Supplier Management
WNC Global Supply Chain Management Policy
Policy
Through continuous optimization of supplier management strategies and operational efficiency, WNC works with suppliers to manage sustainable supply chains. We aim to achieve balanced development among profitability, environmental protection and social responsibility, in order to create better value for all stakeholders.
Mission
By supporting the Company’s business development and enhancing the Company’s market competitiveness, WNC will continue to effectively manage and jointly improve the quality, price, delivery, service, and environmental and social responsibility performance of suppliers, and develop the most suitable supplier portfolio and purchasing policies to be able to work with suppliers in a responsible supply chain.
The materials and components WNC purchased are mainly integrated circuits, circuit boards, display panels, electromechanical components, mechanical parts, and packaging materials. Production consumables are mainly solder paste and solder wires used in manufacturing processes. In 2023, there were 1,077 qualified suppliers of raw materials, components, and manufacturing consumables to WNC’s sites. Among them, 560 are tier-1 or critical suppliers.
Local Procurement
Local procurement can support the development of local economies, generate employment opportunities and income, and reduce costs and carbon emissions of transportation. Therefore, WNC establishes a dedicated procurement team for each country/region, responsible for the selection and management of local suppliers. According to the amount of raw materials, components and production consumables purchased by WNC, suppliers in Taiwan are the main suppliers, accounting for 49% in 2023. Other suppliers are located in Asia, Europe and the United States.
Guidelines
WNC has formulated the Supplier Code of Conduct, which requires all suppliers to sign a Supplier Commitment to Sustainability Declaration and Supplier Integrity Commitment Letter, declaring that they are committed to prohibiting the use of child labor, forced labor, and implementing occupational safety and health management, anti-bribery and anti-corruption measures, fair trade, supporting freedom of association for workers and labor-management agreement rights. Suppliers are asked to complete a Supplier ESG Questionnaire so WNC can understand suppliers’ implementation of labor, health and safety, environmental, ethics, and management systems.
Suppliers can upload a Supplier Commitment to Sustainability Declaration, WNC Supplier ESG Questionnaire, Integrity Commitment Letter, and Legal Compliance Commitment Letter via Digital Supply Chain Portal (DSCP), in order to start doing business, strengthen supply chain collaboration and improve efficiency. As of the end of 2023, 527 Tier-1 Suppliers and 363 Critical Suppliers have signed the Supplier Commitment to Sustainability Declaration and the Supplier Integrity Commitment Letter, accounting for 94.1% and 64.8% of all Tier-1 and Critical Suppliers respectively. Additionally, 424 suppliers have responded to the Supplier ESG Questionnaire, representing 75.7% of all Tier-1 and Critical Suppliers.
Risk Assessment
WNC implemented international assessments (primarily using EcoVadis, supplemented by RBA, S&P Global CSA, and Sustainalytics) to evaluate supplier sustainability risks in 2023. A total of 100 critical suppliers underwent sustainability reviews, and their VPE ESG Compliance Scores were included in the supplier performance evaluations for Q4 2023. In 2024, WNC will gradually improve the sustainability risk management mechanisms for critical suppliers and expand the evaluation of supplier sustainability risks to include first-tier suppliers.
Regular Audit
RBA Audit
A total of 50 Tier-1 Suppliers are scheduled to undergo a WNC RBA audit annually. In 2023, the actual number of audits completed was 51, including 23 suppliers from Type A, 22 from Type B, and 6 from Type C. The non-compliant items in the audit results are mostly labor-oriented, health-oriented and safety-oriented. There were no issues with a lack of policies or procedures related to child labor, overtime work, inadequate lactation environment or facilities, blocked emergency exits, or insufficient firefighting equipment.
The supplier’s non-compliant items and corresponding improvement plans are tracked by the Supplier Quality Management Center. The suppliers work with the Global Supply Chain Management Division to follow the Supplier Evaluation Management Guidelines to supervise suppliers’ implementation of RBA specifications and continuous improvement. In 2023, no supplier relationships were terminated because the supplier’s RBA audit results or improvements did not meet the standards. In 2024, a total of 50 suppliers are scheduled to undergo an RBA audit.
Annual Audits and Counseling
Tier-1 Suppliers, Critical Suppliers or suppliers required to meet customer demands are selected for product quality, safety production, and RBA on-site audits annually. For suppliers whose audit results do not meet the required standards, specialists are assigned to review and formulate improvement plans, while providing appropriate assistance, counseling and training. In 2023, a total of 345 on-site audits and counseling sessions for supplier sites were arranged. Non-compliance items found during the audits include unclear definitions of specifications/procedures, deviations from SOPs for in-factory operations, and anomalies in record sheets. All identified issues have been remediated and resolved. None of the suppliers were required to terminate cooperation with WNC due to non-compliance items found during audits or unsatisfactory results after remediation.
Quarterly Reviews
WNC has established a Supplier Performance Review Committee with personnel from the Global Supply Chain Center, Supplier Quality Management Center, and R&D Projects unit. Comprehensive performance evaluations are conducted based on supply chain performance indicators on a quarterly basis, in order to ensure the overall performance of suppliers in terms of quality, delivery, service, price competitiveness and ESG compliance through visit and guidance. After completing the quarterly Vendor Performance Evaluation (VPE), the Global Supply Chain Center will, based on the VPE results and strategic considerations, work with the Supplier Quality Management Center, R&D project and institutional design units to compile a Recommended Vendor List (RVL) for the selection of new partners and purchasing targets during the recommended supplier meeting each quarter.
Supplier Partnership
WNC values interactions and learning between suppliers. Apart from hosting routine operational review meetings, WNC commends suppliers who have performed outstandingly or made special contributions during the annual Wistron Group Vendor Conference. In 2023, 108 WNC suppliers attended the Wistron Group Vendor Conference.
WNC joined SBTi and committed to achieving net-zero emissions by 2050, aiming to drive our suppliers to create a low-carbon supply chain together. As a result, WNC held its first Sustainable Supply Chain Conference at its headquarters on December 28, 2023. On the day of the event, in addition to sharing WNC’s carbon reduction goals and achievements with suppliers, introducing WNC Supplier Carbon Management Platform, and advocating WNC’s carbon reduction requirements for suppliers, industry instructors were invited to conduct training sessions on Global Carbon Reduction Trends and Carbon Footprint Verification/Carbon Footprint. A total of 42 potential high-carbon electromechanical (EM) and mechanical (ME) suppliers attended the event. The overall satisfaction rating for the event was 4.8 out of 5 points. The survey results of the event questionnaire indicate that the top three challenges in supply chain carbon reduction are: The lack of carbon management manpower, inventory technology, and insufficient internal driving force. This outcome will contribute to future efforts in promoting carbon reduction activities across the value chain, aiding the value chain in moving towards net zero in response to international trends.
Responsible Minerals
WNC has formulated the Responsible Minerals Policy Statement, committed to banning the use of conflict minerals that contribute to significant human rights violations such as armed conflict and forced labor in conflict-affected and high-risk areas (CAHRAs). Suppliers are required to avoid using conflict minerals, disclose the sources of tin (Sn), tungsten (W), tantalum (Ta) and gold (Au) they use and communicate this policy to their upper stream suppliers to achieve alignment throughout the supply chain.
WNC conducts supplier conflict mineral surveys via the CMRT to find out whether smelters used by suppliers are participants in the Responsible Minerals Assurance Process (RMAP). WNC requires new suppliers who use conflict minerals in their products to provide valid supporting data regarding the necessity of using conflict minerals as well as corresponding investigation and management mechanisms for said minerals.
In addition, WNC requires suppliers to promise that products they provide to WNC do not violate WNC’s Responsible Minerals Policy Statement by signing a Supplier Quality Agreement, and also requires that suppliers do not conduct business with smelters that are confirmed to have contributed to human rights violations.
According to survey results in 2023, there are a total of 220 supply chain smelters used by WNC, of which 195 are RMAP-compliant smelters, four are participating in the RMAP program, and 21 are non-compliant smelters. Of these 21 non-compliant smelters, 19 were previously compliant smelters that became non-compliant during 2023. The remaining two had no record of being listed as compliant smelters in the RMAP during 2023. WNC will continue to monitor the status of these 21 smelters and require suppliers to implement improvements to meet conflict minerals requirements for products they ship to customers.