Value Chain Management

Sembcorp Marine is committed to manage the environmental, social and economic impacts across its value-supply chain.

Effective value chain management is essential for business sustainability and customer satisfaction. Value inputs are proactively managed across Sembcorp Marine’s project life cycle processes – from design, engineering, procurement, construction and commissioning through to delivery – to fulfil customers’ specifications, delivery timelines and budgets. Beyond project fulfilment, the Group aims to exceed customers’ expectations towards its practices in managing quality, health, safety and environment as well as business performance.

  • For more information on the material topic impacts in our value chain and Sembcorp Marine’s level of influence, please click here.
  • To find out more details about Sembcorp Marine’s value chain management process, please click here.

 

Supply Chain Management

Steering the Group’s supply chain management strategy is the Sembcorp Marine Procurement and Outsourcing Resources Committee (SPORC). Led by the Head of Supply Chain, SPORC plays a key role in creating value from supply chain synergies through economies of scale and enhanced competitiveness.

Effective material management processes ensure that suppliers provide timely delivery of products and services; comply with quality, safety, environmental standards; as well as align with the Group’s Code of Business Conduct, Supplier Code of Conduct and sustainability requirements. 

A vital part of Sembcorp Marine’s supply chain value management is the due diligence processes for identifying and assessing critical vendors, and managing these processes through close monitoring and periodic evaluations. Key vendors include those providing essential materials, equipment, components and services that may significantly influence project deliveries.

To mitigate procurement-related risks, Sembcorp Marine actively engages and monitors suppliers to ensure that they comply with stipulated delivery schedules, specification standards as well as ethical codes of conduct. Suppliers who have significant impact on project outcomes, including those providing critical materials, equipment and parts, are identified early and monitored closely throughout the project.

 

Sustainable and Responsible Supply Chain

Sembcorp Marine embeds sustainability practices across its value chain, operations and the lifecycle phases of its products and solutions, so as to minimise environmental, social and economic impacts. The Group manages its operational impacts through sustainable resource and material management as well as responsible procurement.

As part of its efforts to mitigate the potential impacts of climate change, the Group sources
sustainably produced equipment and parts to provide customers with greener alternatives. Products and solutions that do not harm the environment and have lower carbon footprint are preferred. These include environmentally-friendly paints, coatings and materials as
well as energy-efficient products for customers’ projects and for the Group’s business operations.

To conserve resources, materials such as steel and blasting grit are recycled or repurposed for internal use. Scrap materials are consolidated and recycled using approved and licensed service providers. Waste material is disposed of responsibly using service providers with
nationally accredited permits.

In compliance with environmental and public health requirements by IMO, Montreal Protocol provisions and Singapore’s National Environment Agency, the Group does not procure materials, parts, equipment or products containing harmful substances, including asbestos and ozone-depleting substances, such as chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs) and halon. 

The Group also practises ethical sourcing and makes every effort to prevent conflict minerals from entering its supply chain. Conflict minerals are defined as tin, tantalum, tungsten, gold, and other raw materials originating from conflict-affected or high-risk areas where the mining of these minerals is exploited by armed groups which perpetuate violence and human rights abuses. Sembcorp Marine’s suppliers are required to declare that they and their upstream partners do not use or procure the said substances and materials.

 

Supply Chain Due Diligence

Recognising suppliers as important partners in value creation, the Group has in place due diligence measures and internal controls to ensure on-time delivery while meeting standards of quality, safety and reliability.

As part of the qualification process for inclusion into Sembcorp Marine’s Approved Vendor List, companies are required to declare and provide supporting documentation that demonstrate compliance with the Group’s standards, and for assessment by a review panel. Sembcorp Marine has also expanded its focus to include sustainability criteria, such as responsible labour management, human rights and environmental practices, in its review process.

Companies in the Approved Vendor List are selected based on their quality and service track record as well as ability to operate responsibly over a long term. Suppliers are subject to Sembcorp Marine’s tender regulations and codes of conduct for fair competition during the bidding process.

Contractors supplying manpower to Sembcorp Marine’s yards must declare that their operations and human resource practices are in compliance with the Group’s Human Rights Policy, Supplier Code of Conduct and applicable employment legislation. In Singapore, the Group’s resident contractors are required to attain bizSAFE Level 4 certification, which ensures that an externally-audited workplace safety and health management system is in place. Regular assessments and periodic audits on contractors’ dormitory and workshop facilities are done to ensure that the Group’s safety, performance, quality, human rights and sustainability requirements are met.

supplychain_process

 

Enhancing Cost-Competitiveness

Within various internal platforms, strategies are deployed to enhance cost savings as well as harness operational synergies and economies of scale that are not only mutually beneficial but also aligned with customers’ needs.

At the various stages of production, opportunities are identified for technical and engineering enhancements that deliver material usage efficiencies for parts and components. As much as practicable, lightness, compactness and efficiency are built into the product design to optimise the quantity of raw materials used in the delivered product.

Sembcorp Marine collaborates closely with customers to identify how product or service inputs can be enhanced in terms of quantity, standardisation or deployment, so as to reduce production costs and the total cost of ownership. The Group also works with its strategic and key suppliers to improve the quality, safety and cost-competitiveness of products and services provided.

Where relevant, the Group leverages its technical knowledge, engineering competencies and innovation capabilities to propose alternative parts and components that can meet cost-saving and sustainability objectives while keeping to customers’ specification requirements. 

Sembcorp Marine further aims to reduce overall transport costs and carbon footprint by sourcing locally or regionally near a project’s location and subsequent point of delivery.

 

Leveraging Operational Synergies and Economies

Sembcorp Marine utilises a strategic approach in procuring categories of materials, components, consumables and services to achieve economies of scale and secure better value from key suppliers. The Group works closely with these suppliers to standardise products and services used in its shipyards and to better align yard operations with evolving technical standards, industry requirements and best practices. This has enabled the Group to continuously improve its cost savings, supply chain economies, competitiveness and sustainability efforts.

Moreover, Sembcorp Marine aggregates the use of transportation and logistics equipment across its yards and affiliates for better resource efficiency. This synergistic approach has further enhanced its supply chain sustainability performance while boosting the Group’s access to a wider set of qualified suppliers with stronger capabilities. 

The Group also actively manages raw material stocks across its shipyards via a central shared database. Inventory levels are monitored to match production needs and minimise inventory storage costs. The database helps improve inventory forecasting and enables better planning with strategic suppliers to realise production economies.

 

To find out more about the Group’s value chain management and competitive strengths, please click here

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