Supply Chain Management
GPSC has established effective supply chain management with an emphasis on both the business and social responsibility dimensions to support the goal of becoming the world’s leading innovative and sustainable power company. For this reason, the company has established a supply chain management policy and approach to serve as guidelines for the delivery of sustainable supply chain management.
GPSC is committed to the effective procurement and management of supplies, insurance, and other aspects of operations related to business sustainability. The company introduced the Procurement Policy in 2015 to ensure excellence in procurement with transparency, fairness, and alignment with global practices.
Download Procurement Policy:Download
Supply Chain Management Approach
Supply Chain Risk Management and Program Design
Supply chain risk management and program design have been implemented at GPSC to manage and assess supplier risk to prevent and mitigate environmental, social, and governance risks from anywhere along the supply chain. Implementation of the program consists of following 4 processes:
1. Supply Chain Analysis
GPSC conducts the following analyses on suppliers which are deemed to pose potential risk to the business: spend analysis, critical analysis, and dependent analysis. The analytical results are used as input into formulating appropriate management strategies by applying the supply position model.
2. 2. Environmental Social and Governance (ESG) Risk Assessment
GPSC assesses suppliers on the likelihood and severity of environmental, social, and governance risks. Details of each dimension are as follows:
- Environmental risks are greenhouse gas emissions, noise and vibration pollution, water use and waste water release, power usage, waste and hazardous materials management, and biodiversity impacts.
- Governance risks are corruption, tax evasion, fair business competition, and intellectual property.
- Social risks are labor management, human rights, health and safety, and legal compliance.
3. Risk Management
GPSC uses results from supplier ESG risk assessment to formulate the risk management approach by categorizing suppliers into 3 levels as follow:
- Strategic suppliers refer to the group of vendors whose business activities are characterized as high risk with severe impacts on the suppliers themselves and potential spillover to surrounding communities, creating severe impacts on buyers both from the business and the corporate image standpoints.
- Key suppliers refer to the group of vendors whose business activities involve products widely distributed to consumers which have high impacts on buyers both from the business and the corporate image standpoints.
- Managed suppliers refer to the group of vendors whose main business activities involve operations which may affect surrounding communities or areas, imposing a moderate level of risk on buyers.
4. Program Design
GPSC has developed the program design by setting strategies and management tools suitable for variouse risk factors, supplier’s businesses, and supplier’s levels of importance.
Vendor List and Supplier Selection System
GPSP has adopted the system of vendor list and supplier selection to ensure that suppliers deliver products and services that meet the company’s requirements. The scope of assessment covers suppliers’ capabilities based on GPSC’s criteria laid out in the supplier assessment form. Suppliers approved through the supplier selection process will be registered on the Approved Vendor List (AVL) in the SAP system by GPSC’s procurement staff.
GPSC also specifies economic, environmental, and social issues consistent with the Supplier Sustainable Code of Conduct in the Terms of Reference (TOR). All suppliers are required to sign the acknowledgement form of GPSC Supplier Sustainable Code of Conduct to ensure compliance with the agreements and requirements.
To assess suppliers’ performance, GPSC has established a supplier performance measurement procedure to be carried out with suppliers on the vendor list that deliver products or services to the company during the assessment period. The purpose of the assessment is to ensure that suppliers can deliver products and services that meet the company’s needs and comply with the company’s Procurement Policy.
Management of Contractor
To control and manage supplier contracts effectively according to the company’s rules which require equal treatment of suppliers, as well as social and environmental engagement and responsibilities, supplier contract management covers procurement for projects and service outsourcing with 3 process keys as follows:
- Team Set-Up
- Contract Execution
- Closeout and Feedback
Supplier Sustainable Code of Conduct
GPSC recognizes the importance of encouraging suppliers to uphold governance principles with social and environmental responsibilities in their business operations. Therefore, the company created the Supplier Sustainable Code of Conduct to communicate the rules which require strict compliance by suppliers. The content of the Supplier Sustainable Code of Conduct ranges from business ethics, human rights, to safety, and environmental management.
Download Supplier Sustainable Code of Conduct:Download
To support the sustainable development of suppliers, GPSC performs supplier audits on environmental, social, and governance risks. The audit results are used as input into identifying solutions or ways to improve suppliers’ efficiency and compliance with the Supplier Sustainable Code of Conduct. The details of the audit criteria are as follows:
|Score||Meaning||Characteristics / Scope of Implementation|
Sustainability practices have been implemented at the excellent level. Monitoring is not required.
Sustainability practices have been implemented at the good level. Improvement can be achieved in some areas but monitoring is not required
Sustainability practices have been implemented at the fair level. Suppliers must propose plan and timeline to improve performance in environmental, social, and governance area (ESG Corrective Action Plan), which has to be completed within the timeframe.
Implementation of sustainability is at the poor level. Supplier must propose a plan and timeline to improve performance in environmental, social, and governance area (ESG Corrective Action Plan) before any bidding can take place.
Achieving Procurement Excellence
GPSC is committed to driving procurement excellence with continuous development in the procurement system to achieve the maximum efficiency. In 2017, GPSC set a target of lowering expenses in procurement by 20% which amounted to THB 67.8 million. The company successfully achieved the target with a variety of expense reduction initiatives, such as a project to speed up the ordering approval form, a project to track and ensure timely delivery of products or services, and a project to shorten payment duration.
Environmentally Friendly Procurement
GPSC aims to use products and services that minimize environmental impacts by implementing the Procurement Policy which requires environmentally friendly procurement practices. Specifically, the consideration of the environmental friendliness of a product or service spans the entire life cycle from obtaining raw materials to managing products past the expiration dates.
GPSC supports local procurement within Thailand, which brings both direct and indirect benefits to the company. The direct benefits of local procurement are lower costs and faster transportation which directly affect the company’s procurement efficiency. Moreover, the company also gains indirect benefits by supporting a local economy and creating jobs and income for local residents. The goodwill created by this process helps strengthen relationships with local communities which, in turn, engenders trust for the company.