Supply Chain Management
Performance
98
%Identified 91 high-risk suppliers and conducted onsite second-party and third-party audits in 2023. We found a total of 829 non-conformance in audits and the average improvement completion rate for non-conformance was 98%.
23
millionMonetized successfully the impact of supply chain management in 2023 with an impact exceeding NT$23 million by calculating the medical costs of overtime working hours and the Company’s compliance with ISO 14001 system certification. The impact assessment helps us measure the priority of management resource investment and optimize the supply chain management process.
440,000
timesConducted more than 2,000 interviews and provided labor rights protection for more than 440,000 times in audit management in past years.
In the supply chain management process of ASUS, in addition to considering traditional aspects such as quality, delivery, cost, and service, the sustainable performance of suppliers is regarded as an important management indicator. Based on the ISO 20400 sustainable procurement guidelines, we will identify and strengthen the management of high-risk suppliers from the perspectives of human rights abuses, labor safety, environment, and integrity operations that may occur in the stages of raw material mining, parts manufacturing, and product assembly. This management is reflected in ASUS’ environmental, social, and governance sustainable management strategy, which is expected to drive the sustainable transformation of the supply chain.
ASUS’ sustainable procurement passed the third-party performance evaluation of SGS with ISO 20400 standards and obtained the world’s first ISO 20400 certification with a high rating in 2020, becoming a benchmark case of sustainable procurement. It proves that ASUS implements sustainability in its procurement strategy and procurement practices. We are building up a sustainable supply chain with the influence of ASUS’ purchasing power. We will evaluate the reactivation of sustainable procurement performance evaluations based on changes in the management framework.
Management Standard
Supplier Code of Conduct
ASUS became a Full Member of Responsible Business Alliance (RBA) in 2018. We demonstrated our resolve for supply chain management and take on greater responsibilities as the producer.
We formulate the ASUS Supplier Code of Conduct which is based on the RBA Code of Conduct and includes the PAS7000 and SA8000 standards to strengthen the protection of young and female employees. We require not only the suppliers but also their upstream to comply with the same requirements. All new suppliers who wish to become our business partners must sign the ASUS Supplier Code of Conduct, showing that they understand and will comply with ASUS' sustainability requirements.
All new suppliers who wish to become our business partners must sign the Declaration of Supplier Code of Conduct, showing that they understand and will comply with ASUS' sustainability requirements. In 2023, 100% of new suppliers have signed the Declaration of Supplier Code of Conduct. We take the following measures in supply chain management:
- Formulate Supplier Code of Conduct, clearly outlining ASUS’s sustainability requirements for suppliers
- Conduct regular assessments of suppliers’ sustainability performance to ensure compliance with the Code of Conduct
- Assist suppliers in enhancing their sustainability management capabilities to reduce environmental impact and improve labor rights
We also continue to communicate and cooperate with external stakeholders on supply chain management issues, actively participate in international initiatives, demonstrate our determination in supply chain management, and promise to assume greater producer responsibility.
The framework-Classification Management
The management consists of three phases: new supplier approval, continuous risk management, and performance evaluation. The targeted suppliers cover tier 1 product assembly, tier 2 component manufacturing, and tier 3 mining of raw material.
Step1.
New Supplier Approval
The entrance barrier for becoming ASUS’ qualified suppliers are: possessing ISO 9001 and ISO 14001 certifications, signing the Code of conduct compliance declaration, and passing the audits on Quality, Hazardous Substance Free on Quality, Hazardous Substance Free (HSF) and ESG.
Step2.
Continuous Risk Management
ASUS' ongoing annual risk management audits cover corporate social responsibility, hazardous substance-free practices, and eco-label management issues. ASUS classifies suppliers with continuous trading as well as those with a quarterly procurement amount reach NT$2.5 million in different level for management. ASUS considers three dimensions of risk: national geopolitics, industry characteristics, and product risks. Based on these, we have developed risk management indicators that include: RBA Code of Conduct, hazardous material system and process management, brand management, brand reputation, labor protection, continuous improvement, and management systems. We conduct onsite second-party and third-party audits for suppliers and assembly facilities with high-risk in their self-assessment results, and document reviews for medium and low-risk suppliers. These audits ensure that suppliers comply with ASUS' requirements on sustainable supply chain management.
In addition, all suppliers must cooperate in the annual survey for responsible minerals procurement, greenhouse gas, water footprint, and waste. We manage potential risks in labor, health and safety, environment, integrity, and ethical standards of suppliers through audits and investigations to avoid the negative impact on governance, environment, and society that could to the supply chain operations.
Step3.
Performance Evaluation
Besides the quality, cost, technology, delivery, and service, we also include sustainable indicators such as ethics, environmental protection, labor rights and health and safety in the Quarterly Business Review (QBR) as an important basis to allocate orders and determine whether to continue the partnerships; suppliers with good performance will be given more resources. ASUS uses its influence to drive the supply chain for continuous improvements. Furthermore, if a supplier violates any corporate social responsibility requirements and significantly impacts the environment and society in the country of operation, ASUS reserves the right to terminate or dissolve the contract or collaboration at any time.
Focus of Attention
Human Rights Protection
Respect for human rights is a core value for ASUS. It is exemplified in our Code of Conduct and applies to all global operations, which include our supply chain. All ASUS employees are treated with respect and fairness, and suppliers are required to comply with all relevant legal, social, and environmental standards. We conduct a full examination of the rules of hiring in suppliers’ companies and set high standards for labor rights in the ASUS Human Rights Declaration. We also take the following actions:
Set high standards for labor rights in the ASUS Human Rights Declaration
Establish the Code of Conduct
The ASUS Supplier Code of Conduct does not allow the use of child labor or any form of forced labor.
Code of Conduct Compliance Declaration
ASUS requires all suppliers to sign and abide by the ASUS Code of Conduct Compliance Declaration and the Human Rights Statement to ensure that tier 1 suppliers meet the RBA Code of Conduct.
Human Rights Due Diligence
We conduct due diligence on our supply chain for their human rights risks. The level of risks are graded based on key indicators such as employment procedures, contract management, wages and benefits, hour warnings, forced labor, freedom of movement, free association, humane treatment, anti-discrimination and anti-harassment, and collective bargaining. RBA-qualified auditors will audit high risk suppliers on their human rights management and labor employment conditions. They will further interview with random workers to examine their working conditions and provide ASUS with direct contact methods. This can prevent the interviewed workers from being oppressed or revenged by their company or superiors for reporting.
Information transparency and disclosure
Transparent disclosure of annual supply chain management performance, including due diligence, risk assessments, audit management, and supplier engagement.
Supplier training
We regularly organize training for suppliers, and invite qualified auditors from impartial third-party institutions to share practical experience and methods for improvement for deficiencies to help suppliers implement continuous and effective improvement for deficiencies.
Strengthening Partnership
Engagement and Communication Program
The supplier conference and training have benefited more than 6,552 times and exceeded 727 hours.
To enhance suppliers’ awareness of sustainability issues and the ability in responding to risks, ASUS organizes the conference and assistance meeting for suppliers on a regular basis to convey our management requirements and strengthen the partnership with the supply chain. We held one supply chain conference and two forums - human rights and carbon reduction in 2023. We invited key suppliers and assembly facilities to participate and also invited the third-party experts to give keynote speeches on international human rights laws, carbon management trends, and challenges. The suppliers actively participated in the forums this year and more than 90% of the participants believed that the forums facilitated more comprehensive communication of issues and provided sufficient time for participants to exchange ideas on core issues. We delivered the records of the forum to suppliers via eNews so that suppliers that have not attended can obtain key information and expand communication.
Online Courses
To encourage our suppliers to receive ISO certification and familiarise with the RBA Code of Conduct, we prepared online courses at ASUS' ESG website - Digital Learning Courses for suppliers to watch online or download. The courses include:
- ISO 14001 Environmental Management System
- ISO 45001 Occupational Health and Safety Management System
- IECQ QC 080000 Hazardous Substance Process Management System
- Introduction of RBA & ASUS CSR Requirements
- Introduction of ASUS CSR Requirement for Labor Aspect
- Introduction of ASUS CSR Requirement for Health & Safety Aspect
- Introduction of ASUS CSR Requirement for Environment Aspect
- Introduction of ASUS CSR Requirement for Ethics Aspect
- Introduction of ASUS CSR Requirement for System Management Aspect
