Jun 1, 2023
Ecopetrol’ s Supply Chain Process is carried out through a strategic model focuses on an effective, responsible and a sustainable long-term supply of goods and services, based on a segmented operation in terms of cost, opportunity, assessment, quality, and risk level.
To achieve balanced operations and reduce sustainability risks, Ecopetrol makes an advance management and assessment of the environment to identify and mitigate social and economic conflicts. For this purpose, Ecopetrol develops and monitors different assessments procedures which allows the identification and classification of suppliers with a high-risk potential:
Monitors suppliers´ compliance regarding claims and complaints, incidents reported in site, contract´s economic deviations, late payments, garnishments, and insolvency. This system also supervises the non-compliance impact in Ecopetrol´ s operations (measured by concentration of contracts with Ecopetrol, estimated value of non-compliance obligations and number of workers - exclusive labor force).
Designed by AON and used by Ecopetrol to identify and control risks associated with third parties sourcing, including policy coverage design, negotiation with the insurance market, issuance, and monitoring of polices, among others.
Monitoring system for labor and/or commercial non-compliance obligations of Ecopetrol´s suppliers with its third parties, in order to ensure that the supplier properly manages and closes these breaches and minimizes its negative impact. Its management is carried out in accordance with the existing contractual mechanisms applicable to the respective contracts.
Ecopetrol defines sustainability risk as any event of uncertain occurrence that, if materialized, generates a positive or negative impact for the achievement of organizational objectives at any level of the Company. In accordance with this definition, Supply Management defines it as any event or action with negative impacts on economic growth and social welfare.
Therefore, the Function seeks to achieve balance in operations and reduce sustainability risks through advanced management and regional assessment to identify and mitigate potential social, economic, and environmental conflicts. Some of the risk mitigation strategies implemented by the Supply Chain Management are:
1. As a preventive Supply Chain contractual performance monitoring, the process has implemented an internal control methodology based on three main action fronts:
- Assurance of compliance of regulations, controls and normative in conformity with the contractual obligations.
- Risk analysis for Top contracts (major impact in opeation).
- Comprehensive tests to guarantee the correct contracts planning and execution.
2. Supply chain process contribution for Ecopetrol´s Anti-Bribery Management System (ISO 37001) certification.
3. Periodic updating of the Operational Continuity Plan for the supply processes considering two scenarios which its materialization could mean a highly negative impact on the supply chain:
-Unavailability of Critical Suppliers to operate.
- Unavailability of Corporate and Support processes that are performed by the supply chain function process to ensure actions to mitigate the impact of the first scenario.
4. During the annual risk management cycle risk and its respective control matrix were reviewed and updated, mainly focused on aspects of transparency, fraud, bribery, and corruption events mitigation.