Supply Chain Management Performance

Supply Chain Management Performance

According to industry characteristics of our supply chain, procurement model, and geographical relations, we have identified some key issues such as conflict minerals, product compliance, sustainability risk management, and environment information transparency in our supply chain management.

Quality Management Assessment

Product quality is positively correlated with the product life, consumer safety, customer satisfaction, and corporate reputation. ASUS applies stringent quality requirements, as all suppliers must pass in Quality System Assessment (QSA), Quality Process Assessment (QPA), and GreenASUS HSF Assessment (GA), and audit of risk on the sustainability.

Quality system assessment was conducted based on 11 dimensions on ISO 9001Quality Management to ensure suppliers have introduced a complete quality system.

 

Quality process assessment involves 5 dimensions in production process to ensure the capability of the production line of the supplier.

 

GA assessment is based on the 3 dimensions in hazardous substance free management requirements in QC 080000 standard to ensure that all raw materials used in the components are comply with relevant international legislations.

As for qualified suppliers, we identify suppliers to perform annual GA audit according to environmental risk and abnormal condition in quality and hazardous substance free management. In 2016, a total of 169 new suppliers received quality management assessments, and the approval rate was 88%; we performed annual GA audit on 41 suppliers with abnormal conditions, and all of them pass the audits.

Corporate Social Responsibility (CSR) Assessment

Besides product quality, ASUS also emphasizes labor rights and operation safety in the production process. ASUS uses EICC Code of Conduct to perform CSR onsite audit, which covers the following 5 dimensions: labor, health and safety, environment, ethics, and management system.

In 2016, we completed CSR onsite audits on 18 OEM providers and key component suppliers. The result showed that 83% (15) of them were approved, 11% (2) were conditionally approved, and 6% (1) was rejected.

According to the audit result, among the 5 dimensions, we found that health and safety management is the one with the most findings, followed by labor management. The average approval rate for all 5 dimensions was shown as follows:

ASUS requires suppliers to setup improvement plans for audit findings and schedules the audit next year to ensure corrective actions are taken. The major findings discovered in each of the five dimensions, and ASUS' recommended corrective actions are described below:

Milestone and Achievements:

More safety mechanism needed for those specific employments, ASUS established additional management procedures for child labor, underage labor, female labor:

Prohibition of Child Labor

Many children lose their chances to receive education, are deprived of childhood, and are forced to enter workplace in advance in order to solve the family economic problems. Therefore, most countries around the world consider the employment of child labor is illegal. ASUS strictly requires suppliers not to employ child labor and conducts onsite audits to ensure that suppliers have implemented proper measures to prevent child labor. Audit criteria include: review the management mechanism of suppliers and human resources intermediaries, the effectiveness of forged identity prevention mechanism (such as: face identification system, identity authentication system, family background information check), and sampling interviews with workers onsite. ASUS pays serious attention to child labor issue and formulate the following management approaches:

  1. ASUS reports to both ASUS’ and supplier’ sales management teams, and supplier shall immediately remove the children from the position as well as send them home.
  2. Supplier shall arrange health examination for the children, and bear the medical expenses for any affected health from the work.
  3. Supplier shall monitor the return home of children and their school attendance to legal age of employment.
  4. Supplier shall propose improvement plans in child labor management mechanism.
  5. ASUS arranges onsite audit and confirm the corrective action.

According to 2016 CSR audit results, no child labor was identified in the supply chain.

Management of Underage Labors

According to China legislation, employees of at least 16 but less than 18 years of age are underage employees. Specific protective measures have to be taken for these individuals still in puberty. ASUS requires suppliers to take the following measures when hiring underage employees to ensure their proper physical and mental developments:

  1. Underage employees must not be assigned to duties requiring intensive labor and exposing to extreme temperature operation or to hazardous substance such as lead, benzene or formalin.
  2. Conduct annual health examination on underage employees. ASUS will ensure the compliance by random interviews with underage employees and by reviewing their annual physical examinations.

According to 2016 CSR audit results, ASUS identified a case of overtime and night shift for underage employees. We demanded the supplier to immediately stop their night shifts and propose the improvement plan on the replacement of underage workers to adult workers. ASUS reviewed the quarterly target of the replacement and scheduled the onsite audit in 2017 to confirm the implementation of the plan.

Safeguarding the Rights of Female Employees

Female employees may experience pregnancy and breastfeeding while pursuing their careers, and ASUS pays great attention to the impacts of working environment on their health and thus proactively formulate protective measures for these future mothers. We include clauses that protect female employees from the voluntary social responsibility standard (Social Accountability 8000 International Standard, SA8000) into ASUS Supply Chain Code of Conduct and require our suppliers to take the following measures:

  1. For pregnant and nursing employees, the risk assessment of the operating environment to health
  2. Change their job positions when any risk exists
  3. No overtime and night shift for pregnant and nursing employees

According to 2016 CSR audits, no case in which the working environment had significant impacts on the health of female employees, and no pregnant and nursing employee was found to work overtime and night shift.