Greening the Supply Chain

Transcription

1 68 Petron Corporation Greening the Supply Chain Discussion of Management Approach Since undertaking the challenge of integrating sustainability into our operations in 2008, we have strengthened our efforts to integrate profitability with responsibility, fostering equitable growth and environmental accountability wherever we are. As we continue our journey, we endeavor to grow and integrate sustainability principles throughout our supply chain. This starts from our Bataan refinery, to our network of depots and terminals, all the way to our consumers through our service stations. Only a sustainable supply chain structure can fortify our goals of maintaining market leadership over the long-term. We have a Supply Chain Management Committee that monitors and promotes programs with the aim of improved customer service, increased revenues, and reduced costs. The Committee defines business processes, formulates the guidelines and procedures, and establishes key performance indicators that are applicable to the integrated Supply Chain Management Plan, including greening of the supply chain. Recently, the Supply Chain Management Committee and the Sustainability Council created a Sustainable Supply Chain Technical Working Group, which undertakes a more hands-on approach in developing the Sustainable Supply Chain Roadmap and establishing direct linkages between the performance of our suppliers, contractors, and dealers to our sustainability goals. Roadmap Development: Initial Steps, Issues, and Indicators Petron is unique since it operates in an ecosystem that includes a diverse group of supply chain stakeholders, from large foreign and local contractors to Philippine society s most basic units, the household and the barangay. While the potential for inclusive development is great, the challenge for alignment is enormous. We seek to leverage on our size and scale to extend the sustainability agenda throughout our sphere of influence. To develop the Sustainable Supply Chain Roadmap, we identified all aspects of the entire business process which we disclosed in the 2011 Sustainability Report.We mapped the risks and opportunities available to our primary and secondary distribution network consisting of third-party suppliers and contractors of marine vessels and tank trucks crucial to the end goal of ensuring a safe and on-time delivery of products and services at a reasonable cost to end users. SUSTAINABLE DEALERSHIP A focus on the triple bottom line of the service stations To further build the baseline information in the 2011 report, our Sustainability Council identified sustainable dealership as the initial phase in the development of the Sustainable Supply Chain Roadmap.

2 2012 Sustainability Report 69 In 2012, as recommended by the 2011 External Review Committee, we introduced sustainability principles to assess the performance of our dealers and our primary and secondary distribution suppliers. A Sustainable Dealership Issue Analysis was also conducted on the various service station processes from ordering and product delivery and storage to sales and after-sales support. Process owners per stage were identified along with potential economic, environmental, and social issues as well as existing initiatives. The table below shows the results of a survey among service station dealers indicating their top priorities on each of the three bottom lines: The following section of our report captures briefly the major initiatives that support the Sustainable Supply Chain Roadmap under these priority aspects. In each of the initiatives, Petron sought to embed triple bottom line goals and objectives so that they help protect market leadership, enhance the business performance of Petron and its partners, provide a competitive advantage because of bestin-class products and services, promote environmental stewardship and social responsibility, and ensure the health and safety of stakeholders. SUMMARY OF DEALER PRIORITY AREAS ECONOMIC Economic Performance Market Presence Indirect Economic Impacts ENVIRONMENTAL Products and Services Emissions, Effluents, and Wastes Energy SOCIAL Labor Occupational Health and Safety Education and Training Society Community Compliance Human Rights Non-discrimination Freedom of Association and Collective Bargaining Product Responsibility Customer Health and Safety Marketing Communications

3 70 Petron Corporation SUSTAINABLE DEALERSHIP PROCESS Empowering the People in Service Stations Dealer Management Courses Petron has a holistic program for training dealers, service station supervisors, and service masters as a way to keep ahead of competition. Going beyond the basics, our Dealer Management Course, Micro Filling Station (MFS) Dealer s Course, and Service Masters Training Course provide the knowhow to ensure the success of the business. In 2012, 197 new dealers and servicestation supervisors attended 20 days of training. There were 11 five-day MFS Dealer s Courses conducted for 240 Bulilit Station dealers and 37 three-day Service Masters Training Courses to 820 service masters. Regular follow-up programs using training videos for our service masters, who are our frontliners, guide them in achieving service excellence. We also have the biannual Petron Dealers Association (PETDA) National Sales Activities such as the Dealers Management Training and Pollution Control Officers training provide our service station owners, dealers, and personnel with the knowledge, skills, and mindset to practice sustainable dealership.

4 2012 Sustainability Report 71 Convention which is a venue to further enhance the knowledge and skills of our dealers. Contractor Safety Management We make sure to observe the Contractor Safety Management (CSM) Program in all our facilities. The CSM outlines guidelines on health and safety requirements that all contractors and their subcontractors must adhere to before and during all work activities in our sites. Integrated in the Petron Safety Performance program which covers standards on the health and safety of employees, customers, suppliers, contractors, and the general public the CSM is our commitment to ensure that contractors work safely at all times. It accredits safety practitioners and officers among them, conducts orientations on behavior-based safety, and promotes continuous improvement through regular performance monitoring. Our CSM is aligned with the contractor s obligations under the Occupational Safety and Health Standard of the Philippines (OSHS) and assists them in complying with government regulations and in adopting standard operating procedures. Pollution Control Officers Training Service stations are required to have their own Pollution Control Officers (PCO). We conduct our own PCO Training Course for dealers based on the Department of Environment and Natural Resources - Environmental Management Bureau s (DENR EMB) Basic Pollution Course. Accredited by the DENR Central Office, our PCO Training Course meets the 40-hour PCO training requirement of the EMB prior to accreditation. In 2012, a total of seven (7) three-day PCO Training Courses were offered to 232 participants. Since the program began in 2010, there have been a total of 21 batches and 904 Petron Service Station dealers, personnel, and contractors trained under our DENR EMB accredited Basic Pollution Control program. Environmental Management System and Environmental Management Plan Environmental protection is integral to our business. We see to it that our service stations comply with our Environmental Management Plan (EMP). Petron s EMP seeks to address all the environmental impact and permitting requirements of the service stations. At the core of the plan are guidelines that adhere to environmental laws. These provide the framework for the different environmental programs implemented at our service stations. Through the EMP, our service stations can work towards the globally-recognized Environmental Management System (EMS) certification with assistance from Petron s CTESG- Environment and Retail Network Engineering and Maintenance Groups as well as Area Sales Executives. At present, there are 12 stations which are EMS compliant. Last year, 20 service stations underwent EMS training.

5 72 Petron Corporation Ensuring the success of the program s goals of tank truck safety, product security, and delivery reliability are thirdparty personnel consisting of about 1,000 drivers. Road Transport Program for Drivers Between our service stations and depots is a nationwide road network that we seek to protect from oil spills and other possible hazards through a major tank truck modernization program. A Driver s Handbook was published for our tank truck drivers to guide them in handling the products. Petron makes sure that they are physically, mentally, and professionally fit to support the goal of meeting customer s needs in terms of product transport and delivery. Our drivers undergo a service excellence program, together with haulers, to learn about the parameters of world-class service. At the end of 2012, a total of 794 meetings on safe tank truck delivery procedure and delivery route assessment safety were conducted. Drivers also have an annual physical examination, random drug testing, and neuropsychiatric tests. We strictly regulate drivers hours on the road and provide them with clean and decent quarters at the depots and terminals where they could rest.

6 2012 Sustainability Report 73 Customer Satisfaction Surveys Throughout the year, we conduct market research studies that identify our strengths as well as areas for improvement, engaging customers from all economic and social backgrounds, from rural areas to urban centers nationwide. Various mechanisms are in place to assess customer satisfaction. Internal and external customer feedback studies profile the users of Petron products, specifically their perception, usage, habits, and satisfaction levels among others. Results of these year-round surveys are integrated into our Marketing programs so that the Petron brand remains top of mind. Upholding Sound Business Processes and Systems We adopt best practices and harness compliance tools and systems to ensure superior performance amid a complex business environment. Documentation, automation, and standardization of quality processes, behaviors, and systems ensure quality results while still acknowledging the uniqueness that differentiate Petron s performance, products and services from our competitors. Procurement Improvement Program We have an ongoing Procurement Improvement Program to enhance efficiencies that maintain competitive advantage and promote savings. Streamlining the process, the program underwent a study that sought to identify opportunities for improvement, establish a strategic sourcing program, and allow Petron to benchmark against world-class standards and industry best practices in procurement. The Procurement Improvement Program is seen to benefit vendors, contractors, and service providers. Phase 1 seeks to integrate strategic procurement closer with the business units. This fosters improved transparency in the supplier selection process, focuses more spend with the best suppliers, and creates opportunities for partnerships between the business unit and the suppliers. Phase 2 focuses on optimizing existing IT infrastructure and investment to facilitate the work of the strategic procurement organization by activating the eprocurement facility for both materials and services. We will have a Vendor Portal that serves as a centralized, web-based repository of information on vendors that accepts accreditation application. By addressing the time-consuming, labor-intensive manual filing and updating of vendors business documents, the portal fosters greater transparency and efficiency when selecting vendors, evaluating their offers, and receiving Purchase Orders, while eliminating the use of paper and ink among other resources. Phase 3 rationalizes procurement resources towards strategic sourcing, allowing for alliances with vendors of critical and strategic items. The Vendor Portal is also envisioned to facilitate the regular or annual performance review or appraisal of vendors. Our accreditation process also looks at the triple bottom line of the vendors. In terms of economic sustainability, we look at the suppliers financial condition, investments,

7 74 Petron Corporation profile of technical personnel, technology, systems, and plant or site of operation to evaluate how they can support our shortterm and long-term projects. In terms of environmental sustainability, vendors who manufacture and supply chemicals, and contractors who are engaged in a project with environmental impact, are required to submit applicable environmental licenses such as DENR permits, required environmental compliance certificates (ECC), or other environmental licenses before delivery of materials or services. Plant visits also give insights on how safety practices are being implemented, and validate if these green and safety requirements are actually observed. Lined up for implementation is a rating for vendors who use materials and other resources that conform to green standards. We will soon require relevant suppliers to have programs on the management, reduction, and proper disposal of waste materials, contaminated materials, industrial chemicals, hazardous waste, and scraps. In terms of social sustainability, contractor applicants are required to submit mandatory legal documents that show that the vendor observes and protects the right of workers to just compensation and benefits. There are safety requirements that need to be complied with, depending on the nature or risk involved, such as company safety management systems, Occupational Safety & Health Standards (OSHS) registration certified by DOLE, and OSHS certificate of its Safety Officer or consultants to show that the vendor safeguards its worker s social and economic well-being as well as physical safety and health. The contractor should also enroll in DOLE s Kapatiran WISE-TAV Program, whether as big brother to small scale vendor or as a contractor that engages the services of workers in the locality. Product Delivery System Improvements Our Road Transport Program has a Haulers Management System that documents all established hauling operating policies, procedures, and initiatives to ensure that haulers comply with all the business requirements that support the Company s objectives. The Road Transport Group continue to implement its fleet modernization program to improve transport efficiency and reduce air emissions. For 2012, it fielded 24 brand new tank trucks and replaced 54 old tank trucks, bringing the total to 60 brand new trucks and 182 accelerated second-hand tank-truck replacements. This resulted to a reduction of 280 tons of CO 2 e Greenhouse Gas. Furthermore, the supply and operations group also implemented the Inventory- Driven Delivery System (IDDS) in 363 Petron service stations, which resulted in a reduction of 30 tons of CO2e Greenhouse Gas. The IDDS is a more efficient delivery system, since tank truck trips are planned in advance. Delivery is based on the daily inventory provided by the service station dealers instead of the usual practice of planning the delivery based on orders placed by the dealers. In terms of its implementation of its In-Vehicle Management System, 255 trucks out of the total 700 contracted fleet have been installed with a Global Positioning System (GPS). Petron 16 Core Standards Checklist To secure Petron s leadership in Reseller Trade, Petron makes sure to foster the culture of sustainability through a cycle of continuous improvement. Our service stations are regularly subjected to Petron s 16 Core Standards Checklist on top of the Sustainable Dealership Performance Index or the Dealer Performance Card.

8 2012 Sustainability Report 75 Conducted by the Area Sales Executive, the 16 Core Standards Checklist identifies the standards that dealers must pass and surpass, from the maintenance of the driveway and yard, to customer-centric practices so that customers will enjoy a positive experience. Sustainable Dealership Performance Index and Dealer Performance Card In 2012, Petron developed the Sustainable Dealership Performance Index (SDPI) to integrate our environmental and social sustainability metrics into the performance evaluation of our service station dealers. We also embarked on a target-setting initiative for the economic, environmental, and social performance of our service stations over the next two years. Guided by Firm Corporate Governance Good corporate governance is the foundation of our leadership position. We see procurement s central role in encouraging the adoption of good governance principles among the suppliers, communicating and cascading ethical practices throughout the supply chain, and increasing the compliance with these principles. Thus, we created a governance group that looks into the development, updating, and consistent application of procurement-related policies and procedures. At present, our procurement manual and procedures are being reviewed and updated to reflect guidelines on working conditions, business standards and ethics, business integrity, occupational health and safety, environment, workplace harassment, conflict of interest and commercial bribery, company confidentiality, dangerous drugs, and dealing with government intermediaries. We understand that the business conduct of our suppliers and contractors reflects on the Company s honesty, integrity, and impartiality, and affect its reputation. Our memorandum of agreement and/ or general terms and conditions for services and construction stipulates the company s and vendor s commitment to provisions on good governance, antiworkplace harassment, prevention of child labor, and freedom of association. Vendors, whether contractor or supplier, are expected to commit to use their resources judiciously in its production, maintenance, and facilities processes, to maintain a safe and healthy working environment, and to ensure the proper disposal of wastes. They are also expected to comply with all regulations regarding the preservation of the environment and the territory where they operate. These agreements also outline the highest possible standards of ethical and business conduct required of each and every vendor, their employees, officers, agents, and subcontractors in the performance of their duties and responsibilities. We expect all vendors and their employees, officers, agents, and subcontractors to be guided by our vision and mission which highlight professionalism, integrity, fairness, commitment to excellence, and care of the environment as their core values.