Mapping and Knowing our Suppliers
Our key supply chain which accounts for the bulk of our procurement spend, comprises Crude Palm Oil (CPO) and Palm Kernel (PK) suppliers. Currently we source from over 400 third-party mills and 44 GAR-owned mills. These in turn source from estates, dealers/brokers and thousands of smallholders.
Since adopting our Forest Conservation Policy (FCP) in 2011 to delink deforestation and palm oil production, GAR has worked on ensuring a “no deforestation” footprint, focusing initially on our own mills and estates including plasma smallholdings. In 2014, GAR expanded the scope of its policies to include its entire supply chain. The 2015 GAR Social and Environmental Policy (GSEP) formalises and articulates this commitment to responsible palm production under the section “Marketplace and Supply Chain”.
We seek to know and understand the practices of our suppliers in producing, procuring, handling and processing palm Fresh Fruit Bunch (FFB) and producing CPO and PK entering our eight downstream facilities in Indonesia. Through engagement and collaboration with our suppliers we seek to help them adopt and strengthen their responsible palm practices.
By the end of 2015, we completed a major initial step in mapping our supply chain to the mill. We know the locations and relevant details of all palm oil mills that supply CPO and PK to our downstream locations:
|No||Name of Facility||Location|
|1||Belawan Refinery and Kernel Crushing Plant||North Sumatra|
|2||Dumai Bulking Station||Riau|
|3||Lubuk Gaung Refinery and Kernel Crushing Plant||Riau|
|4||Marunda Refinery||West Java|
|5||Surabaya Refinery||East Java|
|6||Tarahan Refinery and Kernel Crushing Plant||Lampung|
|7||Tarjun Refinery and Kernel Crushing Plant||South Kalimantan|
We have listed the mills supplying the downstream locations in mill reports that can be accessed in the Supply Chain Maps on this dashboard.
In 2017, we achieved another significant milestone when we achieved 100 percent Traceability to the Plantation (TTP) for all GAR mills. We then started working with our third-party suppliers to implement TTP. At the end of 2018, over 50 third-party suppliers had reported full TTP. This means that over 60 percent of our palm supply chain is now fully traceable. We expect to complete the full TTP process with our suppliers by end 2020.
Helping our suppliers become sustainable
Through mapping the location of our suppliers, we are able to obtain the geospatial location of our third party mills, which gives us an indicative area of the origin of its FFB. We can then examine their location against maps of relevant areas of concern such as legally protected areas, peat areas, forest areas, and High Conservation Value (HCV) areas. Combined with other publicly available information, this enables us to prioritise suppliers requiring support in complying with our sustainability policy. Our focus on priority suppliers is the first step in our commitment to extend support to all our suppliers and help them adopt responsible practices.
Getting to know suppliers through site visits
Site visits to our suppliers are critical for us to know and understand our supply chain. These visits also allow us to gather information on the sources of the FFB that are processed and the sustainability practices adopted by our suppliers. GAR supplier assurance teams supported by our implementation partner, TFT, are using the information to develop action plans to help our suppliers adopt and implement better practices that are aligned with GAR’s GSEP.
Since 2015, we have visited over 70 suppliers.
Deepening the transformation of our supply chain
Mapping the entire supply chain directly to the plantation enables us to better know the plantation owners, workers, farmers and intermediaries involved in supplying our raw materials. Our aim is to ensure that our entire supply chain is operating in line with our sustainability commitments.
GAR recognises that the efforts needed to accomplish TTP by our suppliers is complex. A mill that sources mostly from external plantations and independent farmers is likely to have to put in more effort than an integrated mill which only buys from its own/affiliated estates. There are also mills who deal with intermediaries/FFB agents who accumulate FFB from many independent farmers.
We are working with our suppliers in devising practical action plans to achieve TTP. The inclusion of independent farmers and other intermediaries involved in FFB trade is an essential part of this process.
A mill achieves TTP when they meet the following criteria:
- They can identify all the plantations from which they source palm oil FFB, which they receive and process in their mills. This includes having relevant information such as details of ownership and exact location.
- They have processes in place to document the movement of the FFB from these plantations to the mill, including chain of custody documents when the FFB ownership changes hands from farmers to any intermediaries before entering the mills weighbridge.
Achieving Progressive Traceability
GAR aims to progressively achieve traceability to the plantation for its entire supply chain. Our action plan comprises two phases:
- Establishing TTP in GAR’s own mills including FFB procured from third party suppliers - we completed this process by end-2017 as targeted.
- Establishing traceability to plantation for third-party mills which supply to us. We aim to complete this process by end-2020.
Reporting TTP for GAR’s own mills
GAR reports the proportion of FFB processed in GAR’s own mills that are traceable to the plantation on a quarterly basis. For FFB received to be considered traceable to plantation the following information needs to be provided and verified:
- Information of the plantations supplying FFB to the mill:
- Company/owner of the plantation
- Address of the plantation
- Maps/geospatial information of boundaries of the plantation
- Area of the plantation
- Percentage of FFB received by each mill from this plantation. This is derived from volumes received from the estate as a proportion of total volume received by the mill in a quarter.
We work with our implementation partner TFT to compile and verify this information and report on our TTP on the GAR Sustainability Dashboard. We will also work with peers in the industry, the Roundtable for Sustainable Palm Oil (RSPO) and the Indonesian Sustainable Palm Oil (ISPO) as well as other relevant stakeholders in establishing processes and standards which will enable independent third party verification to be undertaken in the future.
GAR also publishes quarterly reports on traceability for all GAR mills on the Sustainability Dashboard.
Enabling third party suppliers to achieve TTP
GAR will work with our third-party suppliers to help them develop their action plans to map their supply chain to the plantations. These third party suppliers include:
- Third parties supplying FFB to GAR mills:
- Third party plantations who supply FFB into GAR Mills
- Independent smallholders, who supply FFB into GAR Mills. The legal definition of smallholder in Indonesia are farmers who own plantations with a maximum area of 25 hectares.
- Intermediaries: FFB agents or dealers who supply FFB into GAR Mills that they have procured from other third party plantations or independent smallholders.
- Third party mills supplying palm products to GAR refineries which in turn also procure from a variety of sources:
- Own/third party plantations;
- Independent smallholders;
- Other intermediaries handling FFB.
Reporting templates to capture information needed from the suppliers’ FFB sources will be developed. We also aim to help improve chain of custody documentation to record the flow of FFB from plantations to mills.
Timelines and milestones
GAR intends to adopt a continuous improvement cycle, by which we will review our performance throughout the process and adapt our approach to best tackle the challenges in taking this work to the scale of our entire supply chains.
|Commence Traceability to Plantation Reporting of GAR Mills:
|Commence Pilot on Third Party Suppliers:
|Commence Traceability to Plantation Reporting of Third Party Suppliers
|GAR mills achieve 100% traceability to plantation by end-2017.||X|
|Third party mills report traceability to plantation to incorporate traceability of FFB procured from intermediaries/FFB dealers.||X|
|All GAR facilities achieve full traceability to plantation by end-2020.||X|