The Company worked with more than 9,000 suppliers, while the ORLEN Group as a whole had relationships with over 25,000 suppliers.
Suppliers
Suppliers are one of the key groups of our stakeholders. They are required to accept specific criteria relating to ORLEN values and responsibility. The Procurement area cooperates closely with the stakeholders, analyses their needs, puts forward common priorities, plans, KPIs and improvements.
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In a significant step towards ensuring a responsible supply chain, PKN ORLEN incorporated responsible business and sustainability criteria into its procurement management standard. The Company promotes social responsibility among its suppliers and seeks to cooperate with trade partners that respect human rights and operate in compliance with the law, ensure safe and fair working conditions, follow the best standards of ethical conduct and care for the natural environment. CSR and ESG criteria have been defined and compiled into a single document, i.e. the Supplier Code of Conduct. Compliance with the Code is a mandatory criterion in the process of trading partner selection at ORLEN Group companies. The suppliers are selected based on the ORLEN Group’s standardised and uniform social, environmental, legal, and ethical criteria.
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All existing and potential suppliers of the ORLEN Group are obliged to know and accept the requirements concerning human rights, compliance with the law, safe and decent working conditions, the highest ethical standards, and care for the natural environment. Acceptance of the Supplier Code of Conduct by prospective and existing suppliers is a formal precondition for participating in procurement procedures. If a bidder does not accept the Code, their bid will not be considered in the procurement process because the formal criteria are not satisfied. The purpose of the Code is to promote responsibility among the ORLEN Group’s stakeholders and encourage responsible practices among the suppliers. Moreover, every bidder taking part in a procurement procedure is required to read, understand and accept the ORLEN Group Anti-Corruption Policy and the PKN ORLEN Rules for Accepting and Offering Gifts.
The ORLEN Group trades with a group of carefully selected suppliers. In 2021, almost 4,000 tendering procedures were held at PKN ORLEN.
In an effort to continuously improve procurement processes, the Group works to enhance and ensure greater consistency of vendor selection procedures. We developed a model for vendor selection in procurement category management strategies, and the key suppliers are evaluated on a regular basis as part of the supplier relationship assessment process. The supplier selection and assessment criteria, which are based on best market practices, facilitate mitigation of reputation, financial and process risks, and ensure high quality of cooperation with suppliers.
A material element of our efforts as part of the responsible supply chain is the ORLEN Group’s Procurement Centralisation Project, started in December 2020, In 2021, we defined the procurement categories to be managed under the centralised model. Also, the final versions of end-to-end process maps were developed. Work is underway to standardise the IT systems and procurement procedures across the Group. The project will significantly improve the efficiency of the procurement function, mainly through departure from the dispersed organisation structure, as well as economies of scale and gradual expansion of the scope of centralised purchases.
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Local partners are important.
By using their services the ORLEN Group contributes to the development of the market and business in its close neighbourhood. Such suppliers know the local market and are often well aware of the needs and expectations of the ORLEN Group companies. Their close proximity also reduces costs, e.g. of transport and accommodation. In 2021, goods and services sourced from Płock-based companies accounted for some 9.7%1 of PKN ORLEN’s spending. By cooperating with suppliers from its close neighbourhood the Company supports growth of the local market and implements the objectives of its CSR strategy within the supply chain.
At key foreign companies of the ORLEN Group: Unipetrol (Litvínov) and ORLEN Lietuva (Mažeikiai), spending on services provided by local suppliers was 2.84% and 0.66%, respectively, of their total expenditure in 2021.
1 Excluding purchases from suppliers of crude oil and natural gas.
