Sustainable management in the supply chain

Risk management in the supply chain

Risk and opportunity management is based on a 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.
  • Qualification of suppliers for services carrying risk to Health, Safety and Environment (HSE) framed within the risks associated with each procurement process.
  • Auditing and evaluating the services rendered in terms of sustainability.
  • Conducting pre-qualification questionnaires on social risks, using the Achilles system (this is mandatory for new suppliers).

The evaluation of the most critical suppliers in terms of corporate social responsibility by level of risk results from the answers obtained in the Achilles and Supply4Galp questionnaires. This internationally recognised system (Achilles) allows us to evaluate and qualify suppliers from different sectors according to different risk levels.

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

* Until 2015, the evaluation was done only according to the Achilles system.

Certifications

At Galp, we value suppliers that hold certifications as a guarantee of their commitment to improving their sustainability performance. The use of the Supply4Galp collaborative platform for suppliers has been increasing the number of certifications, year after year.

Our suppliers hold the following certifications:

International standard 2014 2015 2016 2017
ISO 9001 1,638 1,667 2,098 2,938
ISO 14001 572 588 908 1,305
OHSAS 18001 385 398 633 1,261
Other certifications 23 26 26 581

In 2017, approximately 60% of our Tier 1 suppliers (with contracts higher than €5 k) are certified.

Supplier audits

We believe that our responsibility does not begin and end with our operations. Thus, in addition to our risk management practices and monitoring of the certifications in the supply chain, we conduct supplier audits.

These are based on previously defined requirements and comply with the applicable law in their respective geographies.

These audits may be requested on suppliers in any activity corresponding to the qualification process, spanning the following areas:

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

On the other hand, suppliers may voluntarily request an audit to their company.

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.

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

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

Audits to carriers through the APETRO agreement

In 2017, within the scope of APETRO, four audits to carriers that render services to Galp were carried out. By 2018, four audits are planned.

At Galp, together with the Portuguese Association of Oil Companies (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. Particularly, we have developed initiatives with public entities for legislative revisions and to develop a support system in the event of an accident.

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.

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

“The S4G platform will streamline of the relationship between companies because it allows us to visualise the state of play of each process, at any given time. We think that S4G may allow us access to more business opportunities, not just those we have been getting so far.”

Cláudia Ferreira, TALIS GROUP

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