 
The consistent and earnestness implementation of this policy underscores the company commitment to building good and fair relationships with suppliers
Title
2020
2021
2022
2023
Average Payment Periods (Days)
82.81
50.63
44.01
44.37

Development and enhancement of supplier through the sustainability

We are aware of business development through a significant and strong sustainability. We are focused on operation under good corporate governance and considering an impact to environmental, social, and all stakeholder group

   Environmental 

  • Promote and develop green industry through sharing the knowledge and experience to employees and supplier
  • In 2023, Rayong and Phra Pradeng factory pass the certify from green industry level 5 green network
  • Support our supplier in receiving Green Industry level 3

   Social

  • Provide knowledge and training to procurement staff to become instructors in basic first aid and CPR courses
  • Develop a training program for basic first aid and cardiopulmonary resuscitation (CPR for Life) for employees of one key business partners
Governance
  • Modify the policy to be adopt to sustainability
  • Consider reviewing the operational processes and ethical conduct of partner to support sustainable business goals