Supply Chain Management Performance

Supply Chain Management During COVID-19

Since 2020, we have included worker health as the primary consideration for supply chain management and conducted a comprehensive inventory of each supplier's plant in response to the COVID-19 pandemic. We formulated appropriate protective measures according to the different risk levels in each region, including restrictions on the number of people, visitor control, health screening, social distance in the plant, distribution of personal protective masks and disinfectant alcohol, and enhanced disinfection and cleaning of the plant. In response to the different risks of the epidemic in different regions this year, we have adopted remote operations for high-risk plants, used video conference and mobile devices for online video audits, and maintained on-site audits for medium- and low-risk plants to comply with the epidemic prevention policies of the local government and maintain scheduled audits.

Audit and Continuous Improvement

To ensure that all ASUS suppliers meet ASUS' related requirements for labor human rights, occupational safety, and environmental protection measures, we identified 36 high-risk suppliers and conducted onsite second-party and third-party audits in 2021. We found a total of 720 deficiencies in audits and the average improvement completion rate for deficiencies was 98%.

According to the audit results, high-risk factors for suppliers generally include labor employment, occupational safety, and environmental management. They are more likely to occur in more labor-intensive OEMs and suppliers of mechanical components, display panels, motherboards, power supplies, and batteries. In terms of improvements for workers' work hour management, ASUS has adopted continuous monitoring and helps suppliers implement management. We require suppliers who fail to meet requirements to establish suitable work hour management and monitor mechanisms and report the implementation performance to ASUS each month. This reduces the potential risks from excessively long work hours of workers, ensures compliance with local regulations and the minimum RBA Code of Conduct requirements, and facilitates continuous improvements for goals.

 

In addition, the 2021 audit results showed that the deficiencies found in the 2021 audit consisted mostly of labor issues while health and safety accounted for the second-largest share. The failure rate and improvement rate for deficiencies are shown in the table below:

Main Findings and Improvements in the Audit

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We organize conferences to help suppliers implement continuous improvement, and provide industry best practices for other companies to share management experiences. We provide continuous support to complete improvements for all audit deficiencies, helping suppliers from high-risk work hours to RBA-approved low-risk continuous monitoring. Through the International Labour Organization (ILO) and the content of the research report of The Lancet, an authoritative medical journal, we calculated the medical costs of reducing overwork due to reduced working hours and the Company's compliance with ISO 14001 system certification. We successfully monetized the impact of supply chain management in 2021 with an impact exceeding NT$23 million. The impact assessment helps us measure the priority of management resource investment and optimize the supply chain management process.

In the audit management in past years, we conducted more than 1,000 interviews and provided labor rights protection for more than 390,000 person-times.

 

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.

Based on results of 2021 on-site audits, no child labor cases was identified in the supply chain.

Management of Underage Labors

According to RBA Code of Conduct, 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 2021 CSR audit results, no case of overtime and night shift for underage employees.

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 Supplier 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 2021 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.

Prohibition of Forced Labor

Respect for Human Rights is an ASUS core value reflected in our corporate Code of Conduct policies, which apply to all global operations, including our supply chain. All ASUS employees are respected and treated fairly, and ASUS requires its suppliers to comply with all relevant legal, social and environmental standards.

The California Transparency in Supply Chains Act of 2010, the United Kingdom Modern Slavery Act 2015, and the Australia Commonwealth Modern Slavery Act 2018 together require business to disclose information relating to their efforts to address the risks of modern slavery in their operations and supply chains. ASUS Human Rights Statement outlined ASUS’s efforts in Human Rights and reaffirmed that ASUS has established and implemented auditing and monitoring operations to prevent slavery and/or human trafficking across the Company and in the supply chain, and makes the commitment to prevent these events from occurring in the future.

Based on results of 2021 on-site audits, no forced labor cases was identified in the supply chain.