Supply Chain Management Framework

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] Sustainable Supply Chain Platform

ASUS uses technology to manage sustainability strategies in the digital transformation of the supply chain, allowing data to assist in decision-making and implementing data-based assessments. We established a sustainable supply chain platform in 2021 to start the short, medium, and long-term digital transformation project for the supply chain management and analyze the ESG performance data of long-term suppliers to identify potential supplier risk factors and reduce the evaluation procedures for the introduction of new suppliers. We invest management resources into the audits and improvements of deficiencies of high-risk suppliers.

  • Phase 1 (2021-2023): Complete the establishment of the platform and import supply chain management data from previous years. Identify risk indicators and correlation with risks.
  • Phase 2 (2023-2025): Establish risk prediction models to predict the risk points and optimize the risk assessment process.