Our Approach

Our Supply Chain

We recognise the importance of integrating sustainability practices into our procurement and supply chain management processes.

Sembcorp’s main suppliers consist of original equipment manufacturers (OEMs), material suppliers, and engineering, procurement and construction (EPC) contractors. OEMs supply us with large-scale equipment such as wind and gas turbines and desalination units as well as key equipment such as switchgears and control systems. Material suppliers supply fuel and chemicals needed to run our plants. EPC contractors provide detailed EPC services for our greenfield plants.

Our plants are designed and built to international codes and standards and it is with this perspective that we procure our equipment. We seek to ensure the procurement of high-quality and technologically advanced equipment that is durable and from suppliers who share our commitment to sustainability. Our Group Procurement Policy and Standards provides guidelines and control principles for various stages of the procurement process.

We value the opportunity to positively influence our service providers and suppliers towards greater health, safety, security and environmental awareness and social responsibility. In 2018, we launched our Supplier Code of Conduct (Supplier Code). The Supplier Code defines the ESG standards of practice that we expect from our suppliers. Separately, our vendor pre-qualification process incorporates ESG criteria in the assessment of potential suppliers.

In 2020, the resilience of our supply chain was tested amidst national lockdowns and trade disruptions. Our value chain management teams transitioned to working remotely, in line with our business continuity planning requirements. In the early stages of the pandemic, our teams tapped on our global network of suppliers to ensure a steady supply of personal protective equipment. Inventory of supplies critical to our operations were increased, and connections to alternate suppliers were established to mitigate supply disruption. Our operations also looked into alternative direct materials as another form of contingency planning.

Supplier diversification
Our efforts to ensure supply chain security include diversifying supply to mitigate concentration risk. Coal supply is managed via a portfolio of suppliers and country sources. Sembcorp’s operations maintain at least one primary and one secondary supplier for critical spare parts and consumables, where possible.

Our suppliers and contractors provide a wide range of products and services including fuel and equipment for electricity generation, chemicals for water treatment as well as maintenance services for our power and water treatment plants.

In 2020, our operations in our markets procured goods and services from approximately 7,500 suppliers, with a total expenditure of S$5.5 billion. In a majority of our operations, a higher proportion of goods and services are sourced locally. There were no significant changes to our supply chain in 2020.

Fuel management
Fuel is a significant cost component for Sembcorp’s power and steam generation operations. Therefore, managing our various fuel sources, along with their supply chains, is a key focus. Our fuel management teams look into issues such as contract management, hedging and procurement, as well as logistics such as transportation and shipping, to ensure the security and reliability of our fuel supply. We secure long-term contracts for coal and gas supplies with reliable counterparties who have reserves that can sustain the useful lives of our assets. For our fast-ramping power generation assets in the United Kingdom which utilises diesel, we have a choice of four pre-qualified suppliers which enables us to take advantage of cost savings through spot pricing. This also provides us with contingency supplies. We are exploring the use of hydrotreated vegetable oil, which generate less emissions, as an alternative to diesel.

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