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Sustainability

Home / 2017 Sustainability Report / Creating and Sharing the Value of Growth for a Sustainable Future
SUSTAINABLE SOURCING
GRI 204-1 GRI 308-1 GRI 414-1

ThaiBev prizes integrity, accountability, transparency, and fairness, abiding by its Business Codes of Conduct. Corporate governance is one of the key factors that improve organizational efficiency involving the relations between executives, board members, management, staff, and other stakeholders. Corporate governance creates important structures acting as mechanisms to determine business objectives, to determine the methods for achieving those objectives, and to monitor operating results. Consequently, the Company emphasizes principles of good corporate governance and appropriate risk management plans following sustainable development guidelines.

Sustainable sourcing is an essential foundation for a sustainable supply chain as it is the first step in the life cycle of ThaiBev products. This is why the Company takes great care in selecting raw materials, goods, and services used in the manufacturing process. The Company has established a Supplier Code of Practice in order to communicate its expectations of suppliers, such that potential production, environmental, social, and business impact is minimized. A standard for screening suppliers is also established, with strict quality control taking into account environmental and social impact. To ensure that consumers receive high quality products, ThaiBev has standardized its sourcing process, which evidences environmental and social responsibility throughout the supply chain. In addition, sustainable sourcing contributes to job creation, increases income in local communities, and stimulates the domestic economy.

Procurement Spend from Critical Suppliers Critical suppliers contributed to
27%

of the total procurement spend in 2017
Commercial Risk Management in Sourcing
Risk management is one of the mechanisms that propels sustainable sourcing in an efficient direction. From the selection of raw materials to the performance assessment after purchase from suppliers, risks are assessed on the basis of pricing and available supply of goods and services, as well as suppliers’ capacity in delivering goods and services. The Company identifies its critical suppliers based on sourcing risk levels and the results are brought to bear on risk mitigation strategies.


Categories of Suppliers
The Company classifies its suppliers by merchandise category into two groups; namely direct materials and indirect materials. The procurement spend on direct materials sourced amounts to 75% of the total procurement spend in 2017.

75% Direct Materials
consists of raw materials, packaging, and fuel. This includes malt, glass bottles, plastic bottles, corrugated cartons, and fuel oils.
25% Indirect Materials
consists of construction, machinery, spare parts, information technology equipment, office and factory consumables, point-of-purchase and point-of-sale products, and services. This includes filling machines, date coding machines, computers, stationery, and personal protective equipment.


Sustainability Risk Management in Sourcing

100%

Of new suppliers are screened using environmental and social criteria
To ensure that suppliers meet the expectations of the Supplier Code of Practice, ThaiBev incorporates the factor of sustainability, encompassing good corporate governance, the environment, and society as part of the sustainable sourcing process. From screening of suppliers prior to purchase, and performance assessment after purchase to monitoring and improving their performance continuously, sustainable sourcing enhances the efficiency of supply chain management to support corporate growth.



Registration of New Suppliers
Every supplier for ThaiBev must accept and adhere to the Supplier Code of Practice, as well as submit to sustainability risk assessment in terms of good corporate governance, and in terms of environmental and social management.
Screening of Suppliers Prior to Purchase
ThaiBev has a sustainability risk assessment process for suppliers, determines clear screening criteria for high risk suppliers, and audits suppliers at sites of operation


Performance Assessment of Suppliers
The Company has an auditing process for suppliers after purchase at sites of operation, and classifies suppliers into groups according to their performance assessment results
Monitoring and Improving Suppliers Continuously
ThaiBev reviews supplier risks, determines measures to mitigate risks, and monitors supplier performance and performance improvement plans for suppliers that fail to pass the assessment.


Collaboration With Suppliers
As suppliers are among the Company’s stakeholders, ThaiBev has come up with various activities and initiatives to facilitate the sourcing process, to promote collaboration between suppliers and the Company, as well as to build the capacity of suppliers to continuously and sustainably grow in step with the Company.


Supplier Award Program
ThaiBev initiated the Supplier Award Program in 2017 with the objective of promoting supplier capacity building, stimulating business competition, and spurring innovation in the industry.

The Company has established four aspects in the criteria for supplier awards, so as to ensure that the award recipients meet the Company’s standards and expectations in each and every aspect.

The Company has established Gold and Silver tiers of the award for suppliers with excellent performance.


President and CEO of Thai Beverage Public Company Limited, Mr. Thapana Sirivadhanabhakdi, presents a Supplier Award.

Apart from the Supplier Award Program, the Company has created the website Supplier Life Cycle Management (SLCM) (slcm.thaibev.com) to enable suppliers to go through registration, performance assessment, and monitoring of their own performance through an online system. In addition, this system also allows for the review and confirmation of purchase orders, a mechanism designed to reduce procurement time, and increase business competitiveness through an automated system. Furthermore, SLCM also acts as a channel of communication between suppliers and ThaiBev, wherein suppliers may submit a complaint or a suggestion through this website.

100%
of the Company’s suppliers in the spirit and beer business groups in 2017 use the system
  1,581
suppliers receive SLCM system training via electronic means
 
88%
of purchase orders are confirmed online in 2017
  107
suppliers receive SLCM system training workshops on site in 2017


Non-tier 1 Supplier Management
As for suppliers who do not directly engage in business transactions with the Company (non-tier 1 suppliers), for instance the suppliers of suppliers, the Company is also mindful of their impact on the procurement process. The Company has established the criteria for risk assessment which identify critical non-tier 1 suppliers, based on both business and sustainability factors. For example, their impact on the Company’s income and market influence, their cooperation with sustainability development efforts in the supply chain, and the frequency of sustainability risks detected.


Sourcing of High Quality and Consumer-Safe Raw Materials
Raw materials are key components in ThaiBev’s main products in the alcoholic business segment. The raw materials with the highest purchase value in procurement are molasses, malt, and broken-milled rice, all of which are used in the brewing and distilling processes. ThaiBev has established a Sustainable Agriculture Guideline to set a standard for the quality and safety of raw ingredients purchased from the Company’s suppliers, as well as for the sustainability in the agricultural sector. Such a code prioritizes the consideration of the environmental impact of agriculture, including pesticide control, water consumption efficiency, local agriculture promotion, and biodiversity conservation.


Molasses suppliers for the Company have been certified by Bonsucro, with a standard recognized by various groups of stakeholders in the sugarcane industry. The standard’s main objective is to reduce environmental and social impact from the production of sugarcane and in turn, the production of molasses.

ThaiBev’s suppliers of malted barley, one of our key raw materials, are members of the Sustainable Agriculture Initiative (SAI) Platform, an international organization with the objective of promoting sustainability in the agricultural sector.

The Company conducts strict quality inspection of broken-milled rice, especially in terms of chemical residues and extraneous materials, so as to ensure 100% safety of products


Procurement of Goods and Services From Local Suppliers
ThaiBev believes that a stable national economy begins with comprehensive income distribution to local communities so that they achieve self-reliance. Therefore the Company consequently privileges suppliers operating in the vicinity of its factories. Not only does this practice contribute to local job creation and add value to raw materials in each locale, it also minimizes transportation-related pollution.

Notes
  • “Local supplier” means a supplier who operates its business in the country where ThaiBev has a production base, and who directly supplies the ThaiBev Group.

  • The data for 2013 and 2014 encompasses ThaiBev’s procurement of goods and services only for the spirit and beer business groups in Thailand.

  • The data for 2015 onward encompasses ThaiBev’s procurement of goods and services only for the spirit, beer, and non-alcoholic beverage business groups in Thailand.

  • The data for 2016 covers the period from January to September 2016, as the ThaiBev Group made adjustments to its fiscal year structure.

  • The data for 2017 covers the period from October 2016 to September 2017.

Our Mission
Creating and Sharing the Value of Growth for a Sustainable Future



GRI 102-11, GRI 102-15, GRI 102-16, GRI 102-17, GRI 103-1, GRI-103-2, GRI 201-2, GRI 204-1, GRI 205-2, GRI 205-3, GRI 305-5, GRI 308-1, GRI 401-1, GRI 403-2, GRI 404-1, GRI 414-2, GRI 419-1, GRI 416-1, GRI 417-1, GRI 417-3, GRI 443-3