Supply Chain Stewardship

We recognise that we are able to influence responsible behaviour in our suppliers, and are ensuring that we leverage this ability for optimum results. While meeting the needs of our business partners, suppliers and vendors we expect them to adhere to our Supplier Code of Practice which encompasses the ESG elements of business ethics, environmental management, human rights and occupational health and safety.

We have identified our critical suppliers, namely suppliers of packaging materials and raw ingredients with sales exceeding RM1 million per annum or suppliers we are unable to replace. Our goal is to assess all critical suppliers and ensure they comply with our Supplier Code of Conduct by 2025.

Our 2025 Commitments
Supply Chain Stewardship
  • 100% of active key suppliers accept and comply with F&N’s Code of Business Practice by 2025
  • 100% of critical suppliers assessed to ensure compliance with Code of Business Practice
  • To purchase 100% RSPO’s physical certified palm oil for our palm oil usage by 2025
Identify Risks – Screening and Critical Suppliers Identification

At F&N, we have a systematic screening process for all new suppliers that includes environmental and social criteria. These criteria reflect the commitments towards the environment (such as reducing waste, pollution and water usage) and society (including human rights and labour practices). The environmental performance of their raw material and primary packaging suppliers are also assessed annually to verify if they have:

Supplier Management

During the pre-qualification screening of suppliers, we assess our suppliers based on a wide range of criteria. Apart from delivery capacity and technical capabilities, we also assess potential suppliers based on their ESG company policies and certifications.

This includes policies for business continuity plan, food safety, responsible sourcing, bribery & corruption, carbon management and child labour and certifications for management systems such as quality, occupational health and safety, environment and food safety.

Critical suppliers are active direct (tier-1) material suppliers with high sales value greater than RM1 million per annum and/or irreplaceable suppliers. Direct material suppliers are suppliers who supply packaging materials, raw ingredients and auxiliary materials. Irreplaceable suppliers include single-source suppliers.

On annual basis, we will conduct a vendor performance evaluation for all critical suppliers, including sustainability. Non-compliant or underperforming suppliers must demonstrate that they are committed to taking necessary corrective actions within a predefined period, or risk having contracts terminated.

Monitor Risks – Monitoring, Auditing and Corrective Action Planning

The Group works closely with our suppliers and conducts regular audits to ensure standards and practices for food safety and the environment are maintained throughout the value chain. All suppliers performances are assessed monthly and audits are done for medium and high risk suppliers 2 times a year based on quality, delivery, service, food safety compliance and certification systems including quality, environmental and occupational health and safety.

Non-compliant or underperforming suppliers must demonstrate that they are committed to taking necessary corrective actions within a predefined period, or risk having contracts terminated.

For food safety, we assess a range of quality assurance and food security criteria to safeguard the health of consumers and the safety of workers in our supply chain. Our criteria for assessing suppliers include the implementation and monitoring of good manufacturing processes, use of protective clothing, food safety management systems, & chemical management.

CAPACITY BUILDING FOR OUR SUPPLIERS

Since 2013, we have been collaborating with local Thailand-based farmers in cooperatives which supply FNDT with fresh milk. We continue to introduce new technologies and equipment (for example, milk machine testers and automatic jet cleaning milking machines) to help them increase productivity, improve milk quality, and reduce wastes as part of a circular economy approach. Working closely with the cooperatives, we also organised seminars and produced quarterly educational newsletters for the farmers.

We continued to build the capability of over 2,000 farmers from 10 milk cooperatives, mainly in Nakhorn Ratchasima Province, through a Farming Excellence System, which consists of 3 key programmes:

chart-capacity

Beginning July 2019, we, together with Soonthorn Metal Can (our can supplier) and Thepsathit Milk Cooperative (one of our milk suppliers in Thailand), came together to tackle the water shortage problem during the annual dry seasons by providing a champagne tank and piping route to the Thepsathit community in Chaiyaphum Province. This programme is able to supply 1,680,000 liters of water every month for up to 180 households across communities in Chaiyaphum province. This also provides sufficient water supply for up to 24 farms, consisting of 955 cattle, to minimise disruption from drought and ensure farmers can continue their farming operations sustainably.