Sustainable management in the supply chain

Galp’s activities generate thousands of direct and indirect jobs worldwide. This requires a range of environmental, economic and social impact concerns to be addressed by Galp when dealing with its contractors and suppliers, through its commitments and sustainable procurement initiatives.

This partnership is governed not only by compliance with commercial and technical conditions, but also by compliance with the provisions of our Purchasing policy, our Code of Ethics and Conduct and the related normative documents, (e.g. Anti-Corruption Policy; Health, Safety and Environmental Policy; Quality Policy; Corporate Social Responsibility Policy), as well as compliance with current legislation in the countries in which the suppliers operate, for the purpose of creating shared value in a sustainable manner.

The relationship between Galp and its suppliers is founded on four key principles:

  • Respect for Human Rights and Working Conditions;
  • Acting with transparency and integrity;
  • Quality as a critical success factor; and
  • Protection of the environment, people and assets.
Galp does not establish or maintain relationships with suppliers who are not aligned with the above principles, and adopts appropriate measures in cases where the ethical and professional conduct or the sustainability requirements of suppliers are in any doubt.

In 2018, we endorsed the BCSD Charter of Principles and invited our suppliers to do so.

Risk management in the supply chain

Galp has a risk management methodology that involves distinct stages, namely the process of selection, qualification and performance assessment of our suppliers of goods or services.

This methodology is based on the acknowledgement of the severity and likelihood of arising potential consequences from risks in several areas (e.g. image; business/client; operations; compliance; environmental impact; exposure to agents that are harmful for health; occurrences; damages or losses, among others)

Risk is managed in the supply chain through several practices, namely:

  • Assessing the supplier’s financial strength in the qualification process and in the procurement processes, whenever justified;
  • Monitoring information on the supplier's economic situation;
  • Conducting pre-qualification questionnaires, using the Achilles system and Supply4Galp, in terms of general, financial, technical, corporate social responsibility (CSR), health, safety and environment (HSE) and energy efficiency questions;
  • Qualification of suppliers for services carrying risk to Health, Safety and Environment (HSE) framed within the risks associated with each procurement process;
  • Auditing suppliers or potential suppliers.

Within the E&P assets not operated by Galp, are signed Joint Operating Agreements that govern acquisitions of goods and services within joint ventures, for example. This ensures alignment between all partners in terms of the quality, social responsibility and EQSS criteria for the pre-qualification of suppliers in purchasing processes.

Sustainability risk assessment

The Supply4Galp platform integrates all information related to supply chain and procurement management, covering the entire procurement cycle.

Achilles, an internationally recognized system, identifies, qualifies, assesses and generates information about suppliers for buyers, drawn from the largest organizations in the world.

Using this methodology, we assess our most critical suppliers in terms of their sustainability risk:

Risk level Description No. of suppliers invoicing in 2015* No. of suppliers invoicing in 2016 No. of suppliers invoicing in 2017 No. of suppliers invoicing in 2018
A+ Above average rating 137 152 200 111
A On average rating 222 208 215 212
B Below average rating 43 32 99 40

By 2020, 50% of our critical suppliers will be rated as A or A+ in corporate social responsibility.

Certifications

At Galp, we value suppliers that hold certifications as a guarantee of their commitment to improving their sustainability performance.

Our suppliers hold the following certifications:

International standard 2014 2015 2016 2017 2018
ISO 9001 1,638 1,667 2,098 2,938 2,791
ISO 14001 572 588 908 1,305 1,474
OHSAS 18001 385 398 633 1,261 1,330
Other certifications 23 26 26 581 760
In 2018, more than 57% of our Tier 1 critical suppliers* (with contracts higher than €5 k) are certified.

* Critical suppliers are: High billing volumes suppliers (> €250.000); non-substitutable suppliers; suppliers of goods or services whose failure to supply or to continue operating could affect Galp group’s activities, in areas such as compliance and the safety of people, environment and assets.

Supplier audits

In addition to our risk management practices and monitoring of the certifications in the supply chain, we conduct audits to suppliers or potential suppliers in the following areas:

  • Financial
  • Technical
  • Corporate social responsibility
  • Safety
  • Health
  • Environment

These audits may be requested on suppliers in any activity corresponding to the qualification process, and are based on previously defined requirements and comply with the applicable law in their respective geographies. Also, suppliers may voluntarily request an audit to their company.

Selection criteria for suppliers to be audited:

  • The need to deepen the knowledge about a company that provides a certain category of procurement;
  • When there are doubts concerning an answer given by a company in the pre-qualification questionnaire, and we seek evidence thereof;
  • Significantly negative progress of a supplier's performance assessment;
  • When there are complaints to suppliers for non-compliance with technical specifications and contractually defined requirements;
  • When the degree of contract risk in the HSE aspects exceeds the supplier's HSE risk level, either for ongoing consultation processes or for awards already made and whose supplying services are still ongoing;
  • Significant turnover of the supplier

Number of audits and suppliers audited in 2018:

Nº audits to suppliers (REPRO-ACHILES)

65

Nº audits to tier 1 suppliers (> € 5k)

24

Nº tier 1 suppliers audited (> € 5k)

2

Nº total of Galp suppliers audited (Tier 1 + non tier 1)

27

% high-risk tier 1 suppliers audited

1,34%

Since the beginning of the supplier auditing program, we have been increasing the number of audits performed, also increasing the rate of suppliers audited. 

Year No. of audited suppliers
2013 48
2014 60
2015 44
2016 46
2017 70
2018 92

Our goal for 2019 is to conduct 40 audits.

 

Audits to carriers through the APETRO agreement

In 2018, within the scope of APETRO (Portuguese Association of Oil Companies), four audits to carriers that render services to Galp were carried out.

At Galp, together with the APETRO, we have an audit plan in place for contracted carriers that transport our products. All drivers attend compulsory courses, whose contents are validated by Galp, regarding defensive driving, handling of products, among others.

Also within the scope of this agreement with APETRO, we signed an Added Road Safety Agreement with other associated companies to improve the ground transportation conditions of oil products.

The ratings obtained in the audit are available in the Group’s list of suppliers. Depending on the severity of the findings, Corrective Action Plans or Improvement Action Plans may be applied.

Sustainability Risk 2018
Number of tier 1 suppliers with high sustainability risk 59
Number of tier 1 suppliers with high economic sustainability risk 11
Number of tier 1 suppliers with high environmental sustainability risk 0
Number of tier 1 suppliers with high social sustainability risk 48

 

The Supply4Galp collaborative Platform

The Supply4Galp (S4G) platform was born out of the importance of the Galp/Suppliers binomial.

It is a collaborative solution that allows users to share all information related to supply chain and procurement management processes at Galp, in an integrated manner.

This solution covers the entire procurement cycle, from the sourcing phase to management of supply and contracts, connecting all users and creating benefits of transparency, efficiency, and quality in the activities performed.

The platform was implemented with the following objectives:

  • Increase Galp’s collaborative capacity in procurement processes;

  • Streamline processes, reducing the time spent on provisioning;

  • Implement a logic of continuous improvement by improving processes and integrating and retaining knowledge.

Galp has implemented a pre-qualification and qualification process for several years that minimizes the risk exposure throughout the supply chain, and as result, in 2018 achieved 96.1% of purchases to qualified suppliers. Our 2019 goal is to achieve 96%.

Get to know our Supply4Galp platform.

Learn more about the qualification process and selection of suppliers

"The S4G platform gives us a greater visibility into processes, making them simpler and more transparent, efficient and agile, and less bureaucratic - which reduces process execution time and enhances value creation for all stakeholders."

Alfredo Figueira, Head of the Project

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