RUEN
2019 Interactive Sustainability Report

Supply chain

Interaction with suppliers is carried out on the basis of the principles of complete transparency of decisions, competitive advantages and assessment of compliance with the principles of industrial and environmental safety, transition to carbon neutrality, corporate responsibility.

We implement a policy of equal opportunity, non-discriminatory in any form, and work with our partners and suppliers to ensure this principle throughout the value chain.

On a regular basis, we conduct a review and examination of our supply chains in order to rule out conflict and violation of the rights and legitimate interests of other parties. The Company has developed and implemented a comprehensive program to combat corporate fraud and corruption.

The company increases transparency by adhering to stricter standards in its work compared to industry standards and by publishing in the public domain information about the formation of the cost of services, payments to the budget in the form of taxes.We work with our suppliers to improve the transparency of their activities.

The company buys and sells a significant amount of goods and services. The selection of the Company's suppliers is carried out according to uniform rules only on the basis of open electronic trading. Each potential supplier has the opportunity to participate in the tender procedure with mandatory confirmation of compliance with the established criteria.

For potential suppliers, a comprehensive assessment of compliance with corporate requirements is carried out.

Following the principles of corporate responsibility, the Company reviews potential suppliers to ensure that their activities are consistent with environmental and social responsibility. If the subject of the tender stipulates the need to check the state of the labor protection and industrial safety system, as well as assess the environmental impact of a potential supplier, an appropriate examination is carried out, which may include a request for confirmation of the availability of the necessary production facilities and technologies, appropriate qualifications of specialists, licenses, certificates, including in the field of ISO, technical audit conclusions.

In addition, within the framework of tender procedures, the Company provides a request for information regarding the social aspects of a potential supplier's activities, including respect for human rights.

If the bidders do not meet the established criteria, they will be excluded from the tender. According to the Company Policy in the field of industrial safety, labor and environmental protection, all suppliers and contractors must follow the Company's principles in this area, comply with legal and corporate standards when fulfilling contractual obligations to the Company. The company monitors the activities of its contractors to comply with these requirements. 

One of the key areas for us is the implementation of sustainable development policies and other initiatives aimed at combating climate change, in accordance with the Extractive Industries Transparency Initiative (EITI).We integrate this approach into the supply chain and encourage our suppliers to also increase accountability and transparency in all aspects of sustainability.
Trading and purchasing platform

Currently, the bulk of the supply chain is made up of domestic producers of products and services. Working with local suppliers remains one of our priority areas.

45 thousand operating suppliers are registered on the trading and purchasing site, of which 7.5 thousand suppliers were registered in 2019, more than 8 thousand suppliers participated in tenders for the supply of goods, 58 thousand competitive bids were received.

Over the 10 years since the founding of the TATNEFT trading and purchasing platform, operators have carried out more than 117.000 electronic trading procedures for more than 150 purchasing organizations, the trading turnover exceeded 460 billion rubles 

In 2019, 11.808 contracts and specifications for them were concluded with 1.041 suppliers for 36.9 billion rubles (excluding VAT). 48% of all orders were placed with enterprises of the Republic of Tatarstan, import contracts amounted to 0.5%. The low share of import contracts indicates a steady decline in the Company's import dependence.

The main share in the procurement structure is taken by deliveries according to price books: framework and long-term contracts with an open volume, which makes it possible to carry out purchases without wasting time and resources, as well as to increase the efficiency of forecasting the cost of objects under construction and planning the budget of expenses. Today, there are more than 900 price books, covering about 150 thousand items of the nomenclature, for which 81% of the total purchases were purchased in 2019 (2018 - 78%).

As part of improving the procurement system, the Company implements mechanisms for categorizing purchases, delegating authority and personalizing responsibility, created and published a library of technical requirements and conditions for the product, and uses a parametric classifier to systematize the selection of analogues of goods from warehouse stocks in the Electronic Store. There is a mechanism of "reorder points" - the creation of stocks of goods for regularly consumed and critical positions. A process approach to the procedure for concluding contracts was introduced, the optimal time frame for concluding contracts with suppliers was established. To control contractual work, the mechanism of setting tasks in the Corporate Social Network TATNEFT is actively used. The logistics of direct deliveries from supplier to customer is being developed.

Review progress in 2019-2020

The company has built up its supply chain capacity with sustainability in mind. Work is underway to improve internal regulations in terms of monitoring the compliance of suppliers and contractors with the Company's requirements for ensuring industrial and environmental safety, occupational health and safety, monitoring social factors and reducing all risks of negative impact on the environment.

Particular attention is paid to joint training programs for Company employees and suppliers and planning interaction, taking into account the aspects of the transition to carbon neutrality, rational environmental management, responsible production and consumption, energy efficiency and resource conservation.
The company is expanding the perimeter of monitoring major suppliers and contractors for compliance with labor rights and social standards.

Focus 2021

In terms of ensuring reliability of supply, we plan to develop the application of international standards and labeling of products and services throughout the supply chain, including labeling of product quality, environmental friendliness, energy efficiency, as well as consistent steps to include carbon neutral labeling in corporate practice.