Responsible Procurement
A Promoter of Shared Value
Suppliers have always been Nanya's most important business partners. We aim to enhance cooperation to create greater value and share the value and benefits of cooperation and create a sustainable future.
Statistics
-
100 %
Nanya requires 100% of critical suppliers to complete the self-assessment to control sustainability risks in the supply chain
-
3,315 MWh
Electricity saved through cooperating with suppliers on energy-saving projects was estimated to exceed 3,315 MWh in 2021
-
45.1 million NT$
Refunded a total of NT$45.1 million to migrant workers of suppliers and benefited 2,009 migrant workers
Strategy and Performance
Sustainable Supply Chain Management
Nanya firmly believes that the sustainable growth of supply chains has certain impacts on corporate sustainable development. Therefore, we are committed to developing sustainable supply chains. We actively invest in related resources and cooperate with suppliers to drive sustainable supply chains and achieve shared value.
-
Sustainable supply chain risk managementImplement risk assessment through self-evaluation questionnaires for suppliers, and strengthen supplier risk management through audits and improvement tracking
-
Supply chain cooperation and exchangesPeriodically organize supplier conferences and supplier evaluations on the basis of cooperation and mutual aid, and provide guidance for suppliers to increase social, economic, and environmental benefits, in order to achieve sustainable development of the overall supply chain
-
Improve the sustainability of supply chainsNanya pays attention to environmental and social sustainability issues while pursuing economic benefits, and continues to work with suppliers in projects related to sustainability
-
Non-use of conflict mineralsNanya is committed to a responsible procurement management strategy for the ban on conflict minerals to satisfy current and future market, legal, and regulatory expectations
Sustainable supply chain risk management
Sustainable Supply Chain Management
Nanya established a supply chain management framework. We use sustainability regulations, sustainability risk surveys, on-site sustainability audits/improvement measures, and supplier capability development to manage and control supply chain risks and strengthen suppliers' sustainability performance. We hope to drive suppliers to grow with us and exert more shared value and influence through a series of sustainability management processes.
-
Sustainability regulations
Sustainability regulations
- Supplier Code of Conduct
- Responsible Business Alliance (RBA) Code of Conduct
- Regulations and requirements related to conflict-free minerals
-
Active risk assessment and surveys
Active risk assessment and surveys
- Establish management system for verification and investigations based on the RBA standards
- Inspection items include labor, health and safety, environment, code of ethics, and management system
-
Sustainability risk assessment questionnaire
Sustainability risk assessment questionnaire
- Issue self-assessment questionnaires to major suppliers
- Determine high-risk suppliers
-
On-site sustainability audits/improvement measures
On-site sustainability audits/improvement measures
- On-site audit
- Document review
- Employee interviews
- Issue CAR for discrepancies found in audits
- Follow up on improvement for defects
-
Develop supplier capability
Develop supplier capability
- Organize supplier award ceremonies
Signing the Supplier Code of Conduct
For our suppliers to understand and implement corporate sustainability step by step, we formulated the Letter of Compliance with Corporate Social Responsibility Requirements for Suppliers and Subcontractors of Formosa Plastics Group (Letter of Compliance), and provided suppliers with comprehensive training and education. The training coverage rate was 100%. The Letter of Compliance includes the Supplier Code of Conduct stipulated by Formosa Plastics Group, the RBA Code of Conduct, and regulations and requirements related to conflict-free minerals. Suppliers have to undertake to abide by the corporate social responsibility regulations in the Letter of Compliance before signing contracts with the Company.
Supply Chain Management Strategy
When Nanya is selecting suppliers that directly produce materials, the suppliers must go through rigorous evaluations and reviews in addition to third-party verifications, including ISO 9001 and ISO 14001. We use a digital supplier assessment and management system to conduct assessment of the Company's six supplier management strategies: "quality, delivery, services, costs, technology, and sustainable operations". The score for sustainable management indicators (sustainable operations) accounts for 10% to ensure compliance with the Company's requirements for sustainable supply chain development.
- Note 1: The five most important supplier management strategies are: "quality, delivery, service, technology, and sustainable development"
- Note 2: Sustainable operations
- Green environment evaluation items include the ISO 14001 certification, energy and resource conservation, reduction in greenhouse gas emissions, and waste recycling rate.
- Corporate social responsibility evaluation items include compliance with local labor laws and regulations.
-
Quality
Stable yield
Decrease in variates -
Delivery
On-time delivery
Multiple backup sources -
Services
Quick response
Pro-activeness -
Costs
Reduction in waste
Increase in benefits -
Technology
Front-end development
Risk forecasts -
Sustainable operations
Green environment
Social responsibility
Supply Chain Sustainability Risk Survey and Assessment
To ensure the supply chain's implementation of sustainability, Nanya distributes Technology Corporation Supply Chain Code of Conduct Questionnaire to major suppliers each year. All major suppliers have to conduct self-assessment, fill in the questionnaire, and hand it back. Suppliers are required to reply the implementation status of various sustainability issues on the questionnaire and provide certification documents issued by related management systems. The results of the suppliers' self-assessment questionnaires shall be adopted as the basis of sustainability risk management and as reference for Nanya's assistance to achieve supply chain sustainability. The content of questionnaire mainly focuses on potential impacts that suppliers might make on the three aspects of economic, social, and environmental. We analyze the results of the suppliers' self-assessment questionnaires, screen 5% of high-risk suppliers for onsite audits, and provide assistance for improvements.
-
Economic aspect- Failed to establish a conflict-free minerals policy
-
Social aspect- Failed to establish regulations prohibiting discrimination
- Failed to prohibit the use of child labor and provide remedies in case of unintentional use
- Failed to explicitly state that anonymous reports are acceptable
- Do not have any mechanisms for handling anonymous complaints and feedback
- Failed to establish complete personal data protection regulations and letter of consent for use of personal data
-
Environmental aspect- Failed to implement identification procedures of safety and health regulations
- Failed to implement identification procedures of environmental protection regulations
Supplier Sustainability Audit
In addition to screening high-risk suppliers for audits based on the results of self-assessed Nanya Supply Chain Code of Conduct Questionnaire each year, to strengthen sustainability risk management of supply chains, conducting onsite audits for critical suppliers at least once every three years starting in 2020. As of the end of 2021, a total of 67 critical suppliers (including high risk suppliers) have been audited, in order to ensure the supply chain's implementation of sustainability.
The audit coverage rate of high-risk suppliers was 100% in 2021. We audited 20 high-risk suppliers (including 15 high-risk major suppliers and 5 high-risk non-first tier critical suppliers) on their sustainability performance. The audit results showed that high-risk suppliers had 81 non-compliance items, but high-risk non-tier 1 suppliers had zero. In regard to non-compliance items, the Company issued a Corrective Action Request for follow-up and improvement.
Sustainability audit table of high-risk suppliers
Sustainability audit table of high-risk suppliers
Supply chain cooperation and exchanges
Nanya uses the annual assessment to convene seminars and discuss requirements regarding production with suppliers. We also educate suppliers about related sustainability topics. In addition, we organize award ceremonies for outstanding suppliers based on the results of the annual assessment. During the ceremonies, senior executives directly communicate to suppliers regarding goals and requirements of the supply chain for quality, technology, delivery, services, costs, and sustainable operations. We compared suppliers of raw materials, components, and equipment in 2021 and presented awards to 8 outstanding suppliers.
Improve the sustainability of supply chains
Human rights risks of contractors' migrant workers
We continued to implement the project of human rights protection for migrant workers in 2021. The project targets the top 25% critical suppliers in terms of transaction amount and employee migrant workers, aspects include: Zero payment (including commissions, fees of accommodation, transportation, documentation, and health checkups), installing lockable safe boxes for storage of important documents and possessions, direct remittance of wages to employees' bank accounts, free access to working and living space, holding religious and cultural activities, and preventive measures against infectious diseases. In 2019-2021, the amount refunded totaled approximately NT$45,100,000, benefiting 2,009 migrant workers.
Implementing energy-saving activities
The Company has actively promoted energy management programs for years. During the sustained promoting process, we have considered sharing our experience of energy management improvements with suppliers with relevant equipment, so the suppliers may implement effective energy-saving programs to lower their energy consumption. In regard to the selection of suppliers, we focused on 14 suppliers with more energy consumption and relevant equipment, such as packaging and test outsourcing factories, material and mask suppliers, and promoted seven energy management programs with high power consumption and of obvious benefit to power conservation, including implementing smart energy conservation into chilled systems, saving energy on the side of refrigerants in ice water machines, and replacing impellers of CDA compressors. We saved over 3,351 MWh of electricity and reduced emissions by 1,664 metric tons CO2e in 2021.
Nanya held meetings promoting the use of renewable energy by suppliers, in order to accelerate the use of renewable energy to replace fossil fuels, and achieve energy transition to control global temperature rise within 1.5°C. Many suppliers responded and will purchase 23 million kWh and above of green electricity before 2023.
Management of Conflict Minerals
Nanya is committed to the management of conflict-free minerals and responsible sourcing strategies to meet the expectations of current and future markets, laws and regulations. To meet the requirements of conflict-free metals, shoulder the responsibility of the Responsible Business Alliance (RBA) and meet the objectives of the Responsible Minerals Assurance Process (RMAP). Nanya began adding the Statement of Compliance with RMI Policy and Conflict Mineral-Free on its product labels in 2022, declaring that none of our products use conflict minerals.
