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 process 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 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. We have been rolling out the Supplier Code across our markets in 2019 through internal training. To date, our procurement teams have received training on the Supplier Code.

We have just launched an annual procurement assessment. This assessment is aimed at identifying supplier risks and encouraging best practices through gathering more granular data and information on our supply chain management performance.

To improve the management of our suppliers and integrate the requirements of our Supplier Code across all stages of procurement, our vendor pre-qualification process incorporates ESG criteria in the assessment of potential suppliers. Going forward, we aim to incorporate the same ESG criteria into the evaluation of vendor performance for our critical suppliers.

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 2019, our operations in our key markets procured goods and services from 6,182 suppliers, with a total expenditure of S$4.5 billion. Spending on local suppliers amounted to 44% for our Singapore operations, 100% for our China operations and 74% for our India operations. 40% of total payments to suppliers went to companies in Indonesia. This was mostly for our natural gas supply for Singapore operations and part of our coal supply for India thermal power operations.

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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