Supply Chain Stewardship
Strategy
Management
Establish a supply chain partner development committee to formulate strategies and plans at business-level in line with the sustainable business partner development approach and promote training of business partners in accordance with sustainable development guidelines.
Supplier Diversity
At SCGP, we firmly believe that a diverse supplier base not only enriches our company but also strengthens the communities and society. We embrace diversity as a core value and recognize that diverse suppliers bring unique perspectives, experiences, and innovations to our supply chain.
Therefore, we are open to providing enterprise procurement opportunities to small businesses owned by women, people with disabilities, veterans, minorities, and LGBTQ+ individuals.
Conflict minerals
At SCGP, we have implemented measures to ensure that we do not source or utilize conflict minerals, namely tantalum, tin, tungsten, and gold, that have been extracted or brokered by armed groups.
These minerals, mined from the Democratic Republic of the Congo and its neighboring countries, have long been associated with significant international concerns. They serve as a source of funding for armed groups and contribute to the escalation of conflict, human rights violations, and environmental degradation.
Conduct risk assessment and certify all suppliers annually and continually, applying enterprise risk management framework covering environmental, Social, and Governance issues and spend analysis.
Segment supplier into 4 groups: general tier 1 supplier; critical supplier; high potential sustainability (ESG) risk supplier and critical non-tier supplier.
Segment Supplier into 4 Groups
Suppliers:
Risk Suppliers:
Suppliers:
Suppliers:
Significant Supplier Monitoring | Year | |||
---|---|---|---|---|
2020 | 2021 | 2022 | 2023 | |
Critical Tier 1 Suppliers | 6 | 7 | 2 | 4 |
High Potential ESG Risk | 0 | 0 | 0 | 0 |
Significant Supplier (Critical Tier 1 Supplier + High Potential ESG Risk) | 6 | 7 | 2 | 4 |
Critical Non-Tier 1 Suppliers | - | - | 38 | 22 |
Total number of supplier assessed via supplier Desk Assessments / Supplier on-site assessments (Significant Supplier + Critical Non-Tier 1 Suppliers ) | - | - | 40 | 26 |
% of total spend on significant suppliers in Tier-1 | 12 | 10 | 1 | 0.4 |
Criteria | Weight |
---|---|
Environment and occupational health & safety management | 30% |
Quality Management Policy and ESG policy | 25% |
Human Rights Management | 15% |
Resources Management | 10% |
Production | 10% |
Distribution | 5% |
Compliant management | 5% |
Supplier Evaluation and Audit
SCGP has a process for regularly Supplier desk assessments and Supplier on-site assessments and evaluating suppliers’ performance in terms of delivery scheduling covering product and service quality, as well as criteria for assessing environmental, social and governance (ESG) risks in their operation which considers the impacts on environment, society along with business continuity comply with international standard such as ISO9001, ISO14001, ISO45001, ISO50001, TIS/OHSAS18001, UDHR, UNGC, UNGP, and ILO etc.
Suppliers shall meet a minimum requirement 70%.
Approach
- Evaluate supplier’s capability by taking into account Environmental, Social and Governance (ESG) impact.
- Use Site Visit Questionnaire/Supplier Desk Assessments/Third-Party Audit (Independent Accredited Auditing Company) to inquire into business practice as well as ESG impact.
- Conduct On-Site Visit/Supplier Desk Assessments/Third-Party Audit (Independent Accredited Auditing Company) , and inform results of assessment along with supplier development plan, to increase the capacity of sustainable enterprise management.
Significant Supplier-Critical Supplier
Conduct Supplier Assessment, according to the type of business risks efficiently, including the following:
- Plant Reliability Assessment, through site visit and review of business operation/approach
- Supplier Desk Assessments
- On-site Audit to be conducted by an internal entity within the BU/company
- Monitor critical non-tier 1 supplier, using Significant Supplier-Critical Supplier Questionnaire or through interviewing, or conducting media and stakeholder analysis
- Third-Party Audit (Independent Accredited Auditing Company), or business assessment criteria, as well as Environmental, Social and Governance impact.
Significant Supplier-High Potential Sustainability (ESG) Risk Supplier
Perform Supplier on-site assessments through either a Third-Party Audit (Independent Accredited Auditing Company) or by an internal entity within the Business Unit.The ESG assessment encompasses specific criteria, accompanied by actionable recommendations aimed at addressing any identified gaps. In terms of audits, there are Supplier Desk Assessments, On-Site Audit, and Third-Party Audit(Independent Accredited Auditing Company) . If a supplier is unable to meet the specified standards and criteria, the company will consider temporarily suspending the purchase or removing the supplier from the list of vendors. By conducting an ESG assessment, if they are identified as a Significant Supplier-critical supplier with a high risk rating, SCG will conduct thorough investigations and develop timely corrective and preventive actions, ensuring continuous follow-up and re-assessment until improvements are achieved.
Formulate supplier development and capability enhancement plan for consistency and efficiency.
Credit Term Policy for Suppliers
Current situation resulted in an economic recession, causing entrepreneurs to have lack liquidity. SCGP realized the situation and wanted to maintain the supply chain as well. Therefore, SCGP encouraged SCGP's SME partners to continue their business without any financial liquidity problems by setting 'Credit Term Policy' to reduce the credit term to allow business partners to increase the working capital faster with payment in 7-180 days depends on products categories.
In 2022, the average payment period was 34 days.
Supplier Development and Capacity Building
Supplier Day 2022
SCGP, together with SCG and affiliates, organized “Supplier Day 2022” to communicate and encourage participation in solving world problems by applying ESG 4 Plus and the revised Supplier Code of Conduct which addresses the important issues that are in the interest of stakeholders such as forced labor and environmental data collection to suppliers. Moreover, the workshop on topic 1. Human Rights, 2. Climate Change and 3. Governance and Business Ethics was held to share ideas and acknowledge as well as support needed for the future development of the partnership. There were 123 participants from 81 key suppliers.
Supplier Day 2023
SCGP organized the SCGP Supplier Day 2023 to engage with business partners on various ESG topics, including COC, Human Rights, Anti-corruption, and GHG. The event also covered topics related to Safety, such as LSR-GSR and Good transportation. A total of 650 business partners (with 1,300 attendees) were invited to participate in the event, which took place in 7 rounds throughout the months of April and May 2023.
GHG scope 3
SCGP organized a training program on carbon footprint assessment for its business partners. The purpose of this program was to provide understanding of SCGP's ESG policies and guidelines, specifically focusing on GHG scope 3 emissions. The training covered the process and methods for collecting carbon footprint data. The session took place online on February 15, 2023.
In-depth Technical Support Program
Our In-depth technical support programs and technical knowledge support aim to systematically build ESG performance in key ESG areas .The programs include training, baseline assessments, collaborative system development, and regularly tracking progress.
1) Enhance Competency in Service with Waste Management Suppliers
SCGP has undertaken a project to develop a waste management supplier in order to reduce the potential risk of waste transportation from SCGP's factory to the supplier’s site. The training to the supplier's employees to raise awareness on safety and providing quality services with heart provided by expert instructors from SCG Skills Development School. In result there was no complaints of safety violations or service issues in 2022. In the future, key performance indicator (KPI) evaluations will be conducted every quarter to create lasting change.
2) GHG reduction project
SCGP is collaborating with a significant suppliers that has a relatively high energy consumption in their production process. The collaboration aims to study the feasibility of utilizing renewable energy, specifically solar cells. The goal is to reduce the amount of electricity purchased and increase the use of renewable energy sources.
3) Sourcing EV Transportation Service Suppliers to Reduce Greenhouse Gas Emissions
SCGP is commited to reducing greenhouse gas emissions in its operations and has partnered with a supplier providing electric vehicle (EV) transportation services, which are efficient and can meet various types of work requirements. This is intended to replace the coventional use of fossil fuel vehicles. The initiative began with EV delivery trucks, after studying and testing them with suppliers since 2021. For Transporting paper rolls and pulp between factories in Ratchaburi Province and Saraburi Province, SCGP invests in the installation of electric charging stations at origin and destination, and will begin operations for finished product transportation at the beginning of 2023 with 7 vehicles from selected suppliers, and will expand its operation to other product groups and shuttle buses for employees in the future. Additionally, electric vehicle (EV) trucks for transporting goods can reduce greenhouse gas emissions by 475,087 kilograms of carbon dioxide equivalent per truck per year, and reduce energy costs by 50-60% compared to a diesel truck.
Sustainable Procurement Framework
SELF-LEARNING
Sustainable Procurement Framework refers to the tool of ensuring the management of sypply chain risk.
This course consists of an introduction, the definition and four elements.
Element 1 is ther commitment. It is about policy and expectation.
Element 2 is six steps of the procurement process.
Element 3 is the measurement.
The last element is reporting and communication
Company Buyers Training Program
To provide the knowledge and abilities to understand th target of ESG program and procurement practices, Sustainable Supplier Committee conducts the E-learning system in order to enhance the skills and abilities of company buyers.
The E-learning system was established to support learning and understanding of the Sustainable Procurement Framework, which is a guideline for SCG Group companies to implement sustainability with their suppliers. The document establishes a process for risk management encompassing economic, environmental, social, and governance (ESG) as well as approach that is appropriate to the risk level, taking into account quality, quantity, delivery of products and services according to the customer’s requirement, and compliance with laws and quality assurance systems, with a view to preventing and mitigating risk. The online learning takes about 30 minutes and there is a Post Test system to measure knowledge after studying.
Target
100%
100%
100%
Performance 2023
contractors.
5,474 million Baht
or accounted for 18%
of total procurement
SCGP guarantee the origin of pulp, wood logs and wood chips used in our manufacturing through FSC™ Certification
Pulp Sourcing
100% of our imported pulp is FSC™-certified
Wood Logs & Wood Chips Sourcing
100% of wood logs & wood chips used in our manufacturing is FSC™-certified
- 5% is FSC™-FM (Forest Management) from SCGP forestry products and contracted farms
- 95% is FSC™-CW (Controlled Wood) from external sourcing (FSC™ controlled wood mitigates the risk of forest products originating from unacceptable sources)
The Ratio of Procurement Spend on Products and Services by Category in 2023
The Ratio of Procurement Spend on Products and Services by Group of Suppliers in 2023
The Ratio of Procurement Spend of High Potential Sustainability Risk Suppliers in 2023
Critical Suppliers
SCGP has 4 critical suppliers
Risk of critical suppliers
- Suppliers with high spending volume
- Suppliers provide critical component
- Suppliers provide non-substitutable component
Examples of Corrective Action and Mitigation Plan for Significant Supplier
- To monitor critical suppliers-related supply chain
- To monitor critical suppliers’ operation
- Diversification of Suppliers
- Supplier Evaluation and Selection
- Long-Term Contracts and Relationship Building
- Continuous Monitoring and Risk Assessment
- Encouraging Supplier Collaboration
Sustainability (ESG) Risk Suppliers
SCGP has zero high potential sustainability (ESG) risk but we have medium and low sustainability (ESG) risk suppliers
Examples of Sustainability risks of suppliers
- Non renewable natural resource utilization
- Potential environmental impact from operation activities
- Hazardous waste generation from some component in the product
Examples of corrective action
- Reduce and effectively use non renewable natural resource in production as well and seek substitute raw material
- Follow up operation of medium ESG risk supplier and reduce activities caused environmental impact
- Collaborate with supplier to develop product to use less resource with same property/quality
Corrective actions have been monitored under the oversight of SCGP Sustainable Supply Chain Committee
Supplier Collaboration & Partnership
We encourage our wood logs & wood chips suppliers to participate in our sustainable sourcing initiatives:
- Set work instruction to address and assess risk of the origin of wood logs/chips
- Conduct training to enhance knowledge and competency
- On-site visit to give suggestion and recheck compliance
Collaboration with suppliers to address impacts of raw materials
Sustainable Supply Chain Measurement
To ensure implementation of sustainability by supplier, and efficient proceeding of procurement as well as compliance and compatibility with the Sustainable Development Framework under governance principle, performance has to be measured by taking into account the following:
Examples of Measurement
Implementation | Key Performance Indicators |
---|---|
Supplier Selection, Approved Vendor List |
|
Spend Analysis |
|
Supplier Assessment |
|
Supplier Segmentation |
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Supplier Evaluation and Audit |
|
Initiation and Improvement Plan |
|
Supplier Governance and Enhance towards Sustainability
Strategy | Implementation | Measurement | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Target | |
Economic | Select and assess suppliers with the capability for sustainable business. |
|
Evaluate suppliers under Approved Vendor List (AVL) with vendor evaluation (QCD Supplier Evaluation). | 100% | 100% | 100% | 100% | 100% | 100% | 100% suppliers under Approved Vendor List (AVL) receive vendor evaluation (QCD Supplier Evaluation). |
Conduct risk assessment and supplier segmentation to formulate strategy and supplier development plan corresponding with the risks. |
|
Assess and classify critical suppliers. | 100% procurement spend (18% procurement spend is from critical suppliers) | 100% procurement spend (17% procurement spend is from critical suppliers) | 100% procurement spend (14% procurement spend is from critical suppliers) | 100% procurement spend (10% procurement spend is from critical suppliers) | 100% procurement spend (1.0% procurement spend is from critical suppliers) | 100% procurement spend (0.4% procurement spend is from critical suppliers) | ||
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Assess sustainability risks (ESG Risk). | 100% procurement spend | 100% procurement spend | 100% procurement spend | 100% procurement spend | 100% procurement spend | 100% procurement spend | 100% suppliers of the procurement spend pass the annual ESG risk assessment every year. | ||
Environment | Develop and enhance supplier's capability towards sustainability. |
|
Green procurement and products on the Green Procurement List. | 5,806 million baht | 4,363 million baht | 4,790 million baht | 5,421 million baht | 4,883 million baht | 5,474 million baht | |
14 products | 14 products | 14 products | 16 products | 16 products | 21 products | |||||
|
Suppliers achieve the Green Industry Level 2 or higher certification. | 33 suppliers | 41 suppliers | 66 suppliers | 69 suppliers | 81 suppliers | 100 suppliers | |||
Social | Develop and enhance supplier's capability towards sustainability. |
|
Operation contractors certified under Contractor Safety Management | 69% | 58% | 95% | 100% | 100% | 100% | 100% Operation contractors certified under Contractor Safety Certification System |
Major carriers certified under Fleet Carriers Standards. | N/A | 87% | 100% | 100% | 100% | 100% | 100% major carrier certified under Fleet Carriers Standards. | |||
Lost Time Injury Frequency Rate (LTIFR) for contractors. | 0.706 cases / 1,000,000 Hours Worked | 0.678 cases / 1,000,000 Hours Worked | 0.296 Cases / 1,000,000 Hours Worked | 0.400 Cases / 1,000,000 Hours Worked | 0.599 Cases / 1,000,000 Hours Worked | 0.454 Cases / 1,000,000 Hours Worked | Zero Lost Time Injury Frequency Rate (LTIFR) by 2024 | |||
Governance | Select and assess suppliers with the capability for sustainable business. |
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Suppliers committed to comply with SCGP Supplier Code of Conduct. | N/A | 90% procurement spend | 90% procurement spend | 90% procurement spend | 90% procurement spend | 100% procurement spend | 90% of the procurement spend comes from suppliers who commit to comply with SCGP Supplier Code of Conduct |
*Green Industry: certification developed by the Ministry of Industry, Thailand, to encourage the industrial sector to operate a green business for sustainable development