Procurement
Our supply chain management system is an integrated process consisting of interrelated elements: procurement planning, inventory management, pre-qualification of tenderers, evaluation of tenders and contract award, contract quality and milestone management (including expediting, during production inspections, delivery receipt, checking the necessary permits, and incoming inspection), and control of inventory transactions. The supply chain management is also closely linked with other related processes at the Company, such as contract management and budgeting. The principles of purchasing materials and equipment, works and services in NOVATEK are determined by the Company’s Procurement Policy.
ESG criteria are integrated into all stages of the procurement process, from procurement planning to putting the inventory into operation. When entering into contracts, we set out our expectations with counterparties and monitor how they are observed at various stages of the procurement process. The Company also pays attention to whether its suppliers observe the human rights requirements, inter alia preventing child and forced labor.
Procurement process
NOVATEK’s procurement process gives subsidiaries and joint ventures the authority to purchase the bulk of goods and services at their own discretion with overall oversight from NOVATEK’s headquarters, reserving centralized procurement for highly critical and expensive items to save through bulk buying.
NOVATEK has incorporated risk assessment into its supply chain management. Procurement risks are included in the Company’s Risk Map, and remedial actions are defined to mitigate these risks.
Procurement transparency and equal treatment of suppliers
To ensure the transparency of procedures and the equal treatment of bidders, NOVATEK conducts procurement through an electronic trading platform and favors open competitive tendering, which any bidder may join. Requirements for bidders and procured items are set to eliminate prejudice for or against any bidder.
The contract award system at NOVATEK uses a rigorous process, maximizing the transparency and objectivity of decisions. Bids are evaluated by a cross-functional team of experts who do not influence each other’s opinion.
The procurement control system includes due diligence procedures and corruption risk assessment across the Company’s supply chain. Also, tender procedures are controlled at all stages for above-threshold procurement.
