Supplier Code of Conduct
Chesapeake is dedicated to maintaining an ethical, safe and high-performing supply base. We recognize that working closely with high-quality suppliers and proactively managing supplier relationships are critical to responsible corporate performance.
Our Supply Chain Department, in conjunction with Operations, protects the company by managing the inherent risks associated with supplier relationships. Through robust supplier qualification, sourcing, contracting and performance management processes, we help ensure our suppliers are delivering safe, consistent, efficient and high-quality service to our stakeholders.
Before entering into a business relationship with Chesapeake, we evaluate a supplier's safety and environmental record, its financial performance and other criteria to determine if they are a good fit. Further, the prospective supplier must agree to abide by Chesapeake's Supplier Code of Conduct and to execute appropriate contracts to govern its relationship with Chesapeake.
Our Supplier Code of Conduct mandates that all suppliers share Chesapeake's commitment to providing a safe and ethical workplace and to conducting operations in an environmentally responsible manner. It also identifies methods for reporting concerns and ethical issues. Suppliers agree to sign and abide by the principles found in our Supplier code during the qualification process.
Supply Chain monitors the performance of active suppliers using a risk-based approach. Suppliers with higher risk profiles are re-evaluated more frequently, allowing for faster response should a supplier violate our Supplier Code or otherwise not meet performance standards.
A key outcome of utilizing and enforcing the Supplier Code is a safe work site. For example, the possession or use of drugs and alcohol is strictly prohibited on company locations. Suppliers and their employees agree to these standards, and Chesapeake's Security team monitors sites regularly for compliance.
Certain strategic suppliers also participate in Chesapeake's Supplier Performance Management Program, a scorecard system evaluating each company's operational, financial and health, safety, environmental and regulatory (HSER) performance while working with Chesapeake. Through this program, suppliers are encouraged to provide feedback to Chesapeake during business review meetings. These two-way performance discussions focus on new ways to collaborate and improve our performance.
In support of our company's core values of commercial focus and change leadership, Supply Chain recently improved our Enterprise Procurement Policy and Contracts Policy to increase accountability. These policies help ensure that all goods and services are contracted through Supply Chain, enabling proper legal review and appropriate management approval. Also, these policies enable systematic price validation of invoices to prevent overbilling. In 2019, all Chesapeake employees completed online training covering these policies to increase the organization's knowledge and awareness of the appropriate procurement channels for goods and services and how to contract with outside parties.
In 2019, we acquired WildHorse Resource Development Corporation (WRD), integrated it into the company as the Brazos Valley (Texas) business unit and were introduced to a new suite of suppliers. We worked diligently to identify, evaluate and contract with ethical, safe and high-performing suppliers who are aligned with Chesapeake to help achieve corporate performance objectives.
As a result, in 2019 Supply Chain negotiated over $25 million dollars in cost savings through direct negotiations and sourcing events. These efforts contributed to the company-wide supply chain savings of $67 million.
Another change resulting from our WRD acquisition was the addition of a sand mine operation which enables Chesapeake to self-source sand for completions operations in our Brazos Valley business unit. The logistics required to self-source and deliver sand to our well sites across all business units is now managed by Supply Chain.
Chesapeake’s core values serve as the foundation of our business and an essential element to our success. From sharing best practices to protecting our employees and business partners, we know that top performance can only come when you commit to acting with integrity and character.Learn more