Supply Chain Management Structure

ASUS Supply Chain

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. Please see the figure for regional distribution.

 

 

 

We define the critical suppliers by purchase amount, supply limitation, and key technology. Critical suppliers are vital partners for ASUS in providing assurance of smooth launching regarding the mass production of products. We commit our resources to assist suppliers in sustainable management for the assurance of sustainable production.

Sustainable Procurement

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 pro-curement strategies. A sustainable supply chain has become an important part of business continuity. According to The Electronics Industry Procurement Analysis Report, more than 60% of enterprise spending is on the supply chain. 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 US National Institute of Standards and Technology (NIST 800-161) identify sustainability as a vital aspect of risk management.

ISO 20400 Sustainable Procurement

ASUS reshaped its supply chain management in accordance with the ISO 20400 Sustainable procurement guidelines, making sustainability one of the key considerations for procurement. We identify that perpetual risks such as human rights, labor safety, environment, and integrity operations exist in extraction, component manufacturing, and product assembly stage based on factors such as supply chain industry characteristics, cooperation strategies, procurement models, and geographic relationships, and we later formulate sustainable management strategies for the environment, society, and governance to drive the sustainability transition of the supply chain.

ASUS sustainable procurement has been certified by the third party SGS, to prove that ASUS has implemented sustainability in its procurement policy and practice, and has been issued the world's first ISO 20400 certification with high rating, becoming a benchmark case of sustainable procurement. We are building up a sustainable supply chain with the influence of ASUS' purchasing power.

 

ASUS Supplier Code of Conduct

Based on the Code of Conduct of the Responsible Business Alliance (RBA), we includes 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 continue to engage with external stakeholders on supply chain management issues, and actively participate in international initiatives. In 2018, we became a RBA Full Member, demonstrating our commitment to supply chain management and to greater producer responsibility.

Environmental Profit and Loss (EP&L)

In assessing the environmental impact of operations, such as carbon emissions and waste, companies can only determine how much greenhouse gas or how much weight of waste is generated, which is limited by the fact that different substances cannot be compared with each other and thus it is difficult to determine which pollutants have a greater social and environmental impact.

The concept of EP&L assessment is to map the impact of business activities on the environmental and social Impact Pathway and then monetize the environmental impact, such as the amount of agricultural ecological loss caused by greenhouse gas of climate change, and the impact of water pollution in reducing regional recreational value. The EP&L assessment allows comparability of different environmental impacts to optimize the quality of decision making.

Risk Evaluation and Classification Management

The latest Responsible Business Alliance Annual Report indicates that labor, the environment, and partnerships are the main risks to sustainable operations in the electronics industry. We have established risk identification procedures based on factors, including RBA self-assessment, hazardous substance management system and manufacturing process management, brand management, brand reputation, labor protection, continuous improvement, management systems, and labor intensity. Each year, we perform the risk identification on more than 300 suppliers and OEMs with quarterly procurement amounting to NT$2.5 million or more, and conduct on-site audits and supervision projects to help the supply chain take appropriate measures.

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.

 

 

Phase 1 New Supplier Approval: The entrance barrier for becoming ASUS' qualified suppliers are: possessing ISO 9001 and ISO 14001 certifications, singing the compliance declaration, and passing the audits on Quality and Sustainability.
   
Phase 2 Continuous Risk Management: We manage suppliers with continuous business relations by risk level. Suppliers classified as high risk will be subject to onsite audits by ASUS and the third party. Suppliers classified as moderate to low risks will be audited by document review. All suppliers must complete the annual survey on responsible minerals, greenhouse gas, water footprint, and waste. The potential risks of the suppliers in labor, health and safety, environment, and ethics are managed through audits to avoid posing an impact on governance, the environment, and society, which in turn affects the operation of the supply chain.
   
Phase 3 Performance Evaluation: Besides the quality, cost, technology, delivery, and service, we also includes 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.

[Case] Human Rights Management

Respecting for human rights is the core value of ASUS, as demonstrated in our Corporate Code of Conduct policy, which applies to our global operations, including 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 comprehensively review the employment conditions of our suppliers and set high standards for labor rights by publishing the ASUS Human Rights Statement:

  1. Formulate The ASUS Supplier Code of Conduct as the high-risk assessment criteria to elevate labor employment and does not allow any form of forced labor.
  2. Transparent disclosure of annual supply chain management performance, including conducting due diligence, risk assessment, audit management and supplier negotiations.
  3. Require all suppliers to sign the ASUS Supplier Code of Conduct Declaration, committing to comply with the RBA Code of Conduct with first-tier suppliers and industry regulations where they operate.
  4. RBA-qualified auditors conduct audits on high-risk suppliers, reviews human rights management and labor hiring and randomly interviews workers to review working conditions. After the interview, ASUS provides direct contact information to avoid retaliation.
  5. Hold regular supervision projects with qualified auditors from third party entities providing best practices to assist suppliers in continuous improvement.
  6. The audit results are included in the quarterly business evaluation as the basis to allocate orders and determine whether to continue the partnerships.