Supply Chain Management


Supply Chain Management

Sustainable Development Goals

Positive and Negative Impact

Sustainable supply chain management involves upstream, midstream, and downstream care of the supply chain, rather than focusing solely on economic returns. In a sustainable approach the impact on society and the environment for future generations of humanity is considered, as well as the sustainability of the company or organization itself.

PTT recognizes the importance of our social responsibility and intends to implement sustainable supply chain management. PTT will embrace the sustainability approach by integrating business ethics, Social Responsibility, Safety and Environment into supply chain management, throughout the procurement of products and services in all sectors of PTT.

The principles of Environmental, Social, and Governance (ESG) management have been applied in the procurement and management process of suppliers to achieve a "Sustainable supply chain management". It is considered Risk Management, creating business opportunities, including developing the potential of partners to be ready to support business growth (Capability Building) in the rapidly changing world situation, as we move towards sustainability together. The ESG management approach will also create confidence in the delivery of goods and services provision, according to demand, defence, and legality).

Objectives/ Goals

PTT's procurement is currently conducted in accordance with the procurement act and government procurement act of 2017. The act states that procurements and contracts issued from government agencies must provide the highest level of benefit for the agency with high transparency effectiveness, and traceability. Furthermore, another procurement challenge is the support for the government's Thailand 4.0 policy to propel the industry through advances in technology, creativity, and innovation, enabling flexible and speed business operations. This policy is combined with PTT's strategy, which focuses on the continuous development of work processes through utilization of digital technology and supply chain management, to increase operational efficiency and effectiveness amidst changing trends.

PTT has established operation guidelines and objectives for traders. There exists communication with traders through trader seminars, websites, and various channels for them to be prepared to develop their business operations in accordance with sustainability guidelines (the PTT Supplier Sustainable Code of Conduct), which has been set for PTT traders.

Progress against PlanGRI 308-1, GRI 414-1, GRI 414-2
Plan2021 Target2021 Performance2022 Target2022 PerformanceLong-term Targets
Critical/Strategic suppliers’ onsite sustainability performance audit Assess 100% of targeted Critical/Strategic goods and service suppliers

Assessed 14 other goods and service suppliers, which is equivalent to 100% of targeted Critical/Strategic suppliers

Assess 100% of targeted Critical/Strategic goods and service suppliers

Assessed 8 other goods and service suppliers, which is equivalent to 100% of targeted Critical/Strategic suppliers Critical/Strategic suppliers (up to 80%) hold self-developing capabilities and maintain sustainable business operations  
Conduct procurement sustainably according to ISO20400

Implemented sustainability integration into the joint procurement process among PTT Group companies under the Sustainable Procurement Guidelines (ISO20400) in at least 3 workgroups

Implemented sustainability integration into the joint procurement process among PTT Group companies under the Sustainable Procurement Guidelines (ISO20400) in at least 3 workgroups as follows:
1. Service (car rental) Group
2. Packaging (wooden pallets and metal drums) Group
3. Maintenance, Repairing and Operating (Pipe & Flange) Group

Implemented sustainability integration into the joint procurement process among PTT Group companies under the Sustainable Procurement Guidelines (ISO20400) in at least 3 categories

Implemented sustainability integration into the joint procurement process among PTT Group companies under the Sustainable Procurement Guidelines (ISO20400) in at least 3 categories as follows:
1. Steel Drum
2. Jumbo Bag
3. Plastic Pallet

Joint procurement between PTT Group can be carried out in accordance with the ISO 20400 guidelines and under with specified work plans

Procurement of goods and services with mutual sourcing needs within the PTT Group. Procurement of goods and services together with companies in the PTT Group to create added value by 15% of the spending value Procurement of goods and services together with companies in the PTT Group created added value by 17.39 % of the spending value Procurement of goods and services together with companies in the PTT Group to create added value by 7% of the spending value Procurement of goods and services together with companies in the PTT Group made added value by 13.10 % of the spending value Procurement of goods and services together with companies in the PTT Group to create added value during 10% - 12% of the spending value
Supplier's satisfaction towards PTT's performance in communicating PTT's operation direction and procurement system via supplier seminars Satisfaction score of 4.5 from 5.0 Satisfaction score of 4.56 from 5.0  Satisfaction score of 4.5 from 5.0  Satisfaction score of 4.56 from 5.0  Satisfaction score of 4.5 from 5.0

Management ApproachGRI414-1

PTT's procurement policy

PTT announced the PTT Group Procurement Policy on February 12, 2019, signed by PTT's Chief Executive Officer and President, for PTT Group companies to follow as a guideline for operations related to procurement in the same direction.

Chief Executive Officer and President has nominated PTT Procurement Governance Committee and PTT Supplier Selection Committee to oversee for sustainable procurement and improvement plan. Executive Vice President for Organizational Development has been designated to be the Chairman of both committees.

PTT Group Procurement Policy

In addition, PTT is committed to conducting business for sustainable growth and directing business for the community, society, and environment. To achieve these intentions effectively, PTT places importance on developing sustainable supply chain management through PTT's supplier supervision and establishing a PTT Group supplier sustainable procurement and management policy in 2015.

To provide PTT's suppliers with practical guidelines for conducting business according to sustainable organizational management guidelines appropriate to the current changes in business operations, PTT has developed the PTT Supplier Sustainable Code of Conduct (SSCoC) and announced the adoption of these guidelines. Being revised and announced to be effective for the fourth time on November 1, 2022, its content and scope are governed by relevant requirements, regulations, and laws, which will help to impel PTT's suppliers to operate ethically with respect for human rights, occupational health care and safety, as well as emphasize the environmental management sustainability, including the four main topics that PTT gives precedence to as follows.

  1. Business Ethics
  2. Social Responsibilities
  3. Safety
  4. Environmental Management 
In addition, PTT reserves the right to inspect the sustainability performance as appropriate and if PTT finds  that the selected supplier does not have the qualifications in accordance with the ESG Interception Criteria or does not perform in accordance with PTT Supplier Sustainable Code of Conduct (SSCoC) or fails to proceed the work as per the ESG Corrective Action Plan or finds that the level or condition of performance  is less than that provided by law which may result in a loss, PTT reserves the right to suspend the work until it has been remedied or to terminate the contract.

Supplier Sustainable Procurement Policy
PTT Supplier Sustainable Code Of Conduct

Governance structure/ Mechanism/ Management System

PTT Procurement Governance

PTT emphasizes ensuring procurement is economical, transparent, effective, and traceable to reassure all stakeholder groups. A Procurement Management Working Team was appointed to monitor and handle aspects relevant to parcel delivery and commercial non-hydrocarbon procurement. The focus is ensuring compliance with the laws, regulations, requirements, criteria, and appropriate processes. Furthermore, Procurement Management Working Team also provides consultation on delivery and non-hydrocarbon commercial procurement process. It enables sharing and learning opportunities in the organization, allowing collaboration to improve procurement process effectiveness.

Process/ Mechanisms of impacts management

Corporate Level Supply Chain Management 

In procuring goods and services whereby, numerous vendors vary significantly in quantity and quality, PTT maintains the importance of systematic supplier management. This system entails focusing on the supplier's capacity to meet increasing product demands, achieve targets, maintain product quality, and cultivate good relationships between suppliers and PTT. This measure includes fostering suppliers' awareness of PTT's corporate sustainability position.

PTT determines standards for selecting, assessing, and auditing suppliers fairly and transparently in terms of the supplier's ability to secure business operations and respond to PTT's needs through compiling the "Approved Vendor List" a selection tool for qualified suppliers to evaluate each supplier's potential in various aspects including service readiness, production rate, transportation, and industrial standards. In addition, sustainability criteria for supplier selection include business integrity, social responsibility, human rights, safety, and environmental management, which comply with the PTT Supplier Sustainable Code of Conduct (SSCoC). Qualified suppliers will be included in the PTT Approved Vendor List (AVL). Suppliers must be capable of operating following the PTT Supplier Sustainable Code of Conduct.

PTT has established a Supplier Sustainable Code of Conduct, covering direction and scope consistent with relevant regulations and requirements. It encompasses the Code of Business Ethics, social responsibility, occupational health and safety, and environmental management. The document is available in both Thai and English. It applies to all suppliers whose contract is at least 2 million Baht and/or those whose operations may impact safety, occupational health, and the environment. It includes suppliers interested in registering on the vendor list of PTT's suppliers. PTT has set a strategy to support and manage suppliers, enabling communication of good working direction, guidance, and knowledge concerning supplier sustainable procurement policy. This strategy is achievable through various channels, such as the Supplier Relationship Management (SRM) Seminar and the corporate website.

PTT organized supplier seminars annually to enhance suppliers' satisfaction and bolster good relations between suppliers and PTT Group. The key objective is communicating targets, policies, directions, and business approaches also to provide an opportunity to exchange knowledge and opinions between suppliers and PTT. There are satisfaction surveys for suppliers regarding procurement and contract management post-process completion and contract termination. The feedback here will be used for the improvement and development of the business sustainably.

Key Performance

Percentage of new suppliers

100% new suppliers are selected using the ESG Assessment Criteria

Percentage of suppliers contracted with PTT
100% of suppliers who have contracts with PTT in the amount of 2 million Baht or more and/or work that may affect safety and the environment, including suppliers who wish to register vendors with PTT have signed an acknowledgment and comply with the PTT Supplier Sustainable Code of Conduct: SSCoC

Analysis of Procurement Costs 2017 - 2022

Spending Data Period

2017 - 2019

2018 - 2020

2019 - 2021

2020 - 2022

Non-Tier-1 Critical Supplier Tier-1 Supplier 4,690 2,852 3,328  4,062 
Critical Tier-1 Supplier 26 25 31 32
Non-Tier-1 Critical Supplier 8 11 12 13

Procurement Value (Billion Baht)

68.77 66.40 67.56 77.35

Spend Value in Thailand (Billion Baht)

65.15 63.26 64.22 74.69

Spend Value in Overseas (Billion Baht)

3.62 3.14 3.34 2.66


 Tier-1 suppliers are supplier and contractor groups with direct PTT procurement contracts through the Non-Hydrocarbon materials and goods procurement process.
 Critical Tier-1 Supplier is defined as supplier and contractor groups considered Tier-1 whereby PTT intends to develop relationships with and enable business synergies in the long term to enhance collaborative business potential and added value creation. These supplier/contractor groups perform high-risk operations regarding severe impacts on the respective supplier/contractor, PTT, and surrounding communities. The risk mentioned above may have a powerful effect on clients regarding business and corporate image.

Local Product and Service ProcurementGRI 204-1 (%)

Major Truck Accident Incidences (Times per 1,000,000 km)

Supplier Satisfaction in Joint Work Operations with the Procurement Department (%)

Supplier Risk Assessment

PTT's management structure for suppliers and contractors ensures stringent management of suppliers' risks to prevent and mitigate impacts on PTT's business. PTT evaluates the risks of its major supplier groups, under the PTT vendor list, to categorized supplier based on the following ESG and business relevance risk factors:

  • Suppliers' ESG Risk, which determined based on sector-specific risk. The ESG topic assessed include for example project delay, quality requirements, air pollution, greenhouse gas emission, water consumption and wastewater, waste management, energy consumption, anti-corruption, fair competition, labour relations, human rights, safety, etc. 
  • Buyers' risks that may impact PTT's operations, such as PTT's high spending/high volume purchasing or non-substitutable products or services.

Performance on supplier risk assessment

IndicatorResult (FY 2022)
1.1 Total number of Tier-1 suppliers 1,643
1.2 Total number of significant suppliers in Tier-1 7
1.3 % of total spend on significant suppliers in Tier-1 47 %
1.4 Total number of significant suppliers in non Tier-1 1
1.5 Total number of significant suppliers (Tier-1 and non Tier-1) 8

PTT's risk assessment results for products and services impact different supplier group management and supplier management. There are three levels categorized as follows:

Supplier Group's Management LevelDefinitionManagement StrategyManagement Tools
1. Critical/Strategic Supplier Critical supplier groups in the critical/strategic group are those whose operational activities pose high risks and high impacts to both the suppliers and surrounding communities, resulting in extreme effects on the buyer (PTT) both in terms of business and organizational reputation

oster long-term relations and common strengths in business operations to enhance mutual capacity and create added value
  • PTT Supplier Sustainable Code of Conduct: SSCoC
  • Specific Terms of Reference (TOR) on business ethics, social responsibility, occupational safety, and environment for the critical/strategic group
  • Sustainability Performance Assessment
  • Suppliers' sustainability auditing
  • Supplier relations management
  • Supplier capacity building
2. Key Supplier Key supplier groups are those whose business activities and products extend to potential consumer impacts, which have high effects on the buyer, both in terms of business and reputation. Foster long-term relations to control spending and risks and to maintain competitiveness level.
  • PTT Supplier Sustainable Code of Conduct: SSCoC
  • General Terms of Reference (TOR) on business ethics, social responsibility, occupational safety, and environment
3. Managed/ Routine Supplier Managed suppliers are those whose activities focus primarily on operations, with potential impacts on surrounding areas or communities and medium risks to PTT as the buyer. General Terms of Reference (TOR) on business ethics, social responsibility, occupational safety, and environment
  • PTT Supplier Sustainable Code of Conduct: SSCoC
  • General Terms of Reference (TOR) on business ethics, social responsibility, occupational safety, and environment

Example of supplier management in a high ESG risk group: Transportation of products by motor vehicles

PTT emphasizes the importance of controlling and supervising operations with the potential to cause significant indirect impacts, including product transportation by motor vehicles. PTT contracted transport operators must strictly comply with stipulated requirements and transportation safety standards and implement methods and tools for transport operator management and supervision as follows:

1. Requires safe transportation of petroleum products by truck through satisfying the PTT Group Road Safety Management Guideline (RSMG), which entails the 5 Pillars principle, to manage all logistic operations contracted by PTT Group. Approaches to implement include:

  • Pillar 1 SSHE Management requires transport companies to utilize a management system for safety, occupational health, and the environment.
  • Pillar 2 Organization Management requires the transport company to have a dedicated SSHE department.
  • Pillar 3 Vehicle & Equipment Management requires transport companies to supply trucks and standard equipment.
  • Pillar 4 Driver Management requires the transport company to recruit and select transporting drivers according to the specified qualifications.
  • Pillar 5 Journey Management requires the transport company to have route risk assessments.

2. Equipment installation and technology applications are required to help track and monitor driving behavior continuously and earnestly. The transportation control center has organized a Risk in Road Safety activity to promote and raise awareness of transportation safety among petroleum product transporters, with the following steps:

  • Product shippers report risk points found on their routes by specifying the dangers in that area.
  • PTT examines information and considers risk points based on the severity of incidents reported by product carriers and accident statistics at that risk area. PTT will survey the area and conduct a detailed risk assessment if it is a high risk.
  • The results from the risk assessment of the area will be used for determining the corrective, preventive, or risk mitigation measures. In case the risk point is high risk.
  • PTT informs product carriers about risk information through the PTT Group Transportation Safety Management Task Force.

Moreover, product transporters and drivers who met the specified criteria were awarded. In 2022, there were 65 participants in the project, 95 risk points were reported and stored in the database, and a report was presented in the PTT Group's Transportation Safety Working Group meeting.

3. To ensure successful implementation, transport company management, according to RSMG standards, with the audit at least once a year by the contracting company. In 2022, a PTT Group audit committee was established to participate in the management audit of 5 transport companies affiliated with the PTT Group. This measure aims to increase learning outcomes and determine RSMG audit standards of the PTT Group in a unidirectional manner.

4. For the marine transportation of petroleum products, PTT has promoted the implementation of the MTIS (Marine Terminal Information System) in the PTT Group by requiring best practice sharing regarding the safety of ship transportation to companies in the PTT Group through the PTT Group Transportation Safety Management Task Force

Auditing and Assessment of Suppliers

PTT has established supplier assessment and audit programs to manage risks, define mitigation plans, and evaluate performance based on jointly developed mitigation plans. Assessments consider quality, quantity, and safety in production and delivery, PTT's basic requirements, and minimum requirements in labor and environmental laws and management standards inclusive of ISO 9001, ISO 14001, and ISO 45001, and compliance with the anti-corruption policy. Supplier assessments are conducted by PTT Group ESG Auditor based on ISO19011:2018 Guideline for Auditing Management system.

PTT has formulated an audit and assessment plan for Critical/ Strategic Suppliers relevant to the high-risk operations work category, which may pose severe impacts on the respective suppliers and the surrounding communities, presenting severe potential effects on the client regarding business and corporate image. This measure has been continuously implemented since 2016. The defined goal is to audit and assess 100% of Critical/Strategic Suppliers relevant to the high-risk operations work category, with further re-audits and reassessments on a 3-year basis. The following type of assessments are performed to evaluate suppliers’ sustainability performance:

1. Desk assessment
PTT issued Sustainability Performance Assessment form, which required all critical/strategic suppliers to complete to maintain business relationship with the Company. The critical/strategic suppliers will be requested to submit document related to assessment topics, which covers Business Integrity, Human Rights, Labor relations, Occupational Health and safety and Environmental management system, to PTT Group ESG auditor to summarize the suppliers’ sustainability performance. If suppliers possess high sustainability risk, the onsite inspection will be required to verify the assessment result.

2. Onsite audit
PTT team in conjunction with a third-party agency conducted sustainability assessments for high-risk suppliers using the sustainability performance assessment form. Supplier that remained high-risk will be requested to submit Corrective Action Plan in which PTT will continuously monitor and support on the implementation.

Performance on supplier desk/onsite assessment   and supporting on corrective action plan 

IndicatorResult (FY 2022)Target for FY 2022
Total number of suppliers assessed via desk assessments/on-site assessments 8 100 %
% of significant suppliers assessed 100%
Number of suppliers assessed with substantial actual/potential negative impacts 0
% of suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plan 0
Number of suppliers with substantial actual/potential negative impacts that were terminated 0
Total number of suppliers supported in corrective action plan implementation 0 100 %
% of suppliers assessed with substantial actual/potential negative impacts supported in corrective action plan implementation 0

There are recommendations from sustainability assessments (ESG) for suppliers to do as follows:

Environmental dimension (Environment: E)

Recommendations from the audit

Environmental Management
  • Provide training or additional communication to create understanding/ environmental awareness on topics that support the Company's environmental programs/projects.

Social dimension (Social: S)

Recommendations from the audit

Occupational Safety and Health

  • Prepare a list of environmental impacts safety and occupational health of the community that may occur in addition to the company’s activities, along with determining guidelines for eliminating/ mitigating those impacts.

Labor Management and Human Rights

  • Organize activities with the community using the company's potential, such as maintenance of public properties, internship acceptance (in related fields), and supporting various community projects.

Human Capital, Community, and Social Development

  • Arrange to collect a list of knowledge that has the potential to be essential to the company's business operations in the future.
  • Communicate human rights policy based on fundamental human rights principles or a global operating framework that aligns with the business model for all personnel within the organization to acknowledge together.

Governance dimension (Governance: G)

 Recommendations from the audit

Legal and Regulatory compliance

  • Communicate a sustainable development policy demonstrating a commitment to operating following economic, social, and environmental principles for all personnel within the organization to acknowledge together.

Responsible Procurement

  • Communicate the company's policies (including the PTT Suppliers Sustainable Code of Conduct) to business partners in their supply chain and create communication channels to store information as evidence.

Communication and Training to Stakeholders in Supply Chain

PTT has annually organized supplier seminars to enable the exchange of information and knowledge between PTT and suppliers and the development of supplier potential and readiness to support PTT in terms of environment, society and governance matters, and continuity in business operation at both locations; the head office in the Rayong Natural Gas Separation Plant area: natural gas distribution pipelines, and natural gas for vehicles, totaling four times. In 2022, the seminar communicated PTT's business direction, allowing traders as business partners to exchange information and ideas to improve their collaboration to be a continuous system by applying modern technology to every procurement process. It is creating an ability to respond to rapidly changing situations under the Digital Procurement project to prepare for and be aware of the world's movements that may affect business operations. Focusing on educating traders to develop their potential for sustainability operations, PTT also concentrates on responding to needs and treating all groups of stakeholders equally, transparently, and fairly, especially business partners throughout the supply chain that PTT attaches great importance to development, support, and promotion of sustainable growth and progress together. Moreover, PTT also communicates to increase knowledge and understanding among vendors about the registration of PTT vendors (Approved Vendor List: AVL) and the registration of natural gas distribution pipeline system equipment topics (NGR Approved Equipment and Material List: NGR AEML). This communication increased the opportunity to become a potential supplier for PTT.

In addition, in 2022, PTT organized a training program to enhance suppliers' capacity in human rights management as the topic is increasingly significant to business nowadays. The proportion of traders trained is 100% participating in the program including 8 high risk suppliers. PTT has been continuously organized suppliers' sustainability training programs to provide an in-depth knowledge on specific ESG topics such as Corporate Governance, Human Rights, Safety and Eco-efficiency. This will lead to further growth as sustainable business partners and aim to improve their ESG performance.

One of our good practices is PTT Group Logistics Zero Accident (LZA) Program, which has been established to provide communication and training to suppliers in product transportation via truck since 2013. The purpose is to control, prevent and mitigate risks or negative impacts from transportation incidents and aim to reduce carbon dioxide and other greenhouse gas emissions.  The training results can be shown the decreasing trend in major transportation incidents.

Business Unit Level Supply Chain Management

PTT's supply chain management strategy for hydrocarbon products and LPG procurement focuses on receiving the correct product quality and quantity on time, safely, and environmentally friendly through a transparent and traceable process from both the PTT side and suppliers' sides. In addition, PTT supports added value creation for hydrocarbon products and LPG products in the PTT Group's supply chain. 

Additionally, stipulations on environmental and social sustainability, volumes, and delivery periods are included in PTT's short-term and long-term contracts with refinery group suppliers. The requirements related to environmental and social practice and criteria for performance excellence are defined in each contract based on the Supplier Sustainable Code of Conduct. ESG factors are used to assess the minimum quality and quantity of both existing and new contracts according to the strategic supply chain management plans, consisting of quality, economical, environmental, safety, occupational health, and community aspects. 

PTT Group implements the PTT Group Emergency and Crisis Management Plans and Business Continuity Management (BCM) to manage risks across its supply chain. The Emergency Crisis and BCM Portal monitor the overall management. In addition, PTT collaborates with internal and external agencies to organize a simulation for the BCM annually; PTT defines the management plan post-incident and transitions back to the pre-incidence level. It includes monitoring the BCM plans from external agencies and ensuring adequate and suitable management. To reduce risks of energy shortage in the country, PTT has applied the BCM principles and continuously participated in emergency response drills as planned with the Ministry of Energy annually.

In 2019, contingency plans for potential unrest in the Middle East, which could impose risks towards crude oil import disruptions to Thailand, were rehearsed. This operation increases readiness to prevent and resolve the country's potential fuel shortage problem. In 2021, PTT participated in the provincial energy emergency response plan, which simulated a severe earthquake in Lampang Province, disrupting Mae Moh Power Plant's electricity generation capabilities in supplying electricity to the five Northern provinces. This simulation included the rehearsal process plans, executive orders, and reporting on situation mitigation and guidelines in providing news to the media. The rehearsal event also included a failure scenario caused by land subsidence where the Common Header, a gas mixing equipment installed to combine designated quality gas from the Gulf of Thailand and LNG in Rayong Province, malfunctions. The above scenario has implications for the natural gas and petrochemical value chain. PTT has links to the Ministry of Energy's Emergency, Continuity Management Center and several business groups, including the PTT Oil and Retail Business Public Company Limited. This scenario strengthens understanding of the crisis management process and communication with stakeholders, including various management aspects. In 2021, PTT joined forces with the Ministry of Energy and Electricity Generating Authority of Thailand (EGAT) and oil traders under Section 7 of the Fuel Trade Act B.E. 2543 prepared together under the Energy Emergency Response Exercise at the national level, the Erawan (G1) concessionaire transition case has continued technical problems. They were making it unable to produce natural gas. The war between Russia and Ukraine made it impossible to procure Spot LNG. There was severe tension between the country's government, which owns the energy source, and its people, causing the United States to use economic sanctions. As a result, no natural gas from that country is sent to Thailand to integrate and enhance the response, to maintain the country's energy security efficiently. 

Natural Gas: NG Procurement  

PTT's natural gas procurement devices into six steps, which are:

  1. The procurement details and requirements are defined and adheres to customer requirements, legal requirements, requirements regarding operations and gas pipeline system connections and PTT requirements.
  2. The selection process for suppliers/ partners proceeds followed the criteria for assessment according to PTT requirements and applicable requirements relating to PTT's strategy, which considers efficiency and overall supplier/ partner potential. 
  3. The communication of requirements and procurement criteria, including the negotiation and preparation of the natural gas purchase agreement, takes place with the natural gas sellers (Gas deliverers)/partners.
  4. The performance of suppliers/ partners is controlled through contract management of natural gas purchases.
  5. The development of suppliers/ partners occurs through the exchange of knowledge during monthly Operation meetings, training, and seminars which increases communication channels. During such meetings, the needs, expectations, and complaints about gas quality problems and quantity on contract are discussed to attain solutions and improve that adhere to customer needs.
  6. The performance evaluation takes place after each delivery and monthly for supplier/partner assessment of their services. If the assessment was underperformed or found some abnormalities, the supplier/ partner is informed and requested to improve performance. Reliability assessments will be conducted over the last year to develop a natural gas supply plan and a contingency plan to support the delivery cases/in which the partners cannot handle the shipment.

Liquefied Natural Gas: LNG Procurement

PTT's liquefied natural gas supply (LNG) contracts materialize in either of two forms: short-mid-long-term contracts and spot LNG contracts. The procurement process begins with defining the supply details and requirements that adhere to the customer's stated quantity and requirements, legal requirements, Third Party Access Code for LNG Terminal, and PTT regulations/requirements. Supplier selection follows PTT evaluation criteria and related conditions, including efficiency and overall supplier potential. The following process pertains to contract negotiation: supplier operations are controlled through contract management and evaluations upon each delivery. The supplier will be notified to improve performance if the assessment results are lower than specified standards.

While these procedures allow the fulfillment of LNG procurement missions and strategies, it is also essential to consider national energy security and preparations for high competition after the LNG business liberalization. There must be appropriate risk management measures for the procurement and management of the LNG Portfolio to determine the proper cost structure through both short-mid-long-term contracts and spot LNG contracts to meet the country's gas demand.

Sustainable Procurement

PTT and the PTT Group emphasize reducing risks in sourcing goods/services and building confidence in services provided to suppliers, in addition to propelling the PTT Group towards sustainable procurement practices according to international standards. In 2021, PTT passed the verification of sustainable procurement practices, ISO20400:2017 Sustainable Procurement, and applied ISO20400: 2017 standards for joint procurement of goods and services of companies in 3 PTT procurement groups and proposed to expand this approach to all procurement groups within five years.

PTT Green Procurement

PTT has launched the PTT Green Procurement Policy in alignment with the government policy. The PTT Vendor Management system, intended to handle environmentally friendly procurement of products and services, allows vendors selected through the bidding method to declare their green product implementation in support of the PTT. The system will accumulate the PTT Green Spending data for all vendors. In 2022, Green Procurement was responsible for 21 jobs worth 345 million Baht.

Local Procurement

PTT supports local procurement and service (within Thailand) and encourages the procurement of goods from operational areas to foster economic support, employment, and income generation for the locals with the advantage of lower costs and faster transportation. As a result of PTT's commitment to building long-term relationships with the communities where it operates, the organization gains each community's license to use. Moreover, PTT encourages suppliers to handle with care and responsibility toward society and local communities and to support procurement within the local area to lower the cost of goods and support the local community.

Digital Procurement System Development

PTT introduces technology to improve procurement, processes, and procedures from the preparation of the internal procurement database, preparation of purchase requests, preparation of requirements, vendor selection, preparation of orders and contracts, contract management, acceptance inspection, billing, payment, including supplier performance assessments and PTT supplier procurement process satisfaction feedback. In 2022, PTT developed the PTT Bid Submission system to support the request/ purchase of procurement documents and submitting offers and prices through online channels to facilitate traders participating in procurement work with PTT. This system can be performed anywhere, anytime, with notifications via e-mail at every step of the work. It also increases transparency in operations by using a method for controlling requesting and bidding. In addition, PTT has implemented the integration of the PTT Vendor Master System (PTT VMS) as a part of the PTT Vendor Management (PTTVM) system to link PTT's vendor information into one database and establish an ESG assessment system for vendors to self-assess on their sustainable business operations at the same standard throughout PTT Group. Moreover, this was for merchants to receive bidding news more quickly, while the PTT Approved Vendor List (PTT AVL) system was also improved for more efficient use.

Reinforcing Transparency throughout the Supply Chain

PTT discloses corporate procurement information monthly so that people can conveniently access It is a response to implementing the Transparency & Sustainability strategy. To be a transparent organization, PTT complies with the announcement of the Official Information Board regarding the stipulation that information on the results of procurement considerations by government agencies is required for public review. According to Section 9 (8) of the Official Information Act, 1997, and signed a memorandum of cooperation on driving the prevention and suppression of corruption between the Office of the National Anti-Corruption Commission NACC), State Enterprise Policy Office (SEPO), and the enterprise agencies, to support the national strategy on the prevention and suppression of corruption, preventing and suppressing corruption. To support the relevant government policies and action plans to prevent and suppress corruption from being successful, PTT also proposed a procurement project with a budget of 1,000 million Baht and more or construction projects with a budget of 500 million Baht or more to the Comptroller General's Department to consider and select to participate in the anti-corruption cooperation project in public procurement and proceeding with the preparation of an Integrity Pact, under the rules set forth by the Anti-Corruption Cooperation Committee (PACC) announcement to demonstrate PTT's intention to operate with transparency. The fiscal year 2022, two procurement projects of PTT have been selected to participate in the additional integrity agreement, namely the GSP Propane Supremacy project and the GSP Optimal Fuel Network for Natural Gas Separation Plant system construction.

Furthermore, PTT will be assessed annually for the disclosure of corporate information about disclosing procurement information, supplier selection criteria, and procurement information for the five projects with the highest appraised value each year, for instance.

Procurement Officers’ Capacity Building

PTT and PTT flagship companies have reviewed and planned vocational employees' development annually. It promotes employees' working capacity to ensure their readiness for organizational shift effectively and strengthens the working potential of employees in influential supporting roles during organizational change. Further training relates to areas including media and Knowledge Management (KM). This initiative focuses on empowering employees with capabilities to apply information technology systems to proficient procurement work under the Digital Procurement program, a program developed by PTT to systemize the procurement process of goods and services, increase flexibility, and reduce working time. The system ultimately enables greater efficiency and productivity in employee work operations. Furthermore, focus on enhancing the knowledge and comprehension of laws and guidelines related to the procurement process resulting in employee empowerment with capabilities to carry out the procurement processes more accurately, quickly, and efficiently. 

In 2022, PTT also organized other training courses, such as managing a workshop on applying ISO 20400: 2017 Sustainable Procurement guidelines to provide employees with skills and understanding to use in their practices. The development of PTT Group ESG Auditor for sustainability performance assessment and the training on Human Rights (Basic Human Rights) was for employees to understand PTT Group ESG, Sustainability Assessment Criteria, Basic Principles of Assessment Guidelines, and processes for becoming a good auditor, which can be adapted or integrated into the process of evaluating each vendor to be able to run a sustainable business. The training courses on the Civil and Commercial Code related to the procurement of government supplies were to create knowledge and understanding of legal principles under the Civil and Commercial Code that are outside the law on public procurement and supplies management. These actions provided employees of all companies in the PTT group the ability to manage their procurement according to their responsibilities correctly, appropriately, and efficiently. The training about procurement was to create knowledge and understanding for PTT employees to perform procurement legally and government supplies management tasks, for instance.