Sustainable with Economy
Sustainable Supply Chain
AOT is aware of the importance of supply chain management to control risks that may affect business continuity and to promote sustainable development in the national economy.
AOT has therefore adopted best practice in managing the supply chain to ensure smooth business operations, avoid social and environmental impacts that may be caused by activities in delivering goods and services to business partners, and enhance AOT's good image.
AOT pursues sustainable supply chain management in accordance with the Public Procurement and Supplies Administration Acts B.E. 2560 (2017), the Ministry of Finance's Regulations on Public Procurement and Supplies Administration B.E. 2560 (2017), Sustainable practices of AOT's business partners, and Ethics on the Procurement and Supply Operation Manual. All of these references are observed throughout the organisation.
Public Procurement and Supplies Administration Act B.E. 2560
The Public Procurement and Supplies Administration Act B.E. 2560 stipulates that procurement and supplies management of government agencies must optimise the benefits for its agencies based on the following principles:
|Worthiness||The procured supplies must possess qualities or characteristics that meet the government agencies' objectives of usage with a reasonable price along with a clear and appropriate supply management plan.|
|Transparency||The procurement and management must be conducted openly with fair competition by treating all entrepreneurs fairly and equally, allowing them with a suitable and sufficient time for submitting proposals, showing clear evidence of operations and disclosing information of procurement and supply management at every step.|
|Effectiveness||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.|
|Verifiability||Information about procurement and supply management must be systematically collected for verification.|
The Essence of Business Partner's Sustainable Practice
AOT requires the Supply Department and the related departments to be jointly responsible for sustainable supply chain management through the following processes:
- 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 sustainability issues that are specific 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. These details are to be contained in the Term of Reference while sustainability issue becomes one of the factors in selecting new business partners and evaluating current partners. A weighted average of 5-10% will be considered depending on the types of contract and business activities of the partners.
- Acknowledging the business partner’s code of conduct
All business partners of AOT must take note of AOT's business partners sustainable practices published in the document which needs to be understood and signed together with contract documents before executing the contract.
- Evaluation of Key Critical Supplier and Supply Chain Risk Assessments
AOT has put in place internal processes for evaluating the critical suppliers and assessing 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 in order to set risk management and control measures to an acceptable level. The importance and urgency of each partner group are also considered with AOT disclosing the evaluation results in the Annual Sustainable Development Report.
3.1 Evaluation of Critical Suppliers
A critical supplier refers to a business partner that delivers goods, raw materials, or services which have a significant effect on its ability to compete, succeed in the market, or survive in business. The evaluation of AOT's critical suppliers is based on three key considerations which are:
- Partners with high expenses
- Partners with fewer competitors
- Partners that deliver materials, which are important to the business such as infrastructure contractors, construction project consultants, security service providers and security equipment partners.
Partners that have been evaluated to be critical suppliers will receive priority tracking in order to control the effects that may occur to 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 in the future (in the case of trading partners being distributors or leasers) in which AOT has identified significant sustainability risks in every dimension. These are used to determine the level of impact including the likelihood of occurrence and then take the consideration of each partner group to set priority in the form of a Seller's Risk Matrix to identify those groups with high sustainability risk and be aware of management measures that should be addressed as a top priority.
The results will be used to design management measures specific with partners including key risk issues to help controlling the risk in a direct and effective manner.
AOT's 10 Business Partner Groups