Supply Chain Management

Central Retail focuses on efficient supply chain management, from transportation systems to warehouse management, to ensure continuity and ability to handle emergency situations. Central Retail also places importance on sustainable supply chain management through the ESG risk assessments and promotes supplier sustainability practices.

Target

Encourage 100% Participation with Key Suppliers

Management Approach

Central Retail has established the supply chain management strategy in line with the retail and omnichannel business strategy to enhance Central Retail competitive advantage with main components of the strategy comprising 1) customer-centric, 2) agility, and 3) cost-competitive.

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Main Components	Principle of operation
Customer-Centric	Excellence in meeting customer needs and providing the best logistics experience.
Agility	Increase the potential of the supply chain to adapt to rapidly changing market trends.
Cost-Competitive	Increase operational efficiency in order to be able to provide services to customers at the lowest possible cost.

Central Retail has prepared and issued the Supplier Code of Conduct focusing on sustainability aspects to be a guideline for its suppliers. Central Retail ensures alignment between its sustainability strategy, therefore, set up trainings for its employees who are responsible for purchasing on their roles in the integration of sustainability in the Company’s supply chain. Furthermore, Central Retail has also set a target to reduce greenhouse gas emissions to reflect its commitment to reducing the impact of climate change. Central Retail has expanded the installation of solar rooftops at distribution centers and changed delivery vehicles into electric vehicles.

Supply Chain Risk Identification and Assessment

Central Retail has developed the process to identify and assess sustainability risks throughout its supply chain. In the first phase, the Company focuses on the assessment of supply chain risks prioritizing on significant tier-1 suppliers before expanding the scope to cover any remaining suppliers in the future.

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Supplier Screening and Selection

The screening and selection of suppliers is an essential step in identifying potential supply chain sustainability problems. Central Retail has established the following criteria for screening suppliers:

Business relevance criteria from considering information about business value to the Central Retail's business.
Supply chain risk criteria It considers the ESG risks posed by business partners operating in high-risk countries, hazardous industry sectors or product, including supplier’s ESG-related management system

Additionally, there is a risk audit system in place for suppliers from looking for complaints, conflicts, or legal infractions, through news sources and public comments on social media.

Suppliers will go through a selection phase after the screening process is completed. When additional assessments are conducted based on business criteria such as credibility, product quality, delivery, other performances and Central Retail's sustainability criteria (ESG). Suppliers who meet the criteria will be selected and register on the Approved Vendor List: AVL and must agree to the Company's supplier code of conduct. The supplier screening and selection process will be conducted regularly in each year.

Supplier Risk Assessment

The risks of the selected suppliers will be analyzed by completing the Supplier Sustainability Assessment (ESG) and presenting the company with evidence. This procedure allows the company to classify the risk of trading partners as high risk, medium risk and low risk. Suppliers with medium and low risk will qualify to pass the risk assessment and register (Approved Vendor List) and will be authorized to conduct business with Central Retail in the future. Suppliers with a high-risk rating must pass a risk assessment on-site with more detail.

Corrective Action Plan

The on-site risk assessment will help to identify key risk areas that must be addressed through the corrective action plan, co-developed between the Company and the supplier. The corrective action plan serves as a roadmap for the supplier's sustainability journey, guiding their progress towards meeting the required standards, improving practices, and aligning with the Company’s sustainability objectives. Such plans outline specific actions, timelines and responsibilities to address the high-risk issues with the goal to mitigate and remediate any significant actual and potential risks.

The suppliers will need to implement and improve pending issues within the specified timeframe prior to a follow-up assessment.

Supplier Relationship and Development

Supplier development is crucial for the Company to ensure that its suppliers meet the company's sustainability requirements, drive improvements in sustainability practices performance over time.