Annual Integrated Report 2019

Responsible procurement Value-add processing Responsible product sourcing We purchase from thousands of domestic and international suppliers. These suppliers include large corporates selling branded products, to the own brand manufacturers which produce and supply Bidfood’s own brand range. In order to meet growing demand for locally sourced products, we increasingly source specialty, fresh and seasonal products from small to mid-sized producers. As a wholesaler of food and non-food items we may be exposed to liability claims. How we manage this We take our responsibility for transparency and ef ciency in our supply chain very seriously. We ensure that our practices re ect the highest standards of integrity, respect and safety for supplier and other partners. We only engage with suppliers who meet our standards, respect our values and would provide the transparency required should an evaluation of their environment be required. No single source of supply individually accounts for a signi cant source of purchases made by a particular Bidfood operation. Most of our suppliers are globally recognised and reputable manufacturers, certi ed to best food and safety standards. Bidcorp conducts rigorous ad hoc supplier assessments to ensure compliance with food quality standards and importantly with ethical work place practices. We have global group liability insurance policies in place. Own brand product range Products packaged under our Bidfood own brands have either been contract manufactured and packaged according to our speci cations, or processed in-house and packed in line with customers’ needs. How we respond For in-house manufacturing, we engage experienced production teams, who have the knowledge and expertise to implement best practice food processing standards. For contract manufacturing quality assurance teams certify the manufacturing and processing plants where these products are packaged, enforcing global quality control standards and assuring the quality of all supply sources to meet our rigorous requirements. Product recall processes have been revised to include stricter protocols around customer contact and control of affected stock, using internal IT systems to facilitate tracking and impact of product reach. Specialty product recall insurance policies are being implemented in countries where in-house processing is prevalent. Product cost volatility Foodservice distribution is characterised by high inventory turnover at relatively low pro t margins. Product availability at the right quality, right quantity and right price is never guaranteed. Pro t may be negatively affected by product cost volatility. How we manage this We typically do not enter into long-term customer agreements, therefore our businesses are able to react quickly to changes in product pricing. We adopt a decentralised model where local purchasing decisions are based on the quality and price of the local product, and according to customers’ ever-changing needs. We are agile enough to respond to our customers quickly and easily. Food safety Inherent to the industry, outbreaks and contaminations are experienced from time-to-time. Industry-wide awareness relating to food safety management has been heightened. Bidfood has always held food safety as a top priority but has used this opportunity to engage with our suppliers, customers and end consumers throughout the group to ensure the food safety best practices are adopted. How we respond Strengthening positive and constructive relationships with governments and other industry players in order for us to anticipate and respond to regulatory and policy developments. There is a strong drive to deliver on transparent and prompt communication with stakeholders along the full supply chain, as well as proactive customer engagements and engaging food safety specialists throughout the group, to ensure the highest standards are implemented. What it may mean to us • Consumer illness • Product recall • Reputational brand damage What it may mean to us • Margin erosion • Lack of product availability • Loss of customer con dence as prices are adjusted to align with volatility What it may mean to us • Lack of in-house manufacturing expertise • Risk of food contamination • Reputational damage due to sub-quality products • Legal action including management time and legal costs What it may mean to us • Consumer illness • Product recall • Reputational brand damage • Heightened regulatory scrutiny 10 / Bid Corporation Limited Annual integrated report 2019