Sustainable Supply Chain Management
Supplier management policy provides common set of standards for procurement to achieve sustainable supply chain management.
FENC is a vertically integrated conglomerate that spans across the petrochemical, polyester and textile industries with vast and complex procurement handlings. The selection, management and procurement of suppliers as well as ESG impact assessment are conducted by the FEG Purchasing Center as well as the procurement departments and procurement units responsible for purchasing primary raw materials at all FENC sites.
Beginning in 2016, FENC has been filing the total green procurement from the previous year with the government. As of the end of 2022, over NT$13.9 billion of green procurement has been made by the FEG Purchasing Center, and NT$15.54 million by OPTC. For seven consecutive years, the FEG Purchasing Center has been recognized as the benchmark unit for green procurement among private enterprises and organizations by the Department of Environmental Protection of Taipei City Government. In 2022, OPTC was recognized by the Department of Environmental Protection of Taoyuan City Government as the exemplary unit for green procurement among private enterprises and organizations.
FENC establishes supplier management rules that respect local regulations and production needs at each Company site. The management is guided by the principles listed below:
1.Supplier Corporate Social Responsibility Commitment Statement
To collaborate with suppliers on our mission to accomplish sustainability development goals, first, FENC requests that suppliers sign Supplier Corporate Social Responsibility Commitment Statement. The mandate is implemented in stages.
The Number and Purchase Amount Percentage of Suppliers Signing “Supplier Corporate Social Responsibility Commitment Statement”
1. The percentage of suppliers signing “Supplier Corporate Social Responsibility Commitment Statement” = the number of suppliers signing “Supplier Corporate Social Responsibility Commitment Statement” ÷ total number of suppliers x 100%.
2. The total number of suppliers varies from year to year.
3. The number of suppliers signing “Supplier Corporate Social Responsibility Commitment Statement” of OPTC is 95%.
4. Description of the stages:
(1) Stage 1: Launched in 2016, targets include Suppliers that work with Raw Material Team (FENC), FEG Purchasing Department (FENC), Purchasing Department of OPTC, Shanghai Purchasing Unit and Suzhou Purchasing Unit.
(2) Stage 2: Launched in 2020, targets include Suppliers that work with Raw Material Team (FEPV), FEG Purchasing Department (OGM) as well as the procurement units of FEFC, FEDZ, FEAZ, FEIW, FEAV, FENV and FEPV.
(3) Stage 3: Launched in 2021, targets include Suppliers that work with the procurement units of FIGP and APG Polytech.
2. Procurement Regulations and Regulations Governing Supplier Evaluation
Additional criteria are established for different types of procurement projects, and all applicable clauses are stated in the contract to ensure compliance.
Procurement units conduct written or on-site evaluation on new suppliers and classify them based on selection criteria. Each year, the procurement units evaluate the major suppliers with end-users. The results serve as references for contract renewal in the coming year. There are 1,439 new suppliers in 2022, and 1,298 (90%) of which have been evaluated.
The following table is a compilation of supplier evaluation by the procurement units. Evaluated categories include environment, labor, human rights and society. When the evaluation indicates major impacts were made, the Company may provide suppliers with assistance for improvements or terminate the contract depending on the severity.
Supplier Assessment Aspects and Number of Suppliers in 2022
|Total Number of Selected|
|Number of Suppliers That Have or May Have Negative Impact|
|Number of Suppliers That Have Made Improvement|
|Number of Supplier That We Have Stopped Working With|
Note: Environmental evaluation includes pollution prevention, waste treatment as well as energy and resource consumption; labor practice evaluation includes occupational safety, equality and training; human rights evaluation includes child labor, forced labor and rights of the indigenous people; social evaluation includes corruption, monopoly and fraud.
3. Priority Status for Local Suppliers
FENC gives priority consideration to local suppliers when it comes to procurement. Such policy promotes local economic development and allows the Company to provide better after sales service.
Percentage of Procurement from Local Suppliers in 2022
|Percentage of Procurement from Local Suppliers||Percentage of Procurement from Local Suppliers After Deducting Main Raw Material|
1. Local supplier is defined as a domestic supplier. In Taiwan, mainland China and Vietnam, local suppliers are unable to provide certain main raw materials.
2. Percentage of purchase from local suppliers = Purchase amount from local suppliers ÷ total purchase amount x 100%.
3. Main raw materials included in the 2021-2022 statistics are PX, PTA, MEG, Bio-MEG and cotton, including recycled cotton.
FENC engages in dialogues with suppliers through various channels in order to monitor supplier operation.
1. The Company provides a mailbox for supplier feedback on its website.
2. The Company monitors the suppliers and contractors monthly and conducts dialogue meetings.
3. The Company holds quarterly supplier meetings to conduct exchange and recognize suppliers for their excellence.
4. The Company holds ad hoc technology exchange meetings with suppliers.
5. Partner with suppliers on mutually benefitting projects.