Sustainable Supply Chain Management 

 

Supply Chain Management Strategy

 

As BJC continues to commence its operations over the years, it has formed an expansive relationship with various business partners and suppliers across multiple supply chains, enabling the reliable supplies of high quality and safe raw materials and products, acquired through sustainable approach, enabling BJC to continuously serve the daily needs of all consumers across the nation. For this reason, BJC has long acknowledged its reliance upon supply chain management as an important topic to the company’s operations, influencing the design, planning, procurement of materials, inventory, execution, manufacturing, and supply of finished product and services to consumers. 

The importance of supply chain management is further emphasized as BJC is aware of the actual and potential, impacts supply chain management has on the economy, environment, and people, including impacts on their human rights to just and favorable conditions at work, while companies like BJC maybe at risk of negative impact including, limited accessibility and availability of raw materials/products, increasing costs for retailers, decrease product quality, which can damage retailers’ reputation, customer dissatisfaction and revenue, increased risks, non-compliance with regulations. On the other hand, a well-managed supply chain management can optimize the supply chain, reducing operational costs, and delivery time, resulting in increased customer satisfactions. This can result in a competitive advantage, allowing BJC to offer better prices, higher product quality and leverage supply chain to source environmentally responsible products, minimizing waste and implement an efficient logistical practice.

Similar to other businesses, as a consequence of BJC’s diverse operations, BJC is directly at risk of and directly and indirectly contributes to the forementioned risks and impacts through the diverse supply chains, from manufacturing and modern retails, transporting and delivering goods nationwide, as such, BJC is committed to continue integration of sustainable supply chain management throughout the value chain, adapting to changing market environment and consumer needs to meet their daily needs. This not only enabled BJC to mitigate risks arising throughout the supply chains, but also enabled BJC to proactively support the sustainable development of all stakeholders at every touchpoint throughout the supply chain, promoting a more sustainable nation, above and beyond stakeholders’ expectation.

 

Supply Chain Management Approach

 

A systematic integration of supply chain management is managed through strict compliance with the corporate-wide Supplier Code of Conduct, established by the Centralized Sustainability and Risk Management Department, while the Merchandise Department is accountable for its integration to all applicable suppliers, including tier 1 suppliers, and business partners, safeguarding a consistent risk identification, management, and remediation through the value chain. On account of the continuously evolving market environment, the supplier code of conduct subjected to a biannual review, to ensure its applicability and inclusivity of all emerging risks and considerations. Furthermore, BJC have also developed a corporate-wide Procurement Policy, stipulating BJC to conduct all procurement approach responsibly.  

 

Supplier Code of Conduct Dashboard 2022

 

Supply Chain Criteria		Performance (%)	Target (%) Year
Supplier Code of Conduct	Inform	100	100% by 2022
	Acknowledge	95	70% by 2025
	Training	95	70% by 2025
Risk Assessment	Risk Assessment in ESG	100	100% by 2022
Sustainability	Acknowledge staffs about supply chain's sustainability	100	100% by 2022
	Acknowledge suppliers about sustainability	3% of critical suppliers	70% by 2025

 

 

 Supplier Code of Conduct

 

A seamless integration of sustainable supply chain safeguard BJC’s business operations against emerging risks, whiles encouraging the effective identification and management of new opportunities relevant to business operations. Sustainable supply chain takes into considerations environmental, social and governance (ESG) aspects and how business operations generate impacts towards society, environment and human rights throughout the value chain, this is guided by strict compliance to the corporate-wide Supplier Code of Conduct, developed by the Centralized Sustainability and Risk Management Department, oversee by the Merchandise Department, practiced by all suppliers (including  critical tier 1 suppliers) and relevant business partners, ensuring consistent risk management through the following guidelines

 

The Supplier Code of Conduct aims to provide a framework for all business operations under BJC with a clear operating guideline and best practice to apply good corporate governance and responsibility to society and the environment throughout the value chain and to drive the implementation of a sustainable supply chain.  The Supplier Code of Conduct covers the following aspects;

 

 

Human Rights and Labor	Environment	Business Ethics
Forced Labor  Child Labor  Working conditions (e.g., working hours, physical/mental demands of the workplace, wages, benefits)  Occupational Health and Safety  discrimination and Harassment  Freedom of Associations and Collective Bargaining	Greenhouse Gas Emissions and Energy Consumption  Pollution Prevention and Waste Management  resource Efficiency  Biodiversity, No Deforestation, or Land Conservation	Anti-corruption and Conflict of Interest  Anti-Competitiveness

 

The Supplier Code of Conduct is subjected to a review every two years, to assure that the policy is applicable to cover all relevant emerging sustainability topics, safeguarding the company against risks, since potential risks are not constant, but continuously expand in line with environmental, social and economic development.

 

Supplier ESG Program

 

BJC has longed enforces the integration of ESG considerations into its supply chain management to foster sustainable supply chain management throughout the supply chain. This is developed into a corporatewide Supplier ESG Program, designed to assist in the identification, assess, and plans of corrective measures in relations to the sustainability of the supply chain, enabling the implementation of a robust and comprehensive supplier ESG programs. The Supplier ESG Program is overseen by Board of Director, providing a clear and comprehensive guideline for BJC to,

1. Continuously review and revise purchasing practices towards suppliers to ensure alignment with the supplier code of conduct, to avoid potential conflicts with ESG requirements.

2. Set clear guidelines to exclude suppliers from contracting should they fail to meet and/or violate minimum ESG requirements within a set timeframe.

3. Set clear guidelines to prioritized Suppliers with superior ESG performance, by applying a minimum weight to ESG criteria in suppliers’ selection and contract awarding. 

4. Criteria to conduct training for company’s buyers and/or internal stakeholders on their roles in the supplier ESG programs 

 

 

 

Supplier Identification and Screening Process

 

In compliance with the established corporate-wide supplier code of conduct, BJC aim to source all raw materials, ingredients and products from a reliable supplier whom has successfully integrated sustainability considerations into their respective business operations. For this reason, BJC remains active in the identification, screening, and monitoring of suppliers, achieved through the BJC sustainable supplier selection process, which both identified potential suppliers, screen sustainable suppliers and identifies critical suppliers through the process below, which also takes country-specific risks, sector-specific risks, and commodity-specific risks into considerations.
 

1. Screen Sustainable        Suppliers and Identify Critical Suppliers:	2. Supplier Risk Assessment:	3. Correctie Action Plans:	4. Foster and Maintain relationship with suppliers to achieve sustainability objectives:
Screen potential suppliers using ESG indicators (Environmental, Social, governance, and Business Relevance) Identify critical suppliers, critical tier 1 suppliers, critical	Suppliers Risk Assessment and Management Process On-site Assessment	Assessment Results and Management Actions	Sustainability Supply Chain training External Collaborations

 

During the 2022 reporting year, BJC has a total of 11,487 suppliers, comprising of 10,454 local suppliers (91%), and 1,033 international suppliers (9%). All suppliers are subjected to being informed, acknowledged, and trained of the Supplier Code of Conduct, safeguarding BJC’s ability to consistently advocate the supplier code of conduct, to comply with all applicable laws, regulations and standards, source raw materials and products in a responsible and (if applicable) are traceable back to the source, taking into consideration actual and potential impacts on the societies and environment through all operations. 

All prospective suppliers are screened through the centralized supplier evaluation process, which assesses suppliers based on Environmental, Social, Governance (ESG), and Business Relevance aspects. The conducted process allows BJC to identify and locate compatible suppliers with BJC’s core value and standards, enabling the development of a long-term and sustainable business partnership. Furthermore, the screening procedure also assess the suppliers based on country-specific risks, sector-specific risks and commodity-specific risks, safeguarding BJC against all potential supplier risks. Finally, the process also includes a post-selection performance assessment, which evaluates important topics such as,

• Product/Service Safety, Quality and Price Suitability
• Service Reliability, and
• Financial Stability and Delivery Capabilities

If a supplier fails the assessment, they must remediate the performance gaps in accordance to BJC’s requirement within an agreed timeframe, or risk termination as relationship as BJC’s supplier.

 

Sustainable Supplier Management Procedures 

 

BJC continuously aim to develop suppliers to improve their respective capabilities, foster long-term business relations and grow sustainably together. This is overseen by relevant executives, which is integrated into their respective remunerations compensation metrics, the executive has a target to select 100% of all potential suppliers through the supplier development program. The development program is focused on establishing a sustainable framework that enables effective supply chain management, including product quality improvement, supplier management, sustainable raw material sourcing, waste management, labor practices, and health and safety management.

BJC has established Sustainable Supplier Management Procedures to serve as a framework for all BUs to integrate ESG factors into the supply chain process, through the consideration of the following topics,

 

1. Integration of ESG factors into supplier selection

2. Communicating a training of Supplier Code of Conduct

3. Supplier Risk Management

4. Integration of ESG factors into annually supplier assessment

5. Auditing supplier on-site

6. Sustainable relationship with suppliers

 

 

Critical (Significant) Supplier Identification Process

 

Berli Jucker Public Company Limited and the group company (BJC Group) has developed a system to evaluate suppliers (Significant Suppliers) by considering Critical Tier 1 and Critical Non-Tier 1 Suppliers, enabling the effective planning and management of critical suppliers. In 2022, The Company Group coordinated with the consultant to improve and develop systems for sustainable supply chain management. In 2022, BJC Group evaluated critical suppliers by considering factors which influences the suppliers’ sustainable management including, 1) Spending 2) Criticality to Business Strategies and Operations, and 3) Ease of substitute suppliers’ identification and the opportunity to collaborate on long-term business ventures. Identified critical suppliers are then evaluated based on their threats to sustainability, using the following criteria’s,

• Country-specific risk: Considers supplier's location 
• Sector-specific risk: Considers supplier's type of business 
• Commodity-specific risk: Considers supplier's products 
• Considers the characteristics of partners such as the organization and number of employees. 

 

BJC group classified the management of significant supplier tier 1, into 2 assessment types, 

1. Desk Assessment: Relevant departments will send surveys to suppliers according to the identified suppliers’ risk to provide feedback on their respective management strategies of such risks, in addition to supplying additional documents or evidence of operations to allow relevant departments to verify the sufficiency and appropriateness of the management approach.

2. On-Site Assessment: Conducted for Significant Supplier at their respective operation locations be either the internal departments, and/or hiring external organizations to perform the assessment (3rd party assessment)

 

 

 

Following the evaluation, BJC Group will notify the suppliers about identified issues and coordinate with all relevant parties to collectively develop appropriate solution and mitigation strategies, including regular monitoring. In 2022, all suppliers with identified issues from the audit have developed and implemented appropriate improvement and corrective actions to resolve all issues. Additionally, no suppliers have been discontinued due to the supplier risks, which would negatively impact the company group. Furthermore, BJC Group also has projects in place to assist the development of critical suppliers to foster sustainable growth, achieved through knowledge sharing and business development through training, joint projects, and continuous development of suppliers.

 

Critical Supplier Assessment Criteria

• Total Spending per Year: for trade suppliers, the spending must be over 70% of total procurement expenses, while for non-trade suppliers, the spending must be over 80%
• Critical for Business Strategies: Including suppliers with key components (i.e., high dependency) and non-substitutable suppliers. E.g., after sale service providers and high demand product suppliers.

Definition

• Suppliers: An organization that provide a product or service used in the supply chain of BJC. A Supplier are organization which have been registered under the BJC Supply System.
• Critical Suppliers: Suppliers which provide goods, materials, services (incl. Intellectual Property (IP)/patents) which have a significant impact on operations, competitive advantage, and market success or survival. Critical suppliers include suppliers of high-volume goods and services, suppliers of critical components and non-substitutable good and services.
• Critical Tier 1 Suppliers: Critical suppliers whom provides product, materials, and services (incl. Intellectual Property (IP)/patents) directly to BJC.
• Critical Non-tier 1 Suppliers: Suppliers that are considered critical, and provide products and services to the supplier at the next level in the chain (tier-2 suppliers and higher)  

 

Supply Chain Risk Assessment and Management 

 

Due to the diversified nature of BJC business, operating across multiple supply chain, the number of business partners BJC engages with continue to increase, exposing the company to various supply chain risk. The Procurement department is accountable for the effective management of all risks and opportunities arising within the supply chain. This is achieved through the enforcement of the corporate-wide Supplier Risk Assessment and Management Process, developed by the Sustainability and Risk Management Department, to categorize suppliers into management tiers such as tier 1 and critical non-tier 1 suppliers, based on their risk levels. The process assesses inherent risks and opportunities within the suppliers' operations, to develop customized management aproach to manage each supplier effectivly, ase on data-centric approach and their respective risk levels. 

Ensuring critical supplier’s compliance with the Supplier Code of Conduct, and minimize risks of potential violations, BJC conducts on-site assessments of supplier’s operations, evaluating supplier’s products and services quality, business ethics, and labor practices. These include child labor, forced labor, compensation, working hours, migrant labor, human rights and occupational health and safety, and environmental criteria such as energy management, climate change, waste and wastewater management. In addition to farms, animal welfare and aquaculture, which are regularly audited.

 

On-site Assessment  

 

Each business units are accountable to closely monitor their suppliers to ensure compliance with the Supplier Codes of Conduct and minimize potential violations. This is achieved through the on-site supplier assessment, to appraise the supplier’s level of compliance to the code of conduct. In 2022, BJC conducted a total of 145 on-site assessment.

 

 

Corrective Action Plans  

 

Following the in-depth on-site assessment of critical suppliers, BJC found that 10 suppliers were classified as ‘High Risk suppliers,’ and have since been informed by BJC of the issues/violations the assessment found and the timeframe in which they are expected to remediate identified issues accordingly.

 

KPIs for Supplier Assessment and Development   

 

Coverage and Progress of Supplier Assessment Program

Supplier Assessment	FY2022	Target for FY2022
Total number of suppliers assessed via desk assessment/on-site assessments	292	Number of suppliers: 215
Percent of significant suppliers assessed	65.76
Number of suppliers assessed with substantial actual/potential negative impacts	10
Percent of suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plans	100
Number of suppliers with substantial actual/potential negative impacts that were terminated	0

 

Coverage and Progress of Suppliers with Corrective Action Plans 

Corrective Action Plan Support	FY2022	Target for FY2022
Total number of suppliers supported in corrective action plan implementation	10	Percent of significant suppliers: 100
Percent of suppliers assessed with substantial actual/potential negative impacts supported in corrective action plan implementation	100

 

Coverage and Progress of Suppliers in Capacity Building Programs 

BJC places great emphasis on collaborating with suppliers in their capacity building programs to enhance productivity and product quality. The company adopts best practices to ensure mutual growth and sustainability. One exemplary case involves working closely with farmers, who are vital suppliers in the agricultural sector. BJC provides them with comprehensive training, modern farming techniques, and access to cutting-edge tools and technologies. By promoting efficient agricultural practices, such as proper irrigation methods, soil management, and crop selection, BJC enables farmers to increase their yields while minimizing environmental impact.  In additon, the programs include in-depth technical support for ESG performance in suppliers.

BJC's supplier capacity building programs not only elevate the quality of products supplied but also foster a more prosperous and resilient supply chain, benefiting all stakeholders involved. 

Capacity Building Programs	FY2022	Target for FY2022
Total number of suppliers in capacity building programs	14	Number of Suppliers: 10
Percent of significant suppliers in capacity building programs	3.15

 

Animal Welfare Policy   

 

Often considered as a foundation to responsible sourcing of animal-oriented products (meat, poultry and seafood), and therefore a key consideration of sustainable agricultural practices, BJC remain compliance with the corporate-wide Animal Welfare Policy, enforcing promise to uphold good animal welfare practices through the value chain, which also includes cooperating with business partners to safeguard the five freedom of animal welfare, allowing BJC to consistently protect the quality of life for all animals within the supply chain. Furthermore, BJC also recognize the risks associated with Animal Testing, which violates animal welfare. Due to the nature of BJC's operations, products and services, BJC is not directly involved in any animal testing processes.