Management Principle of SF Procurement
1. The prospect of procurement:
- Practicing sunlight procurement, Creating strategic value.
- Establishing equal, respect, transparent, progressing and win-win environment of cooperation.
- Committed to provide timely, accurate, high-quality as well as cost-effective supply chain services of procurement.
2. Core Value:
1) Integrity and collaboration:
a) Build long-term cooperation with suppliers based on trust, honesty and integrity.
b) Do not sacrifice the interest of the whole for the interest of a part or department.
c) Facilitate cross-department collaboration and ensure the equity, fairness and openness of procurement activities.
2) Understanding and communication:
a) Fully understand demands from internal and external customers and suppliers' capabilities.
b) Clarify views of SF and suppliers to facilitate communication and understanding among departments and levels.
3) Improvement and optimization:
a) Continue pursuing competitive technology, cost, quality, delivery, services and innovation.
b) Continue improving the procurement management.
c) Continue improving occupational skills of the procurement team.
3. Procurement Management Principles:
1) Authorization principle: SF authorizes the procurement department as the sole organization to make business commitments to suppliers (business commitments include but not limited to selecting suppliers, contracts, orders, prices and stock); commitments made by other departments to suppliers without going through the procurement department are invalid and incompliant with internal rules.
2) Integrity principle: Cooperation with suppliers and all business activities must obey the integrity principle and business ethics.
3) Principle of equity, openness and fairness: This is the basic principle for procurement activities. The procurement department must act in the interest of SF and ensure that procurement activities are open, suppliers are treated equally, and procurement decisions are made fairly.
4. Procurement Management Methods:
1) Strategic procurement management by categories:
a) Realize strategic procurement through category expense and demand analysis, category market analysis and by formulating category procurement strategies (including internal demand optimization strategy and external supply channel optimization strategy).
b) Employ multiple procurement modes that support different categories.
2) Cost management focusing on TCO:
a) Do not focus on prices in the decision-making process. Conduct general evaluation on TQRDCES (technology, quality, response, delivery, cost, environment and safe) and focus on suppliers’ general service capabilities.
b) Focus on TCO and maximize the cost-performance as the basis and target of the decision-making process.
3) Supplier management by levels and categories:
a) Strictly control the introduction of new suppliers to lower the supply and quality risks at the early stage.
b) Manage qualified suppliers by levels and categories. Develop quality suppliers and eliminate low-quality ones to ensure the high quality of suppliers.
c) Build long-term cooperation and in-depth collaboration with suppliers to maximize the value for both parties.
d) Pay attention to suppliers’ continued improvement and innovation capabilities, social responsibility and service guarantee.
5. Procurement Risk Control:
Set up a solid risk control system to control procurement risks, including:
a) Specifying conducts prohibited in procurement activities:
♦ Conducts that violate principle of good faith such as bribery, fraud, falsification, conspired bidding and contacting bid
♦ Divulging business secrets
♦ Violating law and regulations
♦ Breaching business agreements
The above-mentioned conducts will be severely punished according to law or SF's business conduct.
b) The auditing department supervises and reviews key procurement activities and provides suggestion for optimization.
c) The procurement audit group regularly reviews compliance of the procurement organization with internal rules and provides suggestion for optimization.
d) Set up a smooth and open complaint channel for internal and external customers.