Sustainable Supply Chain
Customers
Business Partners
Communities
and Societies
Mass Media
and Online Media
Importance
Operations throughout the supply chain on the part of partners to deliver goods and services to AOT can create positive impacts, e.g., employment which helps income distribution. However, there is a potential for negative impacts, e.g., environmental pollution, unsafe working conditions, or unfair labor practices. This is a risk that AOT must manage and control in order to ensure law compliance, avoid reputational impacts and business disruption. Sustainable supply chain management not only protects business partners from negative impacts and promotes positive benefits, but also indirectly strengthens customer and investor confidence in service stability and operational ethics.
Management Approach
AOT operates sustainable supply chain management in accordance with the Public Procurement and Supplies Administration Act B.E.2560 (2017), Regulation of the Ministry of Finance on Public Procurement and Supplies Administration B.E. 2560 (2017), Guidelines in accordance with the Ministerial Regulation Prescribing of Supplies and Procurement that the State Needs to Promote or Support (No.2) B.E. 2563 (2020) including the Sustainable Practices of AOT Partners and the Code of Conduct on Procurement, and The Supply Operation Manual. All of which are which are enforced throughout the organization.
Public Procurement and Supplies Administration Act B.E.2560 (2017)
The Public Procurement and Supplies Administration Act B.E.2560 (2017) states that the procurement and supplies management of government agencies must bring the greatest benefit to its agencies and must comply with the following principles:
Worthiness
Transparency
Efficiency & Effectiveness
Verifiability
The procured supplies must possess qualities or characteristics that meet the usage purpose of the government agencies with a reasonable price along with a clear and appropriate supply management plan.
The procurement and supply management must be conducted openly with fair competition. All entrepreneurs are treated equally, and a reasonable and sufficient timeline allows them to submit proposals with clear evidence of operations. Procurement and supply management information are disclosed at every stage.
Effectively plan of the procurement and supply management in advance to ensure continuation with an appropriate schedule by evaluating and revealing the achievement of the procurement and supply management.
The procurement and supply management information must be systematically collected for verification.
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The Public Procurement and Supplies Administration Act B.E.2560 (2017)
Guidelines in Accordance with the Ministerial Regulation Prescribing of Supplies that
the State Needs to Promote or Support (No.2) B.E.2563 (2020)
In 2021, AOT operated based on the Guidelines in Accordance with the Ministerial Regulation Prescribing of Supplies that the State Needs to Promote or Support (No.2) B.E.2563 (2020). It aimed to promote both domestic procurement of product or service with environmentally-friendly materials and procurement from small and medium-sized enterprises (SMEs). Not only promotes the growth of domestic grassroot economy, such guidelines also increase the demand for environmentally-friendly products.
AOT Green ICT Management Policy
In 2021, AOT established the policy to manage the use of environmentally-friendly information technology to support sustainable growth of the airport service business. This policy focuses on purchasing energy-saving electronic devices with long life cycle, reusable or easy recyclable, and high efficiency. The policy also supports the selection of environmental-friendly information technology such as e-Document systems, Virtualization Server, and Cloud computing.
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The Significance of Sustainable Practices Guidelines of AOT Partners
Sustainable Supply Chain Management Process
AOT requires the Supply Department and the related departments to be jointly responsible for sustainable supply chain management through the following processes:
1
Screening and Evaluating Business Partners
AOT integrates sustainability requirements in the selection of new business partners and evaluation of existing parties. The selection of new business partners takes into account specific sustainability issues to each type of contract and business activity, such as compliance with occupational health and labor laws, possessing environmental management standards or standards for occupational health and safety management, integrity, reliability, quality of work, availability of resources to deliver products and services.
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Acknowledging the Business Partner’s Code of Conduct in writing
All business partners of AOT must acknowledge Sustainable Practices Guidelines of AOT Partners, and try to understand with signature affixed for acknowledgment along with contract documents before executing the contract.
2
3
Evaluation of Key Critical Business Partners and Supply Chain Risk Assessments
AOT has put in place internal processes for evaluating the critical partners and the supply chain risks in a bid to raise awareness of business partners which are important to business operations, analyzing the types and levels of risk of each partner group, and considering the importance and urgency of each partner group in order to set risk management and control measures to an acceptable level. AOT then disclosed the evaluation results in the Annual Sustainable Development Report.
3.1) Evaluation of Critical Suppliers
A critical Supplier means a business partner who delivers goods, raw materials, or services which have a significant effect on its ability to compete, succeed in the market or the survive in the business. The evaluation of AOT's critical suppliers is based on three key considerations which are:
- Suppliers with high expenses
- Suppliers with fewer competitors
- Suppliers who deliver materials which are important to the business such as infrastructure contractors, construction project consultant, security service contractors and security equipment suppliers.
Partners that have been evaluated to be critical suppliers will receive priority tracking in order to control the impacts that may occur on the company
3.2) Sustainability Risk Assessment Among Business Partners
AOT evaluates the sustainability risks of each group of business partner by taking into account environmental and social governance issues, covering human rights risks and risks in the supplier’s supply chain of Tier 2 (in the case of trading partners being distributors or leasers. AOT has identified significant sustainability risks in every dimension in order to consider the level of impact and the likelihood of occurrence. The result of each partner group will be ranked according to importance in the Seller’s Risk Matrix to identify sustainability high-risk partner group and prioritize management measures. The results of which are used to design management measures specific with partners including key risk issues to help preventing and reducing risks in the effective manner.
AOT's 10 Business Partners
Construction
Service Contract
Product and Equipment
Rentals
Construction
Installation and service contract in information and communication
Maintenance
ground operations, buildings and spaces, and logistics services
Security service contract and customer services
Consultant, organizer, and other office works
Capital Equipment (CAPEX)
Chemicals and consumable goods
IT equipment and system rental service
Rental car and transport service Other equipment rental services
Sustainability Risk Issues for Consideration
Environment
Society
Corporate Governance
Suppliers' Supply Chain Risks
- Energy supply
- Water supply and wastewater drainage
- Biological diversity
- Use of material, chemical and waste
- Air pollution
Human Resources
- Sustainability in competent labor
- Occupational health and safety
- Fair employment
Human Rights
- Illegal labor
- Equal treatment
- Fraud and corruption
- Anti-Trade Competition and Monopoly
- Confidentiality, information security and privacy
- Concern of environmental issue risks among trading partners
- Concern of social issue risks among trading partners
- Concern of corporate governance issue risk among trading partners
Seller's Risk Matrix Evaluation
- Construction
- Installation and service contract in information and communication
- Maintenance, ground handling, buildings and spaces, and logistics services
- Security service contract and customer services
- Consultant, organizer, and other office works
- Capital equipment (CAPEX)
- Chemicals and consumable goods
- IT equipment and system rental service
- Rental car and transport service
- Other equipment rental services
Note: AOT determined orange (H) and red (E) areas for sustainability high-risk partner groups
Partner Groups of High-Risk Sustainability
Partner Group
Findings
Related Management Measures
Construction
Air pollution
(e.g. PM2.5 from construction)
Controlling partners’ operation to be in accordance with the Environmental Impact Assessment report. (EIA)
Installation and Service Contract
In information and communication
Information security
and privacy
Controlling partners’ operation to be in accordance with ICT Security Policy
Security service contract and customer services
Labor sustainability in knowledge and capability
Determining human resource management plan and partners’ training project
IT equipment and system rental service
Information security and privacy
Controlling partners’ operation to be in accordance with ICT Security policy
However, AOT is in the process of formulating monitoring plan to control risks in the aforementioned partner groups and will report the progress in the Sustainable Development Report in the future.
Management Evaluation
AOT has established an internal process to verify the compliance of partners’ and contractors' operations in accordance with the Terms of Reference (TOR), Sustainable Practice Guidelines of business partners and Code of Conduct of AOT. The Work Inspection Committee, independent to such projects, will be in charge of inspecting and examining the completeness of the delivered work regularly as well as determining improvement methods in case of inconsistency with AOT's TOR. In addition, AOT is in the process of developing a field-based audit guideline to monitor implementing measures progress to reduce future sustainability risks in the supply chain.
Last Updated: August 26, 2023