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Supply Chain Management

Supply Chain Overview

       All the procurement of TSC must comply with the relevant provisions of the Government Procurement Act in order to achieve justice, openness and fairness, and the results have been good. New suppliers and existing suppliers should all meet the requirements of the Procurement Act. The internal control system set up the Key Points for Financial and Labor Procurement Operations, Key Points for bulk grain purchase, Operating Points of Project Purchase and Performance Management, and Operating Points of Public Selection of Technical Service and Labor Procurement. TSC set up an outsourcing center as a dedicated unit in charge of purchasing and organizes doubts, objections, complaints and consulting related to the Government Procurement Act so as to complete the procurement system and increase procurement efficiency. In 2017, the total purchase amount(based on the contract amount) wasNTD 41,311,485,358. Among them, the purchase amount of bulk grain purchase and imported sugar was NTD 6,365,244,878. In 2017, the amount of foreign purchases accounted for approximately 15.41% of the total purchase and the domestic purchases accounted for 84.59%.

Major issues of the Value Chain

       The reason for TSC to operate so steadily is because we have reliable partners throughout the value chain. TSC’s suppliers, distributors, corporate customers, consumers and communities where our business is located are all the key elements for Taiwan Sugar to develop steadily.Therefore, through the stakeholder questionnaire survey, we can understand each value activity in the value chain and the concerned material topics. These topics can help TSC and its partners in the value chain understand and solve key issues to further improve and develop unique competitive advantages.After analysis, the four major issues of concern to TSC and its partners in the value chain are Product and Service Labeling, Customer Health and Safety, Marketing Communication and Product Compliance. 

Selection of new suppliers

       The selection of suppliers follows the prescriptions of the Government Procurement Act and also considers the sources of supply or services provided by domestic suppliers to support domestic industries. At present, apart from the 97.18% of bulk grain raw materials in the Animal Industry Business and sugar raw materials in the Sugar Business are imported from abroad, domestic suppliers are prioritized for the supply of the remaining raw materials.In addition, it is clearly stated in all relevant bidding documents that new suppliers shall comply with the principles of fair trade, environmental protection regulations, Labor Standards Act, and Occupational Safety and Health Act. It is hoped that by requiring new suppliers, TSC and its suppliers can jointly fulfill corporate social responsibility and reach corporate sustainable development. Due to the complexity of human rights assessment mechanism, TSC currently screens the suppliers based on the self-assessment of the human rights compliance prescribed in the agreement by the suppliers. In 2017, the percentage of new supplier meeting the selection criteria reached 100%.

Supplier compliance management

       TSC signs contracts with all its suppliers. During thecompliance period, the manufacturer acceptance is conducted before entering the factory. Upon acceptance, suppliers shall provide a Certificate of Origin,ingredient analysis documents, product inspection reports (inspection of heavy metal, E.coli. plasticizers and so on) or Import Certificate of Inspection issued by Bureau of Standards, Metrology & Inspection. If quality and quantity do not comply with the purchase contract after acceptance, the supplier will be notified of a deadline for improvement.The terms of each contract require the suppliers to provide labor and health insurance to their employees, shall not perform forced labor or employ child labor,and shall implement gender equality in work in accordance with the national human rights regulations and Labor Standards Act. Once suppliers are found to be in violation of gender equality in work, freedom of association, sexual harassment prevention, normal leave and non-payment of overtime, they will be immediately requested for improvement within a limited time and may be fined for breach of the contract. If they do not listen to advice or repeatedly violate the terms, the contract with such supplier may be terminated.
       The human rights protection requirements for major investment companies are the same as those of suppliers. The suppliers that have cooperated with TSC for a long time gradually pay attention to human rights.We also strengthen the safety and health management of contract operations, and all units shall inform the work environment, hazard factors and safety and health related regulations of the units in advance when the project is delivered. In addition, TSC’s “Precautions for Occupational Safety and Health of Engineering and Labor Services” shall be specified in the contract and obligate the contractors to implement safety and health management and conduct automatic inspections to prevent accidents during construction operations in accordance with Occupational Safety and Health Act and relevant regulations.In order to protect the contractors’ labor rights, it is stipulated that the contracted project must cover the employer’s accidental liability insurance and third party accident insurance with an individual death and injury of at least NTD 4 million. For labor services or construction contracts below NTD 100,000, it is required to establish a simple contract and handle the prescribed safety and health management issues.
       TSC attaches importance to human rights issues and conducts human rights education and training for the security personnel. The content of the courses includes Sexual Harassment Prevention Act, the differences between three Acts concerning sexual harassment, the construction methods of sexual harassment prevention measures and the awareness of gender harassment. The total number of security personnel assigned to TSC’s units is 139, and the training rate of the stationed security personnel reached 97.84%. In 2017, none of the suppliers violated the relevant provisions of the contract concerning human rights.

Supplier CSR Evaluation

       In 2017, TSC’s new and existing suppliers all met the requirements of the Government Procurement Act.TSC attaches great importance to the sustainable development of the Company. In addition to strictly demanding the self-implementation of CSR responsibilities and commitments, we also drive our suppliers to move toward sustainable development together. Therefore, in 2014, we planned to build a supplier evaluation system and completed the system construction in 2015.In 2017, TSC had 1,482 suppliers(446labor suppliers, 792property related,244engineering). TSC conducted a CSR evaluation system for suppliers with more than 5 million purchase amount to complete a self-assessment questionnaire, and a total of 85 suppliers completed the self-evaluation (accounting for approximately 5.74% of the total suppliers).
       According to the self-evaluation results, the suppliers were divided into three levels, gold, silver and copper based on the scores. All the suppliers in this evaluation scored more than 60 points, with 100% of passing rate. Among them, 48 even scored more than 85 points, reaching gold level.
       In recent years, TSC has analyzed the evaluation results of the suppliers in the environmental, labor rights, human rights, social and product liability aspects. After analysis, the suppliers all reached the passing score and above, but the scores in the environmental aspect is lower. This is because TSC set higher requirements for environmental management. Despite the lower scores in the environmental aspect, all the suppliers are in compliance with relevant laws and regulations. In the future, the previous self-assessment results of the suppliers will serve as reference for the adjustment of the content of the questionnaire.Based on the analysis results, TSC will strengthen the management of suppliers with lower assessment scores to improve the procurement system and enhance the efficiency of procurement. In the future, we will also continue to promote the assessment of the five major aspects of corporate social responsibility in our suppliers of all categories to enhance our partners’ implementation and management of CSR. 

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