Procurement Risk Management Procedures

To strengthen the sustainability risk management of the supply chain, Unimicron gradually strengthens the sustainability performance of the supply chain, especially through four steps to review and improve the sustainability risks faced by the supply chain.

We integrate supply chain risk management into daily procurement operations and construct a Procurement Risk Management Procedure under the supply chain risk management framework. Using the PDCA cycle process, we continuously review the risk status and compile the risk index through the results of quantitative risk analysis. At the same time, the risk heat map is drawn, and the risk occurrence frequency and the degree of impact are used as the assessment basis to formulate the periodic review of the mitigation plan and to implement control of the supply chain’s sustainability risk. We finally communicate and cooperate with suppliers, and analyze operational risk factors such as single supplier, geographic policy changes, lack of production capacity, etc. through the establishment of recovery plans to require supplier attributes (single-supplier) to conduct Tier 2 suppliers or second-origin certification programs to gradually reduce the sustainability risks.

Supplier Sustainability Risk Assessment

To improve the sustainable development of the supply chain, Unimicron has set CSR evaluation criteria for new suppliers that meet the screening requirements, and requires new suppliers to complete the "Unimicron Corporate Social Responsibility Audit Form.” For existing suppliers, we encourage the top 20 suppliers in annual transactions to actively participate in self-assessment. At the same time, for key materials suppliers and key equipment suppliers, we also proactively send out RBA Self-Assessment Questionnaires (SAQ), which will be reviewed by the supply chain management team with on-site audit, and follow-up risk management and control is conducted. As of the end of 2021, the response rate of the supplier self-evaluation questionnaire was 85%.

Supplier Sustainability Audit and Advocacy

In 2021, affected by the global COVID-19 pandemic, a total of 58 major suppliers are expected to be audited in Taiwan and China, and a total of 43 major suppliers (including 4 Unimicron’s and 2 QunHong’s suppliers in Taiwan and 37 suppliers in Mainland China) are completed to be audited. The suppliers that have not completed the field audits will be included in the field audit program in 2022. The main audit deficiencies of suppliers in Taiwan and Mainland China are in the aspects of labor, health and safety, material supplier risk management, and general rules (employee and supplier education and training).

Unimicron requires audited suppliers to complete or propose improvement plans within the improvement deadline. The improvement completion rate of 6 Unimicron’s and QunHong’s suppliers was 54%, and that of 37 suppliers in Mainland China was 100%. It is expected to conduct interviews and provide assistance to suppliers that have not completed the deficiencies improvement or drafted plans in the second half of 2021. Unimicron continues to require suppliers to implement audit deficiencies improvements and coach suppliers to comply with the RBA Code of Conduct, to reduce supply chain risks and increase supply chain performance. In 2021, based on the audit and improvement, two suppliers with excellent performance in the audit results of the previous year (Required suppliers to cooperate with the on-site audit and complete the improvement) were selected from them to be awarded the "Sustainable Co-Prosperity Award" at the Supplier Conference, as the model for other suppliers to learn from.

Supplier CSR Audit Process

2021 Audit Violations

Findings and Improvement Actions of 2021 Supplier Audit

Supplier Communication Platform Shares Sustainable Information to Drive Supply Chain Sustainability

Unimicron follows international standards and regulations such as the RBA Code of Conduct, ISO 14001, ISO 45001, QC 080000, and bans on conflict minerals. We have also established comprehensive supplier management regulations and hosted regular Supplier Conferences based on environmental, human rights, safety, and health principles outlined in the above international standards to promote CSR. We launch campaigns on quality/green products, Occupational Safety and Health, information safety, and sustainable management, and communicate with suppliers to create a win-win partnership.

Affected by the COVID-19 pandemic, we changed the way of the annual supplier conference in Taiwan to an online supply chain platform to propagate sustainable information. In addition, the Mainland China facilities adopted the plan with "Supplier Commitment Letter" and Emails for propaganda to the supply chain. In response to the RBA 7.0, we renewed the training materials on the supply chain platform.