supply chain management
In addition to efficiency and operational excellence, Chevron’s approach to managing our supply chain focuses on two elements that are critical to maintaining our commitment to being a good partner:
- Creating prosperity through local and inclusive economic opportunity: Our supply chain is one of our most powerful tools for creating prosperity in the communities where we operate around the world.
- Encouraging our partners to meet high standards of safety, social and environmental performance: Our expectations of our contractors and suppliers as well as the standards we hold them to also help raise the bar for thousands of companies around the world on issues like respecting human rights and health, environment and safety practices.
creating prosperity through local and inclusive economic opportunity
Chevron spent $39 billion in total goods and services in 2016, much of it going to locally owned companies in the countries where we operate – those goods and services are known as local content. The table below offers a sampling of our local content spend around the world in 2016.
sample of chevron's local content spend as a percentage of overall spend in 2016
*Definition of expenditures that qualify as “local content” varies by country.
Chevron recognizes that the positive local impact of our supply chain investments can be amplified by the sourcing decisions of our suppliers. We encourage our major international suppliers of goods and services to form partnerships with local businesses and to maximize the purchase of local goods and services. These joint ventures create an opportunity for the local businesses to gain access to new technology, bring their processes up to international standards and train their people on the latest industry practices.
In Kazakhstan, the Chevron-led Tengizchevroil (TCO) joint-venture collaborates with our international supplier Nabors Industries Ltd., one of the world’s largest oil and gas drilling contractors. With encouragement from TCO, Nabors Industries has partnered with the Kazakh-owned KMG Drilling & Services. The new entity, KMG Nabors Drilling Company LLP (KMG Nabors), is one of the first Kazakhstani drilling companies to meet the standards and requirements of large operators such as TCO and has hired more than 100 Kazakhstani employees to support the contract with TCO. KMG Drilling & Services is also benefiting from the partnership thanks to improved safety processes and practices as well as significant technology transfer. The local company now has two world-class drilling rigs, one of which is the most advanced in the region.
Chevron also seeks to build and maintain a supply chain that reflects how deeply our community values diversity. For example, in the U.S. we have a robust Supplier Diversity/Small Business Program dedicated to developing and promoting successful partnerships with women- and minority-owned businesses. Thanks to those efforts, we spent more than $570 million with woman- and minority-owned businesses and more than $1.8 billion on goods and services from small businesses. Also in 2016, The National Business Inclusion Consortium (NBIC) awarded Chevron the inaugural Best-of-the-Best Award for our outstanding commitment to diversity and inclusion in our supply chain.
encouraging our partners to meet high standards of safety, social and environmental performance
Chevron requires that our key suppliers adhere to all domestic laws and encourage them to align their practices with the International Labour Organization’s (ILO) core principles. On an annual basis, we communicate directly to the executive leadership of several hundred suppliers – selected based on third-party data and objective criteria for evaluating their human rights risk – about the importance of respecting human rights. We take the opportunity to remind these leaders that Chevron expects our business partners to treat their employees and interact with communities in a manner consistent with our Human Rights Policy and the ILO’s core labor right and principles.
Through our Contractor Health, Environment and Safety Management (CHESM) process, Chevron addresses the HES performance of our contractors whenever we qualify and select the companies with which we work. Once a company becomes a Chevron contractor, we engage them to reinforce our HES expectations and monitor their compliance with our requirements. This not only helps keep our contractors’ employees safe and healthy, but also protects our own employees as well as the communities and environments in which we operate.