Value Chain (suppliers and customers)

Understanding the needs and potentialities of our customers, with the purpose of offering sustainable products and solutions, through a relationship that favors long-term connections. Supplier management in accordance with the company’s social and environmental criteria, aiming at the development of local suppliers and the reduction of adverse impacts throughout the value chain.

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  • Supplier management

    Context:

    Suzano’s Strategic Procurement Vision is to enhance value creation through solutions that integrate and transform the Supply Chain. In this way, Suzano has a structured process in place for managing and training its suppliers that is also based on its Culture Drivers. This process includes a series of activities to guarantee not only the supply of products and services, but also a relationship based on ethics and integrity with these fundamental links in our value chain. Below, we highlight each of our operational fronts regarding supplier management.

     

    Supplier development

    In 2020, we consolidated the company’s supplier development and training program: SEMEAR. Furthermore, we gave continuity, as sponsors, to the PQF and PRODFOR programs in the states of Mato Grosso do Sul and Espírito Santo, respectively, aiming to positively impact, encourage, and guide the development of participating companies.

    More than just having increasingly better partners, we want to help nurture what is good for the world: dreams, creative solutions, the local economy, and conscious entrepreneurship. To this end, in specific units, we have some programs in place for the development of suppliers, as detailed below:

     

    Semear Program

    In 2020, we selected 136 local micro and small enterprises in the logistics segment from among Suzano’s suppliers to receive guidance on how to have structured growth through best management practices, method, innovation, and principles of legal and social and environmental responsibility. That’s what we believe in, always respecting the nature of each organization.

    The first class of this program graduated in December 2020, in the state of Bahia. A total of 41 participants took part, and of these, 8 were recognized in the criteria for participation and completion of the training offered, with a reduction in the economic, financial, and labor risk class and financial dependence of the companies. The program is ongoing in the states of Mato Grosso do Sul, Espírito Santo, and Maranhão, with completion scheduled for March and April this year.

    As part of the SEMEAR Program’s program content, in 2020 we entered into a partnership with SEBRAE and held an engagement event with the topic “Social and Environmental Responsibility for Suppliers in the Transportation Segment” in the state of Bahia. For 2021, we already have an agenda planned for the states of Mato Grosso do Sul, Espírito Santo, and Maranhão.

     

    Integrated Supplier Development and Training Program – Prodfor (ES)

    Also known as Prodfor, the program represents the union of several companies (called sponsors) in the state of Espírito Santo, aiming to promote the development and training of suppliers of goods and services. Suzano is one of the sponsors of the program, contributing not only with the company’s own suppliers, but also with those that work for other organizations.

    Several actions are carried out with various goals, such as developing local suppliers, stimulating technical training, and sharing best management practices with the organizations in the program. The sponsors analyze and approve the registration of suppliers who wish to participate in the Program and who are committed to all stages of the project. The program has the support of the Federation of Industries of the State of Espírito Santo (FINDES) and the executive coordination of the Instituto Euvaldo Lodi (IEL-ES).

     

    Supplier Development and Training Program – PQF (MS)

    Also known as PQF, the program was created to adapt these organizations in the state of Mato Grosso do Sul both to basic management requirements and to the international standards required for negotiating with large industries.

    The program has several sponsoring companies, including Suzano. The program is supported by the Federation of Industries of the State of Mato Grosso do Sul (FIEMS) and coordinated by Instituto Euvaldo Lodi (IEL-MS) and the Brazilian Service in Support of Micro and Small Enterprises (SEBRAE).

    In addition to the initiatives already mentioned, in 2020, the construction of our new plant for the production of toilet paper was started in the municipality of Cachoeiro do Itapemirim, in the southern region of the state of Espírito Santo. In this way, we are also working directly on the development of companies in the region in question, in order to create a local supply chain for this new operation.

     

    Procurement processes

    At Suzano, we have two distinct procurement processes: centralized, under the responsibility of the Procurement team, and decentralized, under the management of different areas of the company.

    Considering centralized and decentralized suppliers, in 2019, we had 10,255 active suppliers, compared with 35,964 registered in our database. Both data consider headquarters and branch. In that same year, spending on suppliers was approximately R$ 17 billion.

    In 2020, we engaged a total of 11,358 active suppliers, compared to 30,015 registered suppliers in our database. In the same period, we spent R$ 20.22 billion on purchases. Of this total, centralized contracts account for R$ 10.9 billion, and transactions with local suppliers—i.e., those with headquarters or branch in the areas where Suzano operates—account for 40% of the total cost.

     

    Suppliers screened using social and environmental criteria

    At Suzano, the registration and certification process for new suppliers considers their scope of activity to define the criteria by which they will be analyzed. In any case, for suppliers to be hired, registered, and certified, all of them must invariably sign a commitment to the Standards of Legal and Social and Environmental Responsibility established by the company. (Learn more about the new suppliers that were screened using environmental criteria

    In the supplier performance evaluation process, audited internally and externally (according to ISO 9000, 14000, 18000, INTI, SMETA, Clients), Safety, Environment and Sustainability requirements are applied to 100% of the regular service providers (those performing services for more than 90 days at Suzano’s premises), and suppliers may be classified under “degree of excellence,” “approved,” “approved with restrictions,” and “not approved.”

    In the case of suppliers that operate with dedicated third parties in Suzano operations, we perform monthly monitoring, which we call COA (Controle de Obrigações Acessórias – Control of Ancillary Obligations). This is a structured process that complies with the labor legislation and other conditions assumed due to the free negotiation of agreements and collective labor agreements. We also have in place a field audit process, through which we interview part of the employees of companies that provide regular services to investigate possible deviations. After a period of 12 months, technical managers globally assess suppliers from a social standpoint. In order to tackle the deviations identified, an action plan may be implemented or, as a last resort, the business relationship may be terminated.

    Additionally, Suzano considers part of its suppliers to be critical. That is, suppliers of inputs and services that can generate significant impacts on quality, process performance, equipment safety and integrity, on the environment and on the health and safety of employees. In 2020, this group accounted for 4% of the company’s total number of suppliers, corresponding to 41% of the procurement budget. Thus, different measures are in place to ensure a good relationship with these suppliers and reduce the risk of impacts on their end.

    For these critical suppliers in the categories of regular services, inputs, forestry and industrial raw materials, we apply an annual performance evaluation. This evaluation considers, among several requirements, environmental and social criteria. The environmental criteria address operational processes, occurrences and environmental impacts, and response to occurrences. Social criteria, on the other hand, evaluate impacts of this nature generated by activities and respect for issues related to Human Rights. Our goal is to develop a Sustainable Procurement Policy, based on which we will review the sustainability criteria currently applied in supplier assessment and expand the range of suppliers assessed using these criteria.

    For more details on critical suppliers, refer to indicator “Critical suppliers.”

     

    Highlights in supplier management in 2020

    Environmental compliance

    A Pilot Project for Environmental Compliance of Suppliers was implemented in 2020. From this project two suppliers representing each forestry operation ( Forestry, Harvest, and Logistics and Roads) were chosen to be registered. In this way, the environmental documents pertaining to the activities they perform at Suzano were checked, and for those issues that were pending or not approved, we developed an action plan. These action plans will be verified and monitored by the responsible teams, in order to seek compliance with the applicable environmental legislation.

    Also this year, we started Suzano’s Responsible Supplier Management Program (RSM), whose goals are:

     

    • Develop a network of sustainable partners.
    • Improve the performance of suppliers.
    • Create and share value with the chain.
    • Build a strategy for developing long-term sustainable partnerships.
    • Integrate the activities of suppliers with the other processes in the chain with a focus on innovability (Innovation + Sustainability).
    • Achieve good coordination of the procurement flow, from registration to the termination of the relationship with the supplier.

     

    The program will be fully implemented in up to 4 years and includes engagement actions through webinars, workshops, and events related to sustainability. To this end, we will focus on topics such as environment, emissions, waste, and water; human rights and working conditions; data privacy; health and safety; diversity and inclusion, accessibility, and support for minorities; the future of work and the extent of the consequences of digitalization and automation; ethics, integrity, anti-corruption, and anti-favoritism; and collaboration, co-innovation, and fostering innovation for responsible businesses and social impact.

    Lastly, we also went ahead with the implementation of the Ímpar System, a Supplier Management system focused on controlling the level of compliance with suppliers’ environmental requirements, by means of licenses, authorizations, permits, among other relevant documentation. Our goal for 2021 is to implement 100% of the system.

     

    CDP Supply Chain

    In 2020, we also entered into a partnership with the CDP Supply Chain Program, of the Carbon Disclosure Project (CDP), for a pilot project in 2021 focused on climate change topics in our supplier relations. In this way, we will work to better manage this topic and stimulate the reduction of greenhouse gas emissions in our supply chain year by year, in line with our commitment to becoming even more climate positive (removing more carbon from the atmosphere than we emit, directly or indirectly).. In all, 100 suppliers from categories considered critical in terms of greenhouse gas emissions will participate in the project.