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
The Company continuously monitors and regularly assesses procurement risks, including corruption and human rights risks, and develops measures to reduce their impact on supply chain sustainability. Procurement risks are reflected in the Company Risk Map.
When identifying and assessing risks related to suppliers’ businesses, NOVATEK considers a totality of factors, including a supplier’s business profile, size, geographical location, and business reputation.
Procurement transparency and equal treatment of suppliers
NOVATEK adheres to the principles of transparency, objectivity, equality, and non-discrimination in the procurement process. The Company sets requirements for bidders and procured items so as not to advantage any bidder while minimizing potential corruption risks and risks of non-performance or improper performance of contractual obligations.
Procurement activities of the Company are predominantly open competitive tenders conducted through an electronic trading platform to ensure that bidders get equal access to the documents stipulating the terms, procedure, and deadlines of the tender. NOVATEK evaluates all bids as part of the procurement process, engaging various experts who do not influence each other’s opinion.
In addition, the Company piloted a procurement and inventory management information system. Procurement automation has made the procurement process more transparent and boosted the efficiency of procurement management decision making.
