Supply Chain Management

Performance

98

%

Identified 43 high-risk suppliers and conducted onsite second-party and third-party audits in 2022. We found a total of 643 deficiencies in audits and the average improvement completion rate for deficiencies was 98%.

23

million

Monetized successfully the impact of supply chain management in 2022 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.

410,000

times

Conducted more than 1,500 interviews and provided labor rights protection for more than 410,000 times in audit management in past years.

According to the Global CEO Survey conducted by PricewaterhouseCoopers, supply chain disruption is one of the top 10 threats to companies. Likewise, more than 50% of CEOs have begun to adjust their supply chain management and procurement strategies. Procurement management is an aspect of showing corporate social responsibility and is a critical mechanism for driving the supply chain forward to achieve the goal of sustainability. The Supply Chain Risk Management Practices published by the US National Institute of Standards and Technology (NIST 800-161) identify sustainability as a vital aspect of risk management. That shows the importance of supply chain management.

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.

As a global leader in information communication technology industry, ASUS has cooperated with more than 700 suppliers, including product assembly plants and component suppliers, mainly located in China.

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 include the PAS7000 and SA8000 standards and set the ASUS Supplier Code of Conduct 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.

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

Implement level-to-level administration for continuous trading suppliers each year. We implement supplier risk self-assessment based on the seven aspects of the RBA Code of Conduct: hazardous material systems and process management, brand management, brand reputation, worker protection, continuous improvement, management systems, and labor intensity. We conduct onsite second-party and third-party audits for suppliers and OEMs with high-risk in their self-assessment results or with a quarterly purchase amount of NT$2.5 million (more than 300 companies). We implement document reviews for medium and low-risk suppliers. In addition, we conduct onsite third-party audits for key suppliers and OEMs every years.

All suppliers must cooperate in the annual survey for responsible mineral 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.

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.

Conduct RBA Audit

Qualified RBA auditors audit high-risk suppliers, review human rights management and hiring, use interviews with workers randomly to review work conditions, and provide them our direct contact methods so that interviewed workers would not face pressure or retribution by the company or superiors.

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 5,279 times and exceeded 717 hours.

To enhance suppliers’ awareness of sustainability issues and the ability in responding to risks, ASUS organizes supply chain conferences and training for suppliers on a regular basis to convey our management requirements and strengthen the partnership with the supply chain.

Due to the COVID-19 pandemic in 2021, all supply chain conferences were held online. According to the findings of audits in 2021, we held two forums - human rights and carbon reduction in 2022. We invited key suppliers and OEMs participate and also the third-party experts to give keynote speeches on international human rights laws and regulations, carbon management trends, and challenges speeches. 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.

Besides, we organized quarterly support meetings to help suppliers improve audit deficiencies. We invited qualified RBA auditors from impartial third-party institutions to analyze the causes of deficiencies and share best-practice cases in the industry to increase the suppliers’ management awareness and help suppliers implement improvements.

In addition to online meetings, we also established WeChat groups with suppliers to facilitate real-time 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’s CSR website - “Digital Learning Courses” for suppliers to watch online or download. The courses include:

Supply Chain Management | Responsible Manufacturing | ASUS ESG website, ASUS ESG goal