Supply Chain Management Performance

Audits and Continuous Improvement

ASUS performs audits to ensure that suppliers meet the requirements in labor rights, occupational hazards prevention, and environmental protection. In 2020, a total of 36 high-risk suppliers were selected for onsite audits, with dimensions in labor employment, occupational health and safety, and environment, and with supplier categories such as labor intensive outsourcers, mechanisms, monitors, motherboards, power supply, and battery. Due to the pandemic, we used mobile phones to hold video audits on suppliers in high-risk regions, and conducted on-site audits on those medium and low-risk regions.

A total number of findings identified were 647, and the average improvement rate was 99%. The audit results showed that the largest number of findings was in the health and safety. Details are presented as followed:

 

 

 

We launched supervision projects to help suppliers correct the findings by working with experts from third party entities to provide best practices, and established a communication platform for experience sharing. All findings were corrected, and the high risk in working hours was reduced to low risk identified by RBA.

Under the continuous audits over these years, more than 1,000 person-time were interviewed, and the labor rights of 370,000 person-time were protected.

 

Based on the International Labor Organization (ILO) and the study published by The Lancet, we monetized the impact of the supply chain management, including the medical cost after the reduction of working hours, the investment in improving occupational safety and health deficiencies, and the acquisition of ISO 14001 system certification, and received the result of exceeding NT$33 million. Impact assessment helps us prioritize the resources invested in which supply chain management to optimize the management processes.

 

Summary of annual audit results:

The results of the third-party audit for 2020 are summarized as follows:

 

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 2020 on-site audits, no child labor cases 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 2020 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 2020 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 2020 on-site audits, no forced labor cases was identified in the supply chain.