Procurement Risk Management
To enhance sustainability risk management in the supply chain, we implement a four-step process: "Risk Review," "Risk Assessment," "Risk Identification," and "Risk Mitigation." This approach helps us evaluate and address sustainability risks.
We integrate risk management into daily procurement and establish a Procurement Risk Management Procedure within the supply chain risk framework. Using the PDCA cycle, we regularly review potential risks, compile risk indices through quantitative analysis, and create a risk heat map. This map, based on risk frequency and impact severity, guides periodic reviews of mitigation plans and manages sustainability risks in the supply chain.
Finally, we communicate and cooperate with suppliers to establish mitigation plans targeting high-risk factors that may cause business interruptions, such as reliance on a single supplier, regional policy changes, and insufficient production capacity. By introducing alternative suppliers or conducting second-source or second-origin certification programs based on supplier attributes, we can gradually reduce risks. We completed the annual procurement risk management assessment in 2023, finding no major risks after evaluation.
Procurement Risk Management Process
Potential Risk
Risk Index
Risk Assessment
Risk Map
(Risk Quadrant)
Mitigation Plan
Regular Review
Re-Assessment
Procurement Risk Assessment Factors
| Risk Type | Risk Factor (Tier 1) | Risk Factor (Tier 2) |
|---|
| Internal Risk | Purchasing Risk | Integrity Requirements |
|---|
| External Risk | Regulatory Risk | Supplier CSR Risk |
|---|
| Supplier Infringement |
| Hazardous Substances Risk |
| Supply Chain Disruption | Business Continuity Risk | Supply Disruption |
|---|
| Cost Risk | Raw Material Price |
| Supplier Conflict Minerals Management Risk | Smelting Plant RMAP Conformity Management |
| Financial Risk | Financial Data Monitoring |
Supplier Sustainability Audit and Advocacy
Since 2011, we have been conducting on-site supplier audits and have strengthened these efforts each year. In 2023, Unimicron conducted 64 audits of key suppliers in Taiwan and China. While some deficiencies were found, no suppliers were classified as high-risk. The main deficiencies identified were related to labor, health, and safety. Audited suppliers are required to complete or propose improvement plans within a set deadline. By the end of 2023, the completion rate for suppliers' improvement plans was 76% in Taiwan and 100% in China. We will continue to require suppliers to complete or propose improvement plans. Upholding the spirit of coexistence and co-prosperity, we will collaborate with suppliers to promote ESG initiatives and achieve sustainable development goals.
Supplier Sustainability Audit Process
Step 1
Suppliers Self-Evaluate and Submit Written Supporting Document
Step 2
Unimicron Conducts a Document Review
Step 3
Unimicron Conducts On-site Audit
Step 4
Suppliers Improve Based on Audit Results
Step 5
Unimicron Verifies Improvement Results and Closes the Case
Aspects of Supplier Audit
Supplier Sustainability Audit – On-Site Audit
(Unit: Times)
| Year | Taiwan Facilities | Mainland China Facilities | Total |
|---|
| 2020 | 15 | 36 | 51 |
|---|
| 2021 | 6 | 37 | 43 |
|---|
| 2022 | 6 | 38 | 44 |
|---|
| 2023 | 5 | 59 | 64 |
|---|
2023 Supplier Audit Violations
(Unit: Item)
Findings and Improvement Actions of the 2023 Supplier Audit
| Category | Item | Main Findings | Improvement Actions |
|---|
| Labor | - Compensation and benefits
- Humane treatment
- Non-Discrimination/non-molestation
| - Salary deductions as punishment
- Lack of infringement management measures
- Discriminatory items on resumes
| - Amend salary deduction penalties
- Enhance management of illegal infringements
- Revise resume items related to discrimination
|
|---|
| Health and Safety | - Occupational safety
- Emergency preparedness
- Occupational injuries and diseases
- Sanitation and accommodation
| - Risk of blocked fire-fighting facilities
- Expired first aid kit contents
- Missing water quality inspection reports and regular inspection records
| - Implement inspection forms to ensure aisles are free of debris
- Include expiration date format on forms
- Add sections for reports and inspections
|
|---|
| Environment | - Hazardous substances
- Solid waste
| - No leakage prevention facilities in the waste liquid storage area
- No hazard labeling for waste and temporary storage areas
| - Install anti-leakage facilities
- Add signs and posts
|
|---|
| Management System | - Improvement objectives
- Training
- Employee opinions, participation, and grievances
| - No annual goals and tracking performance
- No RBA training records
- No anonymous complaint management
| - Set and confirm annual performance targets
- Schedule regular RBA training
|
|---|
| Supply Risk Management | - Supplier RBA CoC Compliance and Related Supply Chain Matters Announcement
| - Failure to Integrate the RBA Supply Chain CoC into Management Procedures
| - Suppliers should build management procedures requiring their suppliers to commit and sign RBA CoC
|
|---|
Improving the Sustainability of Suppliers
We adhere to the RBA CoC, ISO 14001, ISO 45001, QC 080000, and other international standards. We have established a comprehensive supplier management system based on principles of environmental protection, human rights, safety, health, and social ethics. We regularly educate on topics such as quality, green products, OSH, information security, and sustainable management to extend our social responsibility concepts to the supply chain and foster a sustainable future.
Since the COVID-19 outbreak, Taiwan’s annual suppliers' meeting has transitioned to an online platform to minimize personnel movement, handout printing, and carbon emissions. In Mainland China, supplier commitments are managed via email. All suppliers engaged with Unimicron have completed the signing of the commitment. In 2023, online promotion topics for suppliers included the RBA CoC, CSR evaluation descriptions, Supplier Corporate Social Responsibility Letter of Commitment, conflict minerals, business continuity plans, financial risks, and carbon inventory requirements.
Unimicron expects itself and its committed customers to set annual energy-saving and carbon reduction goals. Supply chain team aims to reduce electricity use by transitioning from a reactive to a proactive approach. In 2023, we surveyed 115 key equipment suppliers on their energy-saving development plans. We are currently analyzing the data and plan to share the results with the plants for evaluation in 2024.
