Challenges

Supply chain management is a key factor for sustainable business operation. CKPower recognizes that good supplier management not only forms part of social and environmental responsibility but also strengthens relationships and creates value for all companies in the supply chain.
In addition, supplier risk reduction presents a challenge for the company as it has to manage its supply chains efficiently in order to minimize impact on the business.

Execution

CKPower has prescribed a supplier code of conduct, which encompasses business ethics, labor and human rights practices, safety and occupational health, environmental management in working areas, and responsibility to communities and society. The objective is to encourage suppliers of the company and its subsidiaries to adhere to sustainable business practices that take into account environmental, social, and governance concerns. The supplier code of conduct also serves as guidelines for suppliers that are in compliance with relevant laws and international standards. Furthermore, the company actively encourages suppliers to conduct business with transparency, respect to human rights, and fair labor treatment in adherence to safety, occupational health, and environment standards.
Supplier Performance Evaluation

In 2019, the company conducted supplier evaluation, using environmental, social, and governance (ESG) factors as well as safety as the criteria applicable to both existing and new suppliers, with the goal of encouraging suppliers across the supply chain to adopt sustainable business practices in their business activities. CKPower required its suppliers to pass three types of supplier performance assessment, as detailed below.

Types of supplier performance evaluation
Annual supplier evaluation Mid-operation assessment On-site evaluation
  • Self-assessment on ESG
  • Evaluation on operational efficiency, product quality, and sustainability
  • Safety, occupational health, and environment
  • Social responsibility
  • Environmental protection
  • Evaluation of manufacturing processes for suppliers with low annual evaluation results
  • Collaboratively seeking solutions and formulating potential enhancement plans

In 2019, CKPower evaluated a total of 395 suppliers, 313 of whom were rated “satisfying,” accounting for 79 percent of all the suppliers assessed. No supplier was rated “extremely unsatisfying.”

In addition, the suppliers were categorized so as to allow the company to systematically analyze and formulate procurement strategies and use the obtained data to efficiently conduct supplier-related risk assessment. The suppliers were classified into two groups as follows.

1) Critical suppliers

These are suppliers with high-value contracts or high spending and suppliers of hard-to-replace products and of components or devices vital to the manufacturing process. Critical suppliers present very high or high risks. The company requires these suppliers to be evaluated annually through vendor evaluation forms and on-site audits and to be assessed on sustainability practices.

2) Non-critical suppliers

This term refers to suppliers with moderate- or low-value contracts and present moderate or low risks. The company requires these suppliers to be evaluated annually through vendor evaluation forms and vendor self-assessment.

Sustainability practices for suppliers

In 2018, CKPower started working on supplier sustainability assessment by creating questionnaires, formulating guidelines, and defining the assessment procedure. In 2019, 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 strives to continuously improve the supplier sustainability assessment to ensure its consistency with its sustainability policy.

Supplier risk assessment

CKPower has introduced supplier risk assessment so as to prioritize potential risks on its business according to the criteria it has defined, which cover four key areas, including economy, society, and the environment. Both qualitative and quantitative criteria can be selected as a basis for risk assessment. Likelihood of risks and impact levels can be categorized into four levels as shown.

Likelihood of risks and impact levels
Likelihood/impact Description Level
Very high One instance per month or more/over THB 10 million 4
High One instance per 1-6 months but no more than five instances/THB 5-9 million 3
Moderate One instance per 1-3 years/THB 1-4 million 2
Low One instance per 4-5 years/under THB 1 million 1
Example of supplier risk management and control
Risk factors Risk management and control
Economy
Financial status and stability of suppliers
  • Collateral
  • Review past financial statements.
Suppliers with high spending
  • Examine fulfilment of terms and delivery.
  • Set payment terms as installment payment based on project progress.
Society
Child labor, illegal foreign labor, and human rights violation
  • Define criteria for supplier qualification assessment.
  • Conduct site visits.
Safety and occupational health
  • Assess safety risks before carrying out operations.
  • Make necessary safety equipment a requirement.
Environment
Environmental protection and waste management
  • Define contract terms and monitor compliance.
  • Check factory permits (Ror Ngor 4) according to the category issued by the Department of Industry

Furthermore, CKPower has introduced new vendor evaluation, which is conducted with a form that the company has created, in order to select new suppliers with required qualifications that cover 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 communicate its supplier code of conduct to all suppliers through an acknowledgment form and various activities for suppliers, with the goal of fostering the level of awareness and understanding of the code of conduct that enables them to apply it to their business activities and achieve sustainable growth.

Supplier relationship enhancement

CKPower seeks to strengthen its relationships with suppliers through a diverse array of training, seminars, and activities in order to communicate its business code of conduct, policies, and practices to suppliers. One such activity is Safety Week 2019.

Safety Week 2019

Safety Week 2019 was a training session on electrical safety and providing aid to victims in electrical accidents. The session also included training on safety, occupational health and workplace environment for the company’s suppliers to educate them on safety and working in power plants, foster awareness of safety and environmental audits, and build suppliers’ confidence in the sustainable business practices of the company.