Sustainable Supply Chain Management
Supplier management policy provides common set of standards for procurement to achieve sustainable supply chain management.
FENC is a conglomerate that spans from the upstream to downstream of petrochemical, polyester and textile industries. The production process relies on a myriad of raw materials. The procurement of these materials as well as supplier evaluation, selection and management are the responsibility of the procurement units. FENC establishes supplier management rules that respect local regulations and production needs at each Company site.
Supplier Corporate Social Responsibility Statement
To collaborate with suppliers on our mission to accomplish sustainability development goals, first, FENC requests that suppliers sign Supplier Corporate Social Responsibility Statement. The mandate is implemented in stages：
The Number and Percentage of Suppliers Signing “Supplier Corporate Social Responsibility Commitment Statement”
| Year | Number of Suppliers | Percentage of Total Suppliers | Percentage of Purchase Amount |
Stage 1 | 2018 | 2,035 | 46% | 56% |
2019 | 2,860 | 65% | 67% | |
2020 | 3,452 | 85% | 76% | |
Stage 2 | 2020 | 1,722 | 65% | 63% |
Stage 1 & 2 | 2020 | 5,174 | 77% | 73% |
| Note： 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 x100%. 2. The total number of suppliers varies from year to year. ⇥ Supplier Corporate Social Responsibility Commitment Statement |
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 1,231 new suppliers in 2020, and 1,105 (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. There were no instances of suppliers with negative impacts in 2020.
Supplier Assessment Aspects and Number of Suppliers in 2020
Assessment Aspect | Environment | Labor Practice | Human Rights | Society |
Total number of selected suppliers | 4,506 | 4,306 | 4,643 | 4,882 |
Number of suppliers that have or may have negative impact | 0 | 0 | 0 | 0 |
Number of suppliers that have made improvement | 0 | 0 | 0 | 0 |
Number of supplier that we have stopped working with | 0 | 0 | 0 | 0 |
| 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. |
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.
Procurement from Local Suppliers in 2020
| Percentage of Procurement from Local Suppliers | Percentage of Procurement from Local Suppliers after Deducting Main Raw Material | |||||
| 2018 | 2019 | 2020 | 2018 | 2019 | 2020 | |
| Taiwan | 47% | 47% | 51% | 83% | 90% | 75% |
| China | 49% | 56% | 64% | 78% | 86% | 81% |
| Vietnam | 45% | 31% | 23% | 50% | 77% | 56% |
| Japan | 94% | 78% | 96% | 77% | 71% | 90% |
| U.S. | 97% | 97% | 97% | 93% | 93% | 93% |
| Total | 53% | 56% | 60% | 80% | 85% | 77% |
| Note： 1. “Local supplier” is defined as a supplier located within the same country as the business/operation site. In Taiwan, 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. Comparing to the 2019 CSR, the scope of 2020 FENC Sustainability Report incorporates 10 additional procurement units. Among them, data on FEFC, OGM, FENV, FIGP, APG Polytech, as well as the procurement of main raw materials at FEDZ, FEAZ and FEIW are retrospective to 2018; FEPV retrospective to 2019; FEAV includes 2020 only. 4. In 2020, the percentage of local procurement, which excludes main raw materials, decreased in Taiwan. The main contributing factor is a 20% decrease in local procurement from FEG Purchasing Department. 5. The polyester plant of FEPV began production in January 2019. PTA and MEG are the two main raw materials at this plant. However, both cannot be locally supplied, thus causing the percentage of local procuremnt to go down since 2019. In 2020, FEPV purchased large equipment from overseas; most of the materials for FEAV are imported, causing a drop in local procurement of non-main raw materials. 6. FIGP purchased large equipment from overseas in 2019, thus dropping the percentage of local procuremnet for said year. |
Supplier Engagement
FENC engages in dialogues with suppliers through various channels in order to monitor supplier operation.
- The Company provides a mailbox for supplier feedback on its website.
- The Company monitors the suppliers and contractors monthly and conducts dialogue meetings.
- The Company holds quarterly supplier meetings to conduct exchange and recognize suppliers for their excellence.
- The Company holds ad hoc technology exchange meetings with suppliers.
