Supply Chain Management

The current worldwide expectation is to see collaborative responsibilities throughout the supply chain in terms of safety in production and services, respect for workers’ human rights, consideration for climate change, eco-friendly and human-friendly use of natural resources as well as anti-corruption practices. Unable to handle them alone, CPN requires the cooperation of business partners and contractors in managing such issues. CPN has defined guidelines to manage and develop business partners' wider perception of global situation, including joint development based on their diverse fields of specialization and good corporate governance practices.

The Senior Executive Vice President of Business Development and Project Construction oversees supply chain management of project development and construction, while the Senior Executive Vice President of Finance, Accounting, and Risk Management oversees corporate and asset management. They supervise cross-functional teams to jointly consider, screen, and assess suppliers with a combined view on innovation, techniques, expertise, and value of investment. The cross-functional team comprising the corporate risk management team and the department directly is responsible for assessing supplier risks that may affect CPN. This covers risk assessment of key interconnected processes.

CPN's supply chain management policy defines a collaborative approach between itself and trading partners in developing innovative products and services in line with six sustainability and CG principles as follows:

  1. Regulating the operations to ensure cautious implementation, transparency, and fairness in compliance with mutual corporate governance principles.
  2. Caring for the environment, for example selecting environmentally friendly products and technologies and jointly managing potential environmental impacts and risks.
  3. Considering consumers’ health, hygiene, and safety as well as the quality of products and services.
  4. Considering positive and negative impacts on communities.
  5. Considering human rights, including taking care of business partners’ employees.
  6. Business partners’ capacity and potential to manage rules, regulations, and guidelines for mutual operational approaches.
1. Business Partner Classification

Covering the process of all direct procurement, CPN’s supply chain management focuses on partners that conducted transactions with CPN during this year in (1) development and construction activities, (2) management of shopping complexes and marketing operation, and (3) corporate administration.

Besides specifying partner groups according to their functions within its value chain, CPN applies the following criteria to classify them:

  1. Spending analysis of annual procurement value as shown in the table “Spending-Analysis Classification” and "Classification by Type of Service".

    Spending – Analysis Classification

    Group 1 Partner group sending more than Baht 10 million

    Group 2 Partner group spending between Baht 1 million and Baht 10 million

    Group 3 Partner group spending less than Baht 1 million

  2. Importance of business partners to CPN’s operations.
  3. Business partners’ expertise and monopoly in service provision.

The above classification is utilized in the planning to increase the efficiency of supply chain management, supervision and development of partners, including annual assessment of their risk factors to define more effective risk management measures. CPN conducted supplier risk assessment and formulated measures to manage risks throughout the supply chain. The major steps included: (1) Defining key processes and major manufacturers/contractors, with procurement values, significance of products and services, and the number of manufacturers/contractors available in the market as selection criteria, (2) Assessing risks of product and service delivery in economic, social, and environmental aspects, which can separate key processes that may cause risks and negative impacts on communities, and (3) Formulating risk management measures to reduce the probability or mitigate impacts.

2. Supply Chain Management Process

1) Planning and Invitation of partners to participate in screening

  • CPN invites partners by providing clear information about the scope, objectives and goals of each project. including specific requirements, which include sustainability, safety and environmental requirements.
  • Adherence to procurement policies and practices for business partners and the anti-corruption policy.
  • Partners are required to conduct self-assessment by completing CPN's pre-qualification form. The screening criteria are (1) each company’s credibility and financial management caliber, (2) technical and technological innovation, and (3) management of the quality of work and consideration for impacts on the environment, safety and occupational health.

2) Bidding Selection

  • CPN divides its partner selection process into fair bidding process or through E-Auction, by considering bidders' technical competency and cost-effectiveness.
  • Comparison of three partners is required before any of them can be hired (except for special cases specified under CPN procurement regulations) in accordance with the e-catalog of products and services that have passed the price comparison and annual partner assessment processes.
  • CPN's partner selection criteria comprise Right quality, Right Price, Right source & condition, Right quantity, Right time, Right source, Right place, hiring by avoiding monopoly

3) Delivery of products and services

  • The delivery of work, goods and services must conform to all regulatory requirements, including labor laws, safety standards and environmental conservation regulations.
  • Set standard of work delivery according to Term of Reference (TOR), standard price, workload, quality management system standards and ISO standards and regulations to deliver work according to the sustainability guidelines, such as the safety and human rights of workers.
  • Evaluation of operating process internally and externally and use assessment results for the registration of partners according to procurement policy. This result also one of criteria of maintaining partner in the next year
  • Require partners to develop a corrective action plan and clearly penalties, if the partners neglect or violate the form prescribed.

CPN hosts an annual Supplier Information Meeting to communicate its intention, policies, commitment to promote partner and adherence to corporate governance practices, anti-corruption and sustainable development under the CPN Code of Conduct for suppliers. CPN invited suppliers to join CAC (Private Sector Collective Action Coalition against Corruption, emphasize on development of innovative processes in construction and service provision and development of local partner.

3. Business partner relationship management and joint development

For almost four decades of CPN’s property business leadership, suppliers/contractors and business partners have played important roles in achieving success and growth. Committing to doing business under the sustainable development guidelines, CPN has built, developed and grown together with them. CPN always valued participation and hearing from stakeholders, both formally and informally.

As a rule, the annual meeting is a chance to communicate with stakeholders not only CPN’s business policy, emphasizing good corporate governance, anti-corruption, and sustainability development under CPN’s Code of Conduct for Suppliers. Such meeting also supports their development through an in-depth seminar on the design and construction innovation, labor laws and human rights. Stakeholders were also invited to participate in Thailand’s Private Sector Coalition Collective Action against Corruption (CAC).

Under its engagement guidelines with suppliers, CPN insists on fair and transparent interactions. This year a No-Gift Policy was emphasized by seriously revisiting the internal process as well as seriously and continually communicating with suppliers to acknowledge and understand CPN’s intention. Suppliers were asked to adhere to CPN’s Suppliers’ Code of Conduct and were informed about communication channels for complaint-filing and whistleblowing through integrated communication for the clarity of collaboration procedures.

A CPN element of pride is the development of business partners to grow side by side with CPN and the ability to expand their businesses, domestic and provincial. CPN focused on business partners’ development in two dimensions as follows:

1) For development, construction, operation, and marketing

Focus on collaborative innovation such as

  • Construction is focused on process innovation.:
    • Construction focusing on process innovation Light walls and durable materials which can be delicately modified according to designs and are environmentally friendly.
    • Reusable screw piles used for temporary fences or billboards.
    • Pixel tile technique for exterior tile work or hardscape, which not is only beautiful but can also maximize the benefit of using tile chips, which are otherwise wasted.
    • Wood, vinyl, and slings applied as temporary walls instead of calico for space renovation, which are reusable to reduce consumable materials and not disrupt the feelings of customers when strolling in service areas where renovation is going on.
  • System work – applying the deep-shaft process for water treatment for project expansion with limited horizontal expansion.
  • Shopping complex management – CPN cooperated with partners in business development of recycled water system in large buildings.
  • Collaborated with automation system technology management firms in implementing a parking guidance system to manage traffic and parking space.
  • Worked with event organizers to improve modern marketing activities in response to rapid change in customers’ behavior.
  • Collaborated with sub-contractors to develop international standards of service.

2) The development of local suppliers

Focused on the thinking process system to modernize provincial identity arts and crafts for decoration through both interior and exterior designs, while being responsible to the environment, for instance CPN’s collaboration with local suppliers specializing in ceramic production to specifically apply modern designs in producing ceramics for pillar decoration at CentralPlaza Lampang building CPN jointly with local suppliers in the CentralFestival Samui project reused resources during construction, for example, sand compaction on the parking space foundation and the subbase around the project area, and the use of pile chips left over from cutting for retaining walls for project signs and part of office foundation. The facade of CentralPlaza Salaya was also decorated with “orchids” made from reused fretwork wood.