SUSTAINABILITY REPORT 2019

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Sustainable Sourcing
GRI 308-1, GRI 414-1
Procurement is the starting point of ThaiBev’s supply chain, particularly in regards to the selection of raw materials and products used in the production process. ThaiBev places high importance on sustainable sourcing while maintaining both environmental and social responsibility.

The company procures its agricultural raw materials in accordance with the ThaiBev Sustainable Agriculture Guideline, as well as nationally and internationally recognized standards. To ensure a sustainable procurement process, ThaiBev has established the Supplier Code of Practice which outlines the pre-qualification criteria and stringent quality standards for suppliers. The Code is enforced upon 100 percent ThaiBev’s suppliers to ensure that the products go through a standardized procurement process and demonstrate environmental and social responsibility. In addition, ThaiBev places great importance on risk management in the supply chain.

All suppliers must together find ways to mitigate risks in order to increase transparency and effectiveness in all the processes in the supply chain. These measures are in line with the United Nations’ Sustainable Development Goals, particularly Article 12 which outlines the need for achieving sustainable management and efficient use of natural resources by 2030.

Responsible Sourcing of Agricultural Raw Materials

Agricultural raw materials are the main ingredients used in ThaiBev’s production. ThaiBev is committed to sourcing high quality agricultural raw materials in an environmentally and socially responsible manner. These raw materials are the main components of alcoholic beverages, non-alcoholic beverages and food; namely malt, sugar, palm oil, tea leaves, coffee beans, and cocoa. ThaiBev aims to source 100 percent of these materials responsibly and in compliance with applicable local or international standards by 2030.

  • ThaiBev encourages and supports malt and hops suppliers to become active members and follow the Sustainable Agriculture Initiative Platform (SAI), a global standard for agricultural practices.
  • ThaiBev supports large sugar producers by applying the Bonsucro (Better Sugar Cane Initiative) international standard. This platform promotes sustainable sugarcane production throughout the entire supply chain, covering sugarcane farmers and sugar producers. Recognizing the environmental, social, and economic impacts of sugar production, Bonsucro boosts collaboration between academic groups, sugarcane farmers, and the private sector, so that the various steps of sugar production, from land inspection through the harvest period, can be more effectively monitored and made traceable.
  • ThaiBev supports large-scale palm oil producers and small-scale farmers in the responsible and efficient production of palm oil and to be certified with the Roundtable on Sustainable Palm Oil (RSPO) international standards. In 2019, 100 percent of ThaiBev’s suppliers were RSPO certified factories.
  • 100 percent of the tea leaves used in ThaiBev’s production of non-alcoholic beverages are certified by the Organic Agriculture Standard issued by Ministry of Agriculture and Cooperatives, Thailand.
CROSS
C
Collaborate
Foster collaboration between ThaiBev and its suppliers
R
Re-engineer
Re-engineer procurement processes effectively
O
Online
Work via online solution for speed and transparency
S
Simplify
Develop a user-friendly solution and agile manner of work
S
Synergize
Synergize people and technology for maximum benefits

Due to the growth and dramatic expansion of the business in the ASEAN region, ThaiBev’s supply chain has become more complex and involves increasingly diverse suppliers, which are not only ThaiBev’s direct suppliers but also the suppliers of its suppliers. In 2017, ThaiBev initiated the CROSS project with the aim of increasing supply chain visibility and raising the standard of procurement by focusing on fostering stakeholder collaboration, process re-engineering, and online connectivity. The project activities are classified into three dimensions, including the professionalization of procurement personnel, process improvement through automation and optimization, the development of new technological capabilities that allow for various systems to work in coordination, transparent data accessibility, and better data analysis.

In 2019, ThaiBev introduced the CROSS Procurement solution and connected it with the Supplier Life Cycle Management (SLCM) system. Currently, the SLCM system acts as the central interface between suppliers and ThaiBev. It is here that a supplier can register with ThaiBev, undertake their sustainability risk assessments, confirm orders, and exchange documents online. The CROSS Procurement solution will also play a role in fulfilling the procurement process: the solution instantly records the purchase of products and services that take place throughout ThaiBev’s operations. This is to ensure that procurement is fair, transparent and traceable. The solution consists of four features:

1. CROSS Source

is for the selection of potential suppliers by taking into account the environmental, social, and governance dimension as well as the supplier’s capability. CROSS Source connects with the Supplier Life Cycle Management (SLCM) system and covers the entire supplier qualification processes from the Supplier Code of Practice compliance, to supplier registration, supplier screening, supplier selection, and bidding.

2. CROSS Contract

is for contract creation and agreement with suppliers through a traceable and transparent system. It also covers contract compliance: managing the purchase of products in line with contractual terms.

3. CROSS Buy

is for purchase order issuance to, and confirmation with the determined suppliers and for purchasing products through eCatalogs (online product catalogs).

4. CROSS SRM (Supplier Risk Management)

is for suppliers’ sustainability risk assessments which cover environmental, social, and governance dimensions, and other areas such as supplier credibility, financial liquidity, operational risk and negative media coverage that may affect suppliers’ reputation. The risk input is derived from third-party databases specializing in corporate risk assessment such as the World Economic Forum, Dunn & Bradstreet, GDACS and Semantic Visions.

CROSS PROCUREMENT


In addition to developing its internal procurement processes, ThaiBev is committed to suppliers’ digital capability development through various activities which drive supplier engagement: CROSS Procurement solution training for its suppliers, promoting the solution adoption, hosting the annual business partner conference, and providing solution support services via the ThaiBev Procurement Service Center (PSC). These activities are in place to ensure that suppliers are able to do business with ThaiBev conveniently, quickly, and transparently, as well as enabling suppliers to grow together with ThaiBev sustainably.

Development from the CROSS project
  Internal stakeholders External stakeholders
People Professionalize Collaborate
Process Optimize Simplify
Technology Integrate Centralize

The adoption of the CROSS Procurement solution will enhance ThaiBev’s data accessibility with greater accuracy, increase data analysis capabilities, assist ThaiBev in decision-making and formulating strategies for procurement, and enable ThaiBev to manage risks more efficiently and in a timely manner. In addition, the solution focuses on collaboration and information exchange between ThaiBev and its suppliers in order to maximize efficiency in supply chain management. At the same time, the system increases the quality of ThaiBev’s procurement services for internal users, responding to their needs instantly and supporting the long-term sustainable growth of the organization.

Roadmap
  • 2016

    Launched Supplier Life Cycle Management (SLCM)

  • 2017

    Kick-Off CROSS Project

  • 2018

    Opened ThaiBev Procurement Service Center

  • 2019

    Upgraded the SLCM System

    Developed the CROSS Procurement

  • 2020

    Extend CROSS Procurement solution to domestic non-alcoholic beverage and food businesses

  • 2021

    Extend CROSS Procurement solution to international businesses

    Develop global strategic sourcing plan

ThaiBev Business Partner Award


Initiated in 2016, the Business Partner Award is a program for promoting supplier capacity-building, stimulating business competition, and spurring industry innovation. The award-winning business partners are those with excellent operational standards and are leading models for sustainable business practices for other partners. This year, over 150 business partners consisting of manufacturers and service providers participated in the award program. The participants comprise partners from various industries, such as packaging, commodities and promotional goods.

In 2019, ThaiBev presented the Sustainable Collaboration Award, a distinctive award under the Business Partner Award program, to partners who collaborated with ThaiBev and other stakeholders in initiating projects with the aim to create a sustainable supply chain. The Business Partner Award Committee selected the winners based on the quantitative environmental, social and governance benefits arising from the projects and the number of stakeholders gaining such benefits. This is in line with ThaiBev’s business practices that aim at “Creating and Sharing the Value of Growth for a Sustainable Future.” Roadmap

One of the projects awarded in this category is the “Can 2 Can” project, which is a collaborative effort between ThaiBev and its tier 1 supplier, an aluminum can manufacturer, and non-tier 1 supplier, an aluminum sheet manufacturer. Through this project, ThaiBev and its partner have successfully created a sustainable and closed-loop packaging management system.

ThaiBev Business Partner Conference 2019 and Thailand Supply Chain Network


ThaiBev realizes the importance of engaging with business partners, who are crucial in steering business towards the goals of ThaiBev’s Vision 2020. The ThaiBev Business Partner Conference 2019, which is part of a two-day ThaiBev Sustainability Day 2019 event, has been arranged with the objective to communicate ThaiBev’s steadily and business direction, both short-term and long-term, to its partners and help them seize opportunities to grow steadily and sustainably with ThaiBev. The event also provides a stage for ThaiBev and its business partners to exchange insights as well as goals and challenges related to the dynamic of consumer behaviors, and to keep pace with sustainable development goals.

At this year’s event, ThaiBev launched the“Thailand Supply Chain Network” (TSCN), in collaboration with its strategic business partners, with the aim to establish intercorporate relations among Thai companies. Through TSCN, companies will be able to exchange information, share experiences learned from their investments as well as operating businesses overseas. This knowledge will assist Thai entrepreneurs to strengthen their supply chain and thus, allow them to be able to expand their businesses to different markets.

Commitments and Achievements
  • Policy and standards used in the procurement of raw materials:

    Set standards for the procurement of agricultural raw materials that are the main raw materials used in the production process, namely malt, sugar, and palm oil in accordance with internationally recognized standards such as Bonsucro, RSPO, and SEDEX to ensure that raw materials are carefully selected through socially and environmentally responsible procurement processes.

  • Business partner assessment process:

    By performing on-site audits at suppliers’ facilities on a regular basis, particularly the Critical Suppliers including non-substitutable suppliers, high-volume suppliers as well as suppliers exposed to high risk (suppliers without adequate environmental management or whose employment practices are not in line with the universal standards). Both internal and independent verifiers take part in the audit: for instance, production process inspection, safety and hygiene in product storage, and product transportation. In addition, the audit process examines the sustainability of suppliers’ business operations, such as waste management, labor practices, employees’ occupational health and safety. The risk database from independent organizations that are internationally accepted, such as the World Economic Forum and CSR Risk Check, are also used to assess sustainability risks that cover all risk dimensions. Currently, ThaiBev has assessed 100 percent of its Critical Suppliers and high-risk suppliers.

  • Supplier engagement:

    ThaiBev collaborates with its Critical Suppliers to assess non-tier 1 suppliers, especially the suppliers of critical materials, in order to manage end-to-end risks throughout the supply chain. ThaiBev regularly liaises with key suppliers to exchange information about risks of non-tier 1 suppliers and may assign ThaiBev’s personnel to participate in non-tier 1 supplier on-site audits alongside critical supplier auditors to properly identify and mitigate potential risks in the supply chain.

Insight
Kosit Suksingha
Executive Vice President and Chief Supply Chain Management
How can technology play a role in creating a sustainable supply chain?
This is considered an era in which technology is evolving dramatically, or as we often call it, the “Digital Transformation”. This presents a business opportunity for ThaiBev to improve the efficiency of its work processes, and develop human resources, including our suppliers and partners, to be ready for the digital era, which is absolutely essential for our organization’s growth during a time of rapid change. In the past year, in terms of ThaiBev’s supply chain management, we have implemented the CROSS Procurement solution to enhance our procurement processes. The solution enables us to access information more efficiently and seamlessly connect each department and work process, allowing data to be properly analyzed and interpreted before execution. Our personnel can make better decisions based on quality information. They can also establish a strategic relationship with our suppliers through the exchange of information and the sharing of risks. Our management approach is in alignment with the five pillars of ThaiBev’s Supply Chain Strategy: Visibility, Synergy, Integrated Risk Management, Centralized Management and Standardization. All of these actions have resulted in ThaiBev’s procurement being transparent, fair, and based on good governance, which is the foundation and cornerstone to sustainable supply chain management.
Moving Forward
2020
100%
of active suppliers must accept and comply with ThaiBev’s Supplier Code of Practice
In order to promote the domestic economy and local income distribution,
ThaiBev is committed to maintaining local procurement proportion in terms of number of local suppliers at
95%

100%
of all new potential suppliers must accept and follow ThaiBev Supplier Code of Practice and pass a sustainability risk assessment.
2025
ThaiBev has set a target for
100%
of its active suppliers to be assessed and examined for sustainability risks.
ThaiBev will procure agricultural raw materials which are the main raw materials in the production process
from sources that follow high standards and are environmentally and socially responsible.