SUPPLY CHAIN MANAGEMENT Our suppliers form a key part of our value chain, providing us with inputs that contribute to high quality and safe products and services that deliver value for our customers. At the same time, they are a major area of risk for the Group, as they may carry out their business in ways that harm natural environments or local communities. With these two considerations in mind, the effective and consistent management of our supply chain is mission-critical, as it enables us to exercise greater control over our products and services, our reputation, and the impact we create across the ESG spectrum. Our approach to supply chain management has several dimensions. In addition to taking actions to manage quality and inculcate sustainable business practices, we also aim to promote and elevate Malaysian suppliers wherever possible – thereby circulating value within the local economy – and aspire to impart knowledge to micro, small and medium enterprises (“mSMEs”) to empower their continued business growth. At its core, our processes are governed by policies and procedures relating to purchasing and tendering as well as vendor and contract management. In terms of procurement, all potential vendors are required to complete a vendor registration and declaration form, and also to undertake a pre-qualification assessment prior to being invited to submit a quotation. This aides our Procurement department in ensuring that we only work with vendors who meet our quality and ethical standards. The department also undertakes annual vendor evaluations which serve to upkeep these standards. Our procurement processes are guided by the Group’s Discretionary Authority Limits (“DAL”), which defines a sound framework of authority, accountability and segregation of duties to facilitate effective decision-making at different levels within the Group. The DAL is subject to reviews and enhancement to reflect continuous improvements in tandem with emerging risks and operational issues. For large procurement exercises, procurement is escalated to the Subsidiaries’ Board, Board Purchasing and Tender Committee or the DNeX Board depending on the DAL. Our Performance AMOUNT OF SPENDING ON PROCUREMENT FROM LOCAL** SUPPLIERS (INCLUDING CONTRACTS)* RM102,134,381 RM121,035,096 RM37,847,756 July 2021 - June 2022 July 2020 - June 2021 July 2019 - June 2020 PROPORTION OF SPENDING ON PROCUREMENT FROM LOCAL** SUPPLIERS (INCLUDING CONTRACTS)* 86% 83% 88% July 2021 - June 2022 July 2020 - June 2021 July 2019 - June 2020 *The above figure includes procurement for DNeX, Dagang Net, SealNet, OGPC and IAC. **A supplier is considered local when it is located in the same country as our operations 187 DNeX INTEGRATED REPORT 2022
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