Supply Chain Sustainability

Efficiently manage our supply chain from upstream to downstream with good governance and integrated risk management approach.

At ThaiBev, we are committed in creating a supply chain that does not only keep the business running but also contributes to social needs and reduces environmental impact from our operation.We identify and manage all risk aspects in every stage of our supply chain, starting from sourcing and acquisition of raw material to post-consumption packaging management.Stakeholders are also encouraged and incentivized to be a part in making our supply chain sustainable through our several engagement and communication channels as well.

Supply Chain Risk Management

ThaiBev focuses on sourcing quality raw materials and the continuous development of its suppliers. The company’s supplier selection process assigns high importance to suppliers’ environmental and social performance, and also prioritizes capacity-building for procurement staff, encouraging them to adhere to sustainable purchasing standards and to practice good business ethics in all aspects of their work.

ThaiBev focuses on building capacity for its suppliers to establish a circular economy; resulting in a supply chain that minimizes environmental impact, generates employment and income in local communities, and stimulates the national economy.

Supply Chain Strategy

The five pillars formulate the foundation of ThaiBev supply chain strategy…

Supply Chain Visibility

In response to growing demand from our business expansion and consumer needs, supply chain visibility is vital to supply security and service level excellence.

Supply Chain Synergy

Synergy practice enables us to exploit business opportunities, optimize processes and transactions, and create greater corporate business value.

 

Integrated Risk Management

ThaiBev has a formalized process to identify and manage risks in our supply chain to ensure the quality of our products and maintain high level of our stakeholder satisfaction.

Centralized Control

Centralized management leads us to effective knowledge transfer within each business unit and a fully integrated supply chain network contributing to cost saving and resource efficiency.

Global Branding

ThaiBev has been developing products that can reach different consumers worldwide to support our strategic imperative Vision 2020.

Making Sustainability Our Priority


To express our strong commitment in creating a sustainable supply chain, we set key sustainability priorities in our supply chain as following:

Sustainability Priority:
Resource Efficiency

Linkage to Supply Chain Strategy:
Supply Chain Synergy

Description:

  • Minimize environmental impact from our supply chain.
  • Optimize resource consumption in our operation.

Adoption in our Supply Chain

  • Operate in compliance with 3Rs Principle (Reduce, Reuse, Recycle).
  • Set quantifiable 3Rs KPI in our operation.

Sustainability Priority
Sustainable Sourcing

Linkage to Supply Chain Strategy:
Supply Chain Visibility
Integrated Risk Management

Description

  • Place strong focus on the acquisition of high-quality raw material.
  • Integration of sustainability concern into procurement processes.

Adoption in our Supply Chain

  • Enforce Supplier Code of Practice.
  • Include sustainability requirements in supplier prequalification and audit.
  • Integrate sustainability factor into risk management mechanism.

How Our Spend is Managed


ThaiBev undertakes spend analysis of its supply chain annually to identify business opportunities and risks.

Our spending can be classified into two types: direct and indirect spends. Normally, our direct spend accounts for 60-80% of total procurement spend.

Direct spend, comprising high-value and high-impact items and vendors, constitute the focus of our spend analysis.

Direct spend is reviewed monthly and quarterly at the operational and management level respectively.

Local suppliers account for 87% of total spend; the other 13% is shared among overseas suppliers.

Direct spend covers the procurement of goods and services that are incorporated into products being manufactured by ThaiBev Group e.g. raw material, ingredient, packaging, etc.

Indirect spend covers the procurement of goods and services that are not directly incorporated into products being manufactured by ThaiBev Group e.g. machinery, factory supplies, office consumables, etc.

Identifying Procurement Risks

ThaiBev undertakes procurement risk assessment on an annual basis. The assessment is performed on items contributing to the first 85% of annual spend: material and supplier separately.

Material Risk Assessment

Definition

    ThaiBev’s material criticality is defined by the following factors:

  • Price fluctuation,
  • Contribution to company’s revenue,
  • Complexity of specification (time),
  • Complexity of specification (cost),
  • Standard lead time

Scope


    The scope of assessment covers:

  • Direct spend,
  • Other materials contributing to the first 85% of annual
    spend.

Remark It is possible that there is some overlap between direct
spend and materials contributing to the first 85% of annual spend



Price Fluctuation

This criterion aims to assess the price volatility of the materials purchased.

Contribution to Company’s Revenue

This criterion aims to assess the criticality of the material in terms of the amount of revenue generated for ThaiBev Group.

Complexity of Specification (Time)

This criterion aims to assess the time required for the acquisition of the assessed materials on a hypothesis that the new source of supply is being developed.

Complexity of Specification (Cost)

This criterion aims to assess the amount of cost incurred from the acquisition of the assessed materials on a hypothesis that the new source of supply is being developed.

Standard Lead Time

This criterion aims to assess the average lead time used for the acquisition of the assessed materials.


Supplier Risk Assessment

Definition

    ThaiBev’s supplier criticality is defined by the following factors:

  • Supplier’s price validity,
  • ThaiBev’s dependency on suppliers,
  • Supplier’s compliance,
  • Insubstitutable suppliers,
  • Suppliers capability to respond to urgency.

Scope

    The scope of assessment covers:

  • Suppliers contributing to the first 85% of annual spend,
  • Suppliers of critical materials.


Price Validity

This criterion aims to assess supplier’s capability in retaining price in case of cost fluctuation.

Dependency on Supplier

This criterion aims to assess percentage of procurement share allocated to the assessed suppliers.

Supplier’s Compliance

This criterion aims to assess supplier’s compliance i.e. delay, return, and reject ratio.

Supplier’s Substitutability

This criterion aims to assess the time required in order for this supplier to be fully replaced.

Supplier’s Inventory Management

This criterion aims to assess supplier’s capability to supply the material(s) in case of supply shortage.

Managing Procurement Sustainability Risks

ESG Issues Covered

Aside from managing supply and price inflation risk in procurement, ThaiBev also pays great attention to sustainability (ESG) risks incurring in our supply chain. dividing them into three dimensions: corporate governance, environmental sustainability, and social sustainability, to ensure that all risks are thoroughly identified and managed throughout every step of our supply chain.

What is ESG?

Sustainability covers three dimensions:
E for Environmental

S for Social
G for Governance



Environmental Sustainability (E)

  • Emission
  • Energy
  • Waste
  • Water



Social Sustainability (S)

  • Employment practice
  • Human rights
  • Occupational health and safety




Corporate Governance (G)

  • Antitrust
  • Business confidentiality
  • Bribery and extortion
  • Conflict of interest
  • Legal compliance



ESG Risk Management Process

ThaiBev has formalized processes to identify sustainability (ESG) risks throughout procurement processes from new supplier entry to
supplier performance monitoring.



Registration



Pre-Qualification

  • Assess supplier via comprehensive selfassessment questionnaire
  • Conduct supplier sitevisit assessment.



Selection and Award

  • Apply ESG weight scoring when awarding supplier
  • Include ESG clause in contractual agreement.



Rating and AVL

  • Integrate ESG factors into supplier rating and classification.
  • Conduct periodic on-site audit at key suppliers’ operating sites.



On-going Monitoring

  • Conduct regular supplier performance review and exchange feedback.
  • Require suppliers to fill out Supplier Sustainability Assessment Survey.


Supply Chain of Key Material



Glass bottle contributes to the largest portion of ThaiBev’s primary packaging of several products, including Chang Beer, Ruang Kao, Oishi Green Tea, and Crystal Drinking Water.



Molasses is one of major components that are used in ThaiBev’s distilling processes to produce highest grossing spirits such as Ruang Kao, Hong Thong, and Blend 285.



Malt is ThaiBev’s key raw material used in brewing and distilling processes to produce spirit and beer.


Supply Chain of New Glass Bottle

Supply Chain of Reused Glass Bottle

Supply Chain of Molasses

Supply Chain of Malt

Glass Bottle

Current Situation

  • Glass bottle manufacturing and recycling is a highly labor-intensive industry.
  • Poor working condition is frequently detected
Actions

  • Promote the adoption of Supplier Code of Practice to key suppliers.
  • Invest in labor-saving devices to improve labor health and wellness.
2020 Target

100% of key suppliers operate in full compliance with ThaiBev Supplier Code of Practice.

Molasses

Current Situation

Sugarcane harvesters are bound by contractual agreement with sugar manufacturer.

Actions

Promote the adoption of Supplier Code of Practice to key suppliers.

2020 Target

100% of key suppliers operate in full compliance with ThaiBev Supplier Code of Practice.

Malt

Current Situation

  • 100% of major suppliers is members of SAI Platform.
  • 100% comply with Supplier Code of Practice.
  • Maltsters are helping barley harvesters to adopt sustainable agricultural practices.
Actions

On-going monitoring

2020 Target

100% of malt used in the production processes is sourced sustainably.



Our Approach on GMO

Where We Stand…
Most of materials we use are sourced locally where there are regulations concerning GMO cultivation and labeling in place. ThaiBev operates in full compliance with those requirements. As for other major components which are from overseas origin, such as, barley malt, they are generally cultivated from non-genetically modified crops.

At this stage, ThaiBev does not use any GMO materials in our beverage products. However, we are committed to monitor and label if it becomes applicable in the future. We expect our suppliers to disclose the usage of GMO content in their materials supplied to ThaiBev as well.

Our Protocol

Supply Chain Visibility

Our standard requirements on GMO include a restriction on GMO in our specifications for agricultural raw materials.

Supply Chain Visibility

Laboratory tests are performed to ensure that the materials are GMOfree.

Supply Chain Visibility

Formal GMO-free certifying document is requested from our suppliers.


Sustainable Agriculture

The Beginning of Sustainable Supply Chain

At ThaiBev, delivering quality products to our customers is as important as ensuring that the raw materials used in their production originate from sustainable sources. Realizing such concept, we offer our raw material suppliers a guideline to sustainable agriculture which sets out our expectation.


 

Sustainable Packaging


At ThaiBev, we strives to reduce and manage environmental impact from our packaging by

  • Strictly adhere to 3Rs Principle. (3Rs stands for Reduce, Reuse, and Recycle.)
  • Collaborate with our supplier to create more environmental friendly products.
  • Increase biodegradable content in our packaging.
  • Encourage our consumers to take part in reducing packaging waste.

2016 Target

Initiative Target Actual
Reduce 20% reduction in plastic usage Achieved at 20%
Reuse 60% of glass bottle is reused. Achieved at 62%
Recycle 50% of paper packaging is recycled. Achieved at 66%
Reclaim 60% of glass bottle is reclaimed. Achieved at 65%

 

We also measure true value of our initiatives to reduce the environmental impact from our packaging, following SEP&L methodology.
View our true value measurement.

 


Distribution and Customer Engagement

We value highly our customer satisfaction and constantly strive for continuous improvements through several customer engagement channels.
In 2016, ThaiBev collaborates with third-party institution, University of the Thai Chamber of Commerce, to conduct customer satisfaction survey, covering key customers.

Survey is conducted on key customers, accounting for

58%

of total revenue generated.


The survey aims to measure ThaiBev distribution service level.


Target sampling subject is distributor and sale agent.


250

of sampling group covered.


5

distribution areas in Thailand.



Remark
– The achieved percentage (%) is measured by number of sampling subjects participated in the survey.
– The survey covers 250 sampling subjects of key customers.
– Customers refer to distributor and sale agent.


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