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Innovative Capability

Supplier Risk Management

Procurement Risk Management

In order to strengthen the management of supply chain sustainability risks and gradually strengthen the sustainable performance of the supply chain, Unimicron examines and improves the sustainability risks faced by the supply chain in four steps. First, we examine the risk factors that may exist in the procurement, analyze the results through risk assessment, and then conduct risk mitigation measures. Through the deployment of the risk mitigation measures, supplemented by the establishment of a SOP, we finally communicate and collaborate with suppliers to gradually minimize the sustainable risk to the supply chain through the implementation of a recovery plan.

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.

Supplier Sustainability Risk Assessment

To improve the sustainable development of the supply chain, Unimicron has set esg 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 50 suppliers in annual transactions to actively participate in self-assessment. At the same time, for key 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 2020, the response rate of the supplier self-evaluation questionnaire was 94%.

Supplier Sustainability Audit and Advocacy

In 2020, we conducted a total of 48 on-site audits for important suppliers, including 11 Unimicron’s and 1 QunHong’s suppliers in Taiwan and 36 suppliers in Mainland China. Although the suppliers still have deficiencies, none of the suppliers are included in the high-risk level internally recognized by Unimicron. 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 12 Unimicron’s and QunHong’s suppliers was 38%, and that of 34 suppliers in Mainland China was 100%. It is expected to conduct interviews and provide considerable assistance to suppliers that have not completed the deficiencies improvement or drafted plans in the second half of 2020. Unimicron will continue to require suppliers to implement audit deficiencies improvements and continue to coach suppliers to comply with the RBA Code of Conduct, to reduce supply chain risks and promote supply chain growth. Based on the actual audit and improvement delay scores, two suppliers with excellent performance in the audit results in 2019 (need to cooperate with the on-site audit and complete the improvement) will be selected from them to be awarded the top "Sustainable Co-Prosperity Award" at the 2020 Supplier Conference, as the model for other suppliers to learn from.

Supplier esg Audit Process

Findings and Improvement Actions of 2020 Supplier Audit

esg Audit Practices and Number of Plants Audited in Taiwan by Year

In 2020, based on the supplier audit plan, we expect to audit 12 key suppliers including re-audits of 9 suppliers to confirm the effectiveness of suppliers’ improvements and continuous implementation. We also selected 3 suppliers that have not received on-site audits for auditing operations in order to implement and advocate the supply chain’s compliance with the RBA Code of Conduct.

Construct a Supplier Communication Platform and Capacity Building

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 systems and regulations and hosted regular Supplier Conferences based on environmental, human rights, safety, and health principles outlined in the above international standards to promote esg. We launch campaigns on quality/green products, work safety, and esg supplier management, and communicate with suppliers to create a win-win partnership. Unimicron plans to hold a supplier conference every year. However, the COVID-19 outbreak affects, that the supplier conference had changed the way to outreach sustainable issues by online supplier platform, include quality, industrial safety, environmental protection issues, green procurement, information security, sustainable supply chain management, esg implementation results, and the RBA Code of Conduct. In addition, the plants of Mainland China had affected by COVID-19 so we adopt the plan with "Supplier Commitment Letter" and Email for propaganda to the supply chain. In response to the RBA 7.0, we will renew the training materials on the supply chain online platform.

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