Supply Chain Management
Supplier Code of Conduct
|SUPPLIER CODE OF CONDUCT|
|Business Ethics||Human Rights and Labor||Safety and Occupational Health||Environment||Social Responsibility|
Sustainability Practices for Suppliers
In 2018, CKPower began working on supplier sustainability assessment by creating questionnaires, formulating guidelines, and defining its assessment guidelines and procedure. The Company began conducting supplier sustainability assessment as well as prescribed an additional goal of conducting on-site audits to ensure that suppliers operated in compliance with the supplier code of conduct. CKPower also strives to continuously improve the supplier sustainability assessment to ensure its consistency with its sustainability policy.
2022 Execution and Performance
Training on Human Rights for Business Partners
In 2022, Nam Ngum 2 Hydroelectric Power Plant and Xayaburi Hydroelectric Power Plant organized training on human rights for their main business partners and general partners, totaling 28 participants. The objective of the training was to communicate the company's human rights policy and relevant practices to the partners, aiming to foster understanding of human rights. Furthermore, it serves as a guideline for business practices with partners in conducting their operations. The expected outcome is to reduce and prevent instances of human rights violations while also enhancing the knowledge of the partners and benefiting the local communities.
Business Partners Risk Assessment
CKPower has a process for assessing supplier risks and the potential impact on the organization's business operations, based on the criteria set by the company. These criteria include the likelihood of risks occurring and the severity of their impacts on various sustainability dimensions, including governance, economy, society, and environment. It covers issues of business ethics, labor practices and human rights, safety and occupational health, environmental management, and responsibility towards communities and society. The company sets four levels of risk assessment for these areas as following.
In 2022, there were a total of 492 business partners, which accounts for 100% of the partners that the company assessed for risk. The results from the risk assessment revealed that the majority of the partners had a low level of risk. If the risk assessment of business partners identifies issues with a high to extreme level of risk, CKPower will implement risk management measures to bring it within an acceptable level.
|Risk Issues||Risk Management Measures|
|Issues with extreme level of risk|
New Approved Vendor
CKPower has prescribed new approved vendor with criteria covering sustainable topics in economic, social, and environmental dimensions, such as product and service warranty, product delivery, environmental policies and social responsibility, compliance with labor laws, and safety standards. At the same time, the Company also actively and continuously promotes and communicates its supplier code of conduct to all suppliers.
|NEW VENDOR SELECTION||NEW VENDOR EVALUATION|
|CKPower has prescribed new vendor evaluation with criteria covering sustainable topics in economic, social, and environmental dimensions, such as product and service warranty, product delivery, environmental policies and social responsibility, compliance with labor laws, and safety standards. At the same time, the Company also actively and continuously promotes and communicates its supplier code of conduct to all suppliers.||As part of vendor selection, CKPower screens vendor candidates by evaluating their qualifications based on criteria covering environmental practices and social responsibility, product and service quality, delivery, experience, product warranty, safety standards, and legal compliance.|
In 2022, all vendors, including 78 new vendors, underwent an assessment in governance and economic, environmental, and social aspects.
|New Vendor Screening Criteria||Percentage of new vendors
Governance and Economy
Critical Supplier Analysis
CKPower classifies its suppliers into three major categories: Critical Tier 1 Supplier, Non-Critical Tier 1 Supplier and Critical Non-Tier 1 Supplier to allow it to systematically analyze and formulate procurement strategies and assess supplier-related risks effectively.
|1. Critical Tier 1 Suppliers||are direct suppliers with high contract value of 10 million baht or higher per year; non-substitutable suppliers, such as advanced construction and engineering suppliers; and suppliers of products that are difficult to source from elsewhere, are considered critical components or equipment in production, and involve a high or extreme level of risk. Examples are such as:
|2. Non-Critical Tier 1 Suppliers||are general direct suppliers with average spending or low contract value and with a medium or low level of risk.||85%|
|3. Critical Non-Tier 1 Suppliers||are suppliers who do not engage in business directly with CKPower but engage in trade with CKPower’s suppliers. They are selected from a list of suppliers of CKPower’s Critical Tier 1 Suppliers.||0%|
Supplier Performance Evaluation and Monitoring
Supplier performance or efficiency evaluation is based on a set of criteria and CKPower’s Supplier Code of Conduct and enables the company to collect data related to the capabilities of its suppliers across governance, social, and environment. Three types of supplier performance evaluation are conducted: yearly performance evaluation, mid-operation performance evaluation, and on-site audit.
Suppliers with low performance or failing to pass the evaluation will be suspended temporarily or removed from the approved vendor list. The evaluation is based on the site audit checklist. CKPower assists suppliers in resolving their issues and works with them to enhance their potential in order to increase their business capabilities.
Supplier Risk Assessment
In 2022, CKPower conducted an operational efficiency assessment, covering ESG management, on a total of 492 suppliers, representing 100% of the Company’s total suppliers in 2022. The assessed suppliers consisted of 349 existing suppliers and 78 new suppliers, representing 16% of the Company’s suppliers. All 78 new suppliers underwent an ESG assessment.
On Site Audit 2022
On-site audits are conducted to determine whether CKPower’s suppliers comply with the Supplier Code of Conduct. They are conducted not only on suppliers with a D rating but also Critical Tier 1 Suppliers who play a critical role on the production in order to offer troubleshooting assistance and advice and plan supplier capability development in collaboration with all relevant parties and the suppliers themselves before another assessment. In 2022, on-site audits were conducted at four companies, which were Critical Tier 1 Suppliers with a vital role in the production process.
Strengthening Supplier Relationships
CKPower strives to foster relationships with its suppliers through a wide range of training, seminars, and activities, where they are informed of the Company’s business approach, policies, and practices.
Safety Training for Suppliers
First Aid and CPR Training for Suppliers
In 2022, Bangpa-in Cogeneration Power Plant organized a first aid and cardiopulmonary resuscitation (CPR) training for 10 Non-Critical Tier 1 Suppliers. Led by an expert physician, the training session fostered knowledge and awareness of operational safety among the suppliers, which could help mitigate the severity of incidents and ensuing losses and could be further disseminated in their businesses.
Placing importance on environmental conservation, companies under CKPower Public Company Limited have instituted a green procurement policy that encourages eco-friendly procurement practices and promotes the use of products made from renewable resources and non-polluting products, such as those certified with the Green Label, in an effort to protect the environment, use resources sustainably, reduce risks to employees and the Company from exposure to hazardous materials, instill green consumerism within the organization and society at large, and reduce costs through sustainable and cost-effective consumption. In 2022, the procurement of Green-Label office suppliers and Energy Star computer equipment amounted to a total value of 5,157,748 baht, equivalent to 65.39% of the overall expenditure of CKPower’s total office supply and computer equipment procurement.
CKPower promotes local procurement, which can enhance procurement efficiency and speed. By creating jobs and generating income for local residents, the practice also contributes to local economies and helps to strengthen relationships with communities and foster confidence among them.
|Power Plants||Percentage of local procurement*|
|Bangpa-in Cogeneration Co., Ltd.||10%|
|Nam Ngum 2 Power Co., Ltd.||16%|
|Xayaburi Power Co., Ltd.||19%|
|Bangkhenchai Co., Ltd.||1%|
*The term ‘local’ is defined as being in the same province as CKPower’s power plants or as being in Lao PDR for power plants in Lao PDR.
To manage risks related to payments from its customers, CKPower offers a credit term of no more than 30 days for its suppliers as it has deemed that credit risk will rise significantly if the payment is made after 30 days as specified in contract terms. In 2022, the average actual credit term was 20 days, which was consistent with the Company’s policy.