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 to which we hold them 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 more than $25 billion in total goods and services in 2017, 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 is a sampling of our local content spending around the world in 2017.
sample of chevron's local content spending in 2017
(in $U.S. millions)
*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, 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 500 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 United States we are dedicated to developing and promoting successful partnerships with woman- and minority-owned businesses and small businesses. Thanks to those efforts, we spent more than $587 million with woman- and minority-owned businesses and more than $1.5 billion on goods and services from small businesses. The National Business Inclusion Consortium has honored Chevron with the Best-of-the-Best award three years in a row, since its inception in 2016, 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 encourages them to align their practices with the International Labour Organization’s (ILO) core principles. On an annual basis, we communicate directly with 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 rights and principles.
Contractors are a critical part of the Chevron workforce. On any given day, approximately 75 percent of Chevron workforce hours are contractor work hours. Chevron’s Contractor Health, Environment and Safety Management (CHESM) process establishes clear accountabilities and facilitates active engagement with contractors to help keep them, and our entire workforce, safe. The CHESM process helps us:
- Select contractors that are qualified for specific work activities;
- Ensure Contractor personnel are familiar with Chevron HES practices and procedures;
- Communicate clear HES performance expectations to contractors;
- Ensure active engagement of contractors; and
- Provide a consistent CHESM program to help eliminate health, environment and safety (HES) incidents and injuries involving contractors.