109 O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT Credit Terms Thai AirAsia views credit terms as crucial to consistent business operation in our current phase of business recovery. AirAsia’s standard credit term is 30 days but the Company determines credit terms with some suppliers depending on factors such as the duration of the business relationship, product type, sales volume, product quality and size of the supplier’s business (small, medium or large). The Company’s credit terms are set appropriately for the sustainable operation of its suppliers. However, due to the majority of the Company’s costs being immediate in 2022, the actual credit term observed in the year was below its policy at an average 30 days. Green Procurement Thai AirAsia makes efforts to procure products and services from local suppliers to support and boost the country’s industries as well as to reduce the carbon emissions that would result from international transport. Domestic Procurement Once an evaluation is completed, the procurement department will analyse the supplier’s efficiency and use the information for future procurement decisions. All our critical suppliers passed the evaluation in 2022. Data collected from our evaluation will be used to support each supplier in uplifting their standards in the future. The Procurement Department prioritises suppliers by procurement value and importance to the Company. Each year, the critical supplier is subjected to an evaluation of its business ethics, legal compliance, operational performance, financial risks, environmental risks and sustainability risks. Procurement communicates its evaluation to the supplier so that the supplier may draft a plan for improvement of the relevant areas. With the return of travellers and flights, Thai AirAsia’s spending on local suppliers increased from Baht 3,780 million in 2021 to Baht 8,200 million in 2022. The Company will continue to support local businesses to contribute to the economic recovery of the nation. Supplier Performance Evaluation Thai AirAsia's supplier evaluation process incorporates ESG criteria to ensure that suppliers are in line with the Company's business standards. The Company carries out annual performance evaluations of its suppliers, based on standards of each supplier. Evaluations cover: Product Worthiness Product Quality On-Time Delivery After sales service and response Innovation Initiative EHS and Sustainability Performance Note: 1 Due to COVID-19, operations were suspended resulting in no critical suppliers for 2021. 1 4 2 5 3 6 Policy Credit Term (Days) Average Actual Credit Term in 2022 (Days) 2020 2021 2022 Amount spent on local suppliers (Baht million) 2020 556 2021 395 2022 391 Number of Local Suppliers Number of domestic and international critical suppliers Number of critical suppliers that passed ESG selection and evaluation 12,000 3,780 8,200 2020 4 2020 4 20211 0 20211 0 2022 4 2022 4
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