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ORLEN Group 2016 Integrated Report

II nagroda specjalna w kategorii Raport Zintegrowany | Najlepszy raport on-line

Responsibility towards Suppliers

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Suppliers are one of the key groups of Stakeholders. Under the CSR Strategy for 2015–2017 the Company’s suppliers are required to meet specific criteria relating to ORLEN values and social responsibility. The Procurement Area cooperates closely with the Stakeholders, analyses their needs, puts forward common priorities, plans, KPIs and improvements.

In 2015−2016, the rules of cooperation with suppliers were changed, with the administrative and support function gaining a proactive and business-minded role. To achieve our strategic objectives we are chiefly focused on implementing a method of comprehensive management of procurement categories, a supplier management model (its elements include segmentation, classification, management rules) and global procurement standards. Also, rules of cooperation within the Group were defined and have been consistently implemented. This process is supported by the Procurement Policy implemented as an umbrella document binding across the Group. It establishes common standards covering procedures, processes, tools, systems and procurement structures. The key initiative is the successive implementation of the Connect Procurement Platform at the Group companies, which promotes uniform and consistent procurement processes across the Group, transparency of procurement processes, knowledge sharing and better communication with suppliers.

In a significant step towards ensuring sustainable development and responsible supply chain, PKN ORLEN incorporated the responsible business and sustainable growth criteria in its procurement management standard. The Company promotes social responsibility among its suppliers and seeks to cooperate with trading partners that respect human rights and operate in compliance with the law, ensure safe and fair working conditions, follow the best standards of ethical conduct and care for the environment. CSR criteria have been defined and compiled into a single document entitled Supplier Code of Conduct’. As of April 2016, compliance with the Code is mandatory in the process of trading partner qualification. The release of the Code is one of the initiatives aimed at promoting a responsible supply chain, such as the publication of best practices in the Responsible Business Forum’s report entitled ‘Responsible Business in Poland 2015. Best Practice’. Moreover, at the 6th CSR Fair we made a presentation of the Procurement Area’s experience in preparing and implementing the ‘Supplier Code of Conduct’, promoting responsibility among Stakeholders and encouraging responsible practices among suppliers. In November 2016, a package of procurement management guidelines, comprising the Procurement Policy and the Supplier Code of Conduct, was released for implementation at the ORLEN Group companies as a common standard binding across the Group.

In 2016, the Connect Procurement Platform saw the launch of a new supplier zone, which will facilitate the use of the system by our trading partners. This new feature was added in response to the latest trends in application development. Most of all, it addresses the requests made by suppliers in satisfaction surveys. The respondents expected the platform to be more intuitive and easier to use. The coming years will see the further integration of procurement tools, including the launch of new functionalities in the supplier website. The existing set of procurement documents (requests for proposals, bids) will be expanded to include transaction documents (orders, contracts, supply notices).

One of the key IT systems supporting the procurement function across the ORLEN Group will be the Integrated Procurement Tool (IPT), whose purchase was initiated in 2016. The goal of the IPT purchase and implementation is to provide a tool to support the P2P (procure to pay) process. The IPT implementation at the ORLEN Group will increase the efficiency of the procurement function, shorten the procurement completion time, reduce risk, improve spending transparency and increase savings.

2016 saw fundamental changes related to the development of the procurement category strategy and the establishment of a supplier classification and assessment system.

Various initiatives and best practices are being implemented across the entire ORLEN Group. The key element contributing to a more efficient procurement process is procurement category strategy developed and implemented together with our trading partners. Strategic management of procurement categories facilitates the incorporation of development directions specified in the Company’s Strategy in operating activities, which are adjusted to the specific nature of each procurement category. This approach is aimed at developing new solutions, process streamlining and cutting costs.

The ORLEN Group cooperates with a group of carefully selected suppliers. As part of an effort to continuously improve procurement processes, the Group enhances and seeks to ensure greater consistency of supplier selection processes. A supplier classification and assessment model was worked out. The criteria established based on the best market practices, among other things, it is now possible to mitigate reputation, financial and process risks, and ensure a high quality of cooperation with trading partners.

We attach particular importance to engaging with local businesses, based in the County of Płock and the Province of Warsaw. By using the services of local suppliers the ORLEN Group reinforces the market and conducts business in its close neighbourhood. Such suppliers know the local market and are often well aware of the needs and expectations of the ORLEN Group companies. Their close proximity also reduces costs, e.g. of transport and accommodation. In 2016, PKN ORLEN spent roughly 4% of its total expenditure on products and services offered by Płock-based companies. By cooperating with suppliers from the close neighbourhood the Company supports the growth of the local market and implements the objectives of its CSR strategy within the supply chain.

At key foreign ORLEN Group companies – Unipetrol (Litvínov) and ORLEN Lietuva (Mažeikiai), spending on the services provided by local suppliers in 2016 was 11% and 1%, respectively, of their total expenditure.

We put a strong emphasis on the achieving our strategic objectives and meeting global standards bearing in mind that our most important asset is our People. This is why in 2014 we launched a development programme called the Procurement Academy. As part of the Procurement Academy programme, we worked to improve professional qualifications and soft skills, which included the areas of leadership, communication, and bulding of positive relations between employees, contributing to a higher quality of cooperation and professionalism of the procurement process. The programme, which continued throughout 2016, translated into a clear and consistent improvement in our trading partners' satisfaction with the general quality of cooperation and buyer competence. We are proud to announce that 90% of the current personnel of the Procurement Area at PKN ORLEN have completed the Procurement Academy. Our programme also won the recognition of Polish procurement and logistics managers. The project was awarded the third position in the ‘Procurement Leader’ competition held as part of the PROCON/POLZAK procurement sector conference held on October 18th and 19th in 2016 in Warsaw.

In 2015, PKN ORLEN received the CIPS Certificate (CIPS - Chartered Institute of Purchasing and Supply) awarded by the world’s largest organisation in the procurement sector. The certificate which is valid for three years, attests to the international standards applied by the Company in procurement processes.

A form of dialogue with the Stakeholders was the third satisfaction survey concerning the level of cooperation with the Procurement Area carried out in 2016. The respondents included trading partners and suppliers.The survey covered many aspects of cooperation, including the competences of employees, their communication skills and commitment. Respondents could also express their opinion concerning the tools used by PKN ORLEN, including the Connect Procurement Platform. The survey showed that the cooperation is still viewed in a favourable light despite a slight decline in the overall satisfaction index relative to 2015.


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