SUSTAINABILITY
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PROCUREMENT ANALYTICS Local Procurement Critical Supplier Sustainability Risks
Home / Supply Chain
2019
Supply Chain Risk Management
Effective supply chain risk management is essential to ThaiBev’s business continuity. With the current pace of continuous business expansion, ThaiBev’s supply chain is becoming more complex with growing number of suppliers and increasingly diverse in terms of product category. ThaiBev is aware of the underlying risks in multiple tiers down its supply chain and has adopted several practices to manage its supply chain risks from upstream (sourcing of raw material) to downstream (after-purchase processes).
Procurement Analytics
฿ 30 billion

Direct Material
82%

Indirect Material
18%
ThaiBev analyses its procurement spend and suppliers to effectively prioritize commodities and suppliers as well as defining sourcing strategy for each item.

Most of ThaiBev procurement activities are based on online platform meaning that all of the data are maintained and updated systematically on real-time basis, ensuring that any procurement decisions made are based on accurate and up-to-dated information.

product categories
+3,000
active suppliers
4
continents
27
countries

Number of Supplier
Procurement Spend
Local Procurement
ThaiBev is committed to maintaining local procurement proportion in terms of number of local suppliers at 95% annually by 2020.


Local Supplier
Local Spend

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.
Critical Supplier
Critical suppliers are suppliers indispensable to ThaiBev’s supply chain and business continuity. ThaiBev treats critical suppliers as strategic business partners with whom ThaiBev works closely to ensure that all aspects of supply chain risks are being monitored and mitigated. Critical suppliers also play significant role in improving overall supply chain transparency by co-identifying risks beyond ThaiBev’s tier 1 suppliers.
ThaiBev defines its critical suppliers considering both commercial and sustainability factors. The most significant factors which are supplier’s sustainability maturity level and business goal alignment with ThaiBev Group’s vision are given the highest weightage.

Suppliers are deemed critical when their total criticality score are equal to or higher than 60.


Sustainability Maturity

Business Goal Alignment

Critical Material Supplier

Substitutability

Dependency
ThaiBev’s Critical Supplier Definition
ThaiBev has reviewed its critical supplier identification processes annually and updated the definitions to meet the evolving business strategy and improve supply chain management.
2013 - 2014

Supply Risk
Define critical suppliers based on operational risks such as demand-supply and focus only high-volume suppliers

2015 - 2016

Commercial Risk
Consider other commercial risks such as volatility risks and the difficulty in finding alternative suppliers

2017 - 2018

Business Impact

  • Re-define criticality from risk aspect to business impact
  • Identify critical non-tier 1 suppliers

2019 - 2020

Sustainability
Include the maturity level of suppliers in operating in line with sustainability development practice in the definition of critical suppliers

3,000
active suppliers
43
Critical Tier 1 Suppliers or equivalent to
1.4%
of total active suppliers
Total Spend ฿ 31 billion
Critical Tier 1 Suppliers contribute to
34%
of total procurement spend in 2019
Geographic Distribution
43 Critical Tier 1 Suppliers

Packaging
Chemical
Commodity
Critical Tier 1 Suppliers and Procurement Spend Contribution
Despite accounting for small number of total tier 1 suppliers, critical suppliers contribute to high volume of procurement spend annually.


Critical Tier 1 Suppliers
Procurement Spend Contribution

Non-tier 1 Supplier Management
27
Critical Non-tier 1 Suppliers
Non-tier 1 suppliers who supply goods and services to ThaiBev’s tier 1 suppliers are also rated in order to identify Critical Non-tier 1 Suppliers. ThaiBev works closely with its tier 1 suppliers to identify Critical Non-tier 1 Suppliers and assess their sustainability risks to improve the assessment quality and gain more insights to risks in the supply chain.
100%
Supplying Critical Materials
84%
Supplying Products to Critical Tier 1 Suppliers
Proportion of Critical Non-tier 1 Suppliers with High ESG Risks
ThaiBev collaborates with its tier 1 suppliers to identify ESG risks in the supply chain that lie beyond the tier 1 suppliers with the aim to reduce the level of ESG risk exposure in non-tier.


Critical Non-tier 1 Suppliers
Critical Non-tier 1 Suppliers with High ESG Risks

RISK MANAGEMENT MECHANISMS

THIRD-PARTY RISK DATABASE

FORMALIZED RISK ASSESSMENT

ON-SITE AUDIT

COLLABORATION WITH TIER 1 SUPPLIERS
Sustainability Risks
Effective risk management is the keystone to ThaiBev’s supply chain management. Aside from the commercial aspects, ThaiBev also assesses sustainability risk factors in its supply chain which includes environmental, social, and governance. The sustainability risk management is embedded in every step in the procurement process starting from new supplier registration, supplier qualification, tendering and awarding, supplier performance evaluation, and on-going monitoring.

With the coming of the digital era, ThaiBev has adopted several online solutions to enhance its supply chain risk management and improve overall supply chain transparency. Multiple sustainability risk identification processes have been implemented to ensure that 100% of its active tier 1 suppliers and critical non-tier 1 suppliers are assessed and monitored.
SUSTAINABILITY RISK IDENTIFICATION PROCESSES
Third-party Supplier Risk Database
Number of total active tier 1 suppliers assessed using third-party risk database

ThaiBev uses supplier risk database from variety of globally recognized analysts including World Economic Forum, Dunn & Brad Street, etc. The database is updated on a daily basis and covers all of ThaiBev suppliers.
Online SUSTAINABILITY RISK ASSESSMENT
Number of total active tier 1 suppliers assessed online via Supplier Life Cycle Management

Online sustainability risk assessment is mandatory requirement for ThaiBev suppliers. It comprises four ESG topics: governance, environmental, social, and supplier management. The assessment is carried out annually.
On-site Audit
Number of suppliers with high sustainability risks audit annually

Aside from critical suppliers, suppliers with high sustainability risks are subject to annual audit conducted on at least one of suppliers’ operating sites either by ThaiBev auditor or a third party.
SUSTAINABILITY INTEGRATION INTO THE PROCUREMENT PROCESSES


NEW SUPPLIERS
01
REGISTRATION
  • Supplier Code of Practice
  • Sustainability risk assessment survey
02
PRE-QUALIFICATION
  • Comprehensive sustainability assessment questionnaire
  • On-site audit


EXISTING SUPPLIERS
03
BIDDING & AWARD
  • ESG criteria in bidding selection
  • ESG contract clause
04
EVALUATION
  • On-site audit for critical suppliers and suppliers with high ESG risks
05
CAPACITY BUILDING
  • Corrective actions
  • Supplier meeting
  • Supplier award
Suppliers with High ESG Risks
ThaiBev assesses 100% of its active suppliers on ESG risks annually through multiple channels
7%
Tier 1 Suppliers with High ESG Risks
Distribution by Risk Category
The majority of suppliers assessed has gap in their own supplier management measures and policies.

Corporate
Sustainability

Environmental
Sustainability

Social
Sustainability

Supplier
Management

Proportion of active suppliers exposed to high sustainability risks
Proportion of Tier 1 Suppliers with High ESG Risks
Despite the growing number of total active suppliers, ThaiBev aims to reduce the number of suppliers exposed to high ESG risk through stringent corrective action request and follow-up protocols.


Total Active Suppliers
Tier 1 Suppliers with High ESG Risks


RISK MANAGEMENT MECHANISMS

Critical Suppliers & High ESG Risks Audited Annually
ThaiBev has implemented multiple risk management approaches in the supply chain to ensure the all of its critical suppliers and active suppliers with high ESG risks are audited on an annual basis.

TYPES OF AUDIT
  Document Audit / Online Assessment On-site Audit *Proxy On-site Audit
ACTIVE SUPPLIERS  
CRITICAL TIER 1 SUPPLIERS    
CRITICAL NON-TIER 1 SUPPLIERS  
SUPPLIERS OF CRITICAL MATERIALS    
SUPPLIERS OF FOOD CONTACT ITEMS    
SUPPLIERS EXPOSED TO HIGH ESG RISKS  
*PROXY ON-SITE AUDIT
refers to an on-site audit conducted by any personnel outside ThaiBev Group e.g. customers of suppliers, third-party organization, etc.
THRESHOLD FOR SUPPLIER QUALIFICATION


NEW SUPPLIERS



EXISTING SUPPLIERS

AUDIT PROCESSES

CORRECTIVE ACTION REQUEST 
ThaiBev sets out mandatory requirements for suppliers to submit corrective action plan within designated period if it detects any non-compliances and monitors closely how actions are taken to resolve the issues. ThaiBev shall suspend any suppliers who fail to resolve major non-compliances within the agreed window of time from having any business transaction until further actions are properly taken and satisfy ThaiBev’s requirements.
MAJOR NON-COMPLIANCES

Unethical business practice

Illegal activities

Negligence to health and safety

Human right violation

Deviation from product specification


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