Sustainable supply chains

Some of these disruptions included limited port operations, logistics service disruptions, drop in schedule reliability and container displacement. Our aim was to maintain a sustainable supply chain while balancing cost-effectiveness with healthy inventory levels, customer service, and secure capacity. Furthermore, we are committed to fostering International Maritime Organization (IMO) 2020/2030 objectives as part of our global sustainability approach to reduce emissions in collaboration with our stakeholders.

We successfully maintained our service levels to serve our customers in over 130 countries due to heavily investing into building a resilient network. Through the launch of the global optimization program spanning all areas of the supply chain, we leveraged our collaboration with logistic-service partners and used economies of scale to reduce transportation, storage, and documentation costs to successfully deliver 32 million metric tons of product deliveries.

SABIC has always strived to be the employer of choice in all domains. People development and leadership focus remain cornerstones for supply chain organization. In 2022, we activated the Supply Chain Local Talent Community across the globe in all our businesses, focusing on developing competitive employees and leaders who can work together towards building a transparent supply chain that fits into the circular economy.

This year, we introduced a regional dialogue forum to provide more clarity and frequent communication of mid- and long-term supply chain strategy. The objective of this forum was to create the best practices for the supply chain and make innovative projects visible. We also continued to cultivate a leadership mindset through our development program focus in a bid to promote cost-consciousness in the organization.

TOGETHER FOR SUSTAINABILITY (TfS)

A key part of SABIC’s sustainable procurement strategy is embedding sustainability into the company’s procurement processes, policies and culture as a foundational pillar. To progress in these efforts, SABIC recently joined TfS.

By joining TfS, SABIC is gaining access to established methodologies and infrastructure that will help accelerate the implementation of its sustainable procurement strategy and ESG goals. For example, members of TfS jointly operate global supplier assessments and audit programs through independent experts, eliminating the need for each member to conduct their own assessment programs and also reducing the burden on suppliers to participate in numerous different programs. This initiative also highlights the importance of collaboration within the industry, especially in increasing transparency on upstream value chains to support further reductions in Scope 3 GHG emissions. Joining TfS will enable SABIC to help raise sustainability standards in procurement in partnership with a network of 40+ other chemical companies.

SAFETY AND QUALITY ASSESSMENT SYSTEM

The Safety and Quality Assessment System (SQAS) is a vital tool in helping the chemical industry measure logistics service providers’ (LSP) EHSS performance, assess and address gaps and areas for improvements, and identify top providers. Over the past several years, SABIC has been collaborating with other industry stakeholders, including CEFIC, to develop robust criteria for sustainability assessment in the SQAS. Additionally, in 2020, we created and started using OCS templates in our SQA assessments, making it easier to collect data in our goal to keep plastics from waste streams and waterways.

At site-level, we are working towards OCS certification. This process includes our commitment to encouraging our plastics-engaged logistics service providers and third partly logistics service providers (3PLs) to also embrace the OCS guidelines via CEFIC and SQAS – and most of our LSPs and 3PLs have been working on this over the past SQAS cycle. We initially focused on the hubs and near-site warehouses and carriers but also included other parties further along the supply chain. Where Supply Chain Management interfaces with site logistics, we ensure that OCS care seamlessly connects with manufacturing commitment and implementation.

By using the developing roll-out of OCS in SQAS as the basis for evaluating our supply chain partners, we ensure that renewed questionnaires, specific control points, and mandatory criteria have been included in our analysis. Suppliers that score on all applicable OCS questions can be included in a public register so that everyone can follow their implementation trajectory in a fully transparent and auditable trail.

The SQAS assessments are valid for three years. Any service provider involved with transport or handling of plastics must request a new assessment, which includes OCS verification by trained and accredited assessors. Reports submitted since 2022 include a reduced list of requirements but since early 2023 the entire list is mandatory to apply for becoming a SABIC logistics partner. In three years, all our service providers will have been assessed, and we intend to have OCS mandatory for LSPs from the end of 2025 and to work only with SQAS- and OCS-certified companies.

In China, SABIC has been working with the Chemical Warehouse Safety Assessment System (CWSAS), an initiative sponsored by the Hazardous Goods Branch of the China Association of Warehousing and Distribution (CAWD) and the AICM for assessing the quality, safety, security, and EMS of warehouse service providers in China. Together with international chemical enterprises and well-known warehousing enterprises in China, SABIC has been contributing to CWSAS since its period of gestation at the end of 2020. Through relentless efforts and close collaboration, chemical warehouse safety workshops, committee meetings, and training sessions have been conducted over the past two years. CWSAS represents a great milestone for the chemical industry in China.

SABIC has also had a representative on the technical committee of the Chemical Road Transportation Safety Assessment System (CRSAS) in China since 2021. SABIC will continue to support the initiative and will use it as the primary forum to verify and support the implementation of responsible care through the supply chain. SABIC’s contribution to CWSAS and CRSAS demonstrates its strong commitment to responsible care.

PROGRESSIVE COLLABORATIONS

SAUDI ARAMCO

In 2022, SABIC took the lead in marketing and selling numerous Saudi Aramco products. Five Aramco joint venture sites benefited from the supply-chain readiness, enabling the transfer of marketing rights to SABIC along with integration into the SABIC business and supply chain operating model. By completing several process and system changes across supply-chain operations in both companies, we have grown more efficient in ways that benefit our customers.

SAUDI RAILS

To sustain our leading position in the era of localized markets and increasing competitive intensity, we need to strike partnerships and make collaborative investments. This year, our cooperation with Saudi Rails led to an agreement to diversify network reach and accessibility in Saudi Arabia as part of our strategy to become the logistics center for supplying other regions in the Kingdom and GCC. SABIC, in collaboration with Saudi Aramco, supports transportation policy reforms for it is a reliable and environmental-friendly means to deliver bulk commodities with reduced carbon emissions while reducing long-term shipping costs. This allows greater access to competitive freight rail service in the Kingdom and signals a change in the pattern of supply chains for chemical industries.

UNINTERRUPTED ORDERS INITIATIVE

To improve our work efficiency through seamless operations, we implemented our Uninterrupted Orders (UIO) initiative to automate repetitive activities in the field of Order Management, Order Fulfilment, Documentation and Reporting to improve work. For instance, automating order-closing activities reduced the touches by 80% in this field. Together with other process-automation initiatives, all this contributed to the objective of improving our work efficiency in customer service and elevating our customer interaction.

DIGITAL INITIATIVES

SABIC implemented a number of digital technologies and new business models to optimize processes and business operations. These included:

– Expanding the Corporate Digitization Program to cover multiple domains such as supply chain, manufacturing, market and sales, and procurement as well as product innovation.

– Global initiation of Track & Trace, a visibility solution expecting to deliver work efficiency and proactive response to our customers, after a successful pilot.

– Taking the next step in the AI-Powered S&OP initiative, as part of our Corporate Digitalization Program to further improve and integrate the S&OP process.

NETWORK AND PLANNING OPTIMIZATION

To build resilience across our supply chain, it is necessary to study market trends and impacts that shape business operations. Sustainability is a crucial trend and will be a key factor in our strategy for the supply chain moving forward. As a part of SABIC’s ESG governance model and Scope 3 partner engagement, the supply chain continues to evolve and contribute to the circular economy through joint thinking, innovation and collaboration with customers and service providers.

SUSTAINABLE PROCUREMENT

Contracts with our suppliers are governed by the SABIC Sustainable Procurement Policy, which has been developed in compliance with legal and ethical standards. In addition, we also have a Supplier Code of Conduct, which was reviewed and updated in 2020, impressing behavioral and operational best practices on our suppliers. We procure materials and services from qualified suppliers through lawful, ethical, and fair practices, as specified by the SABIC Code of Ethics, and they must meet our technical, quality, EHSS, and social responsibility standards.

The SLM Program is used to evaluate new suppliers and verify their level of compliance. As a key component of our sustainable procurement model, we provide opportunities for local suppliers, wherever possible. We also invest in developing the skills and competencies of women and young people to support local entrepreneurism, which contributes toward the local economy. Suppliers are also assessed for environmental sustainability through an environmental questionnaire under our SLM process. Consequently, our supplier base, in general, meets the minimum requirements on EHSS.

SUPPLIER LIFECYCLE MANAGEMENT

We use our SLM Program to vet new supplier qualifications and verify ongoing compliance. Suppliers must meet our standards to be included in our global database for procurement and supply chain needs. In 2022, we registered 1,510 suppliers through SLM, bringing the total to 32,340. We identified 82 suppliers that were inactive, underperforming, or had failed to comply with our Supplier Code of Conduct, and we removed those suppliers from the database.