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 spanning across the 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 FEG Purchasing Center as well as the procurement units at FENC sites.
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:
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.
⇥ Supplier Corporate Social Responsibility Commitment Statement
The Number and Purchase Amount Percentage of Suppliers Signing “Supplier Corporate Social Responsibility Commitment Statement”
| Note: 1. The precentage 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. 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, FEG Purchasing Department, Purchasing Department of OPTC, Shanghai Purchasing Unit and Suzhou Purchasing Unit. (2) Stage 2: Launched in 2020, targets include Suppliers that work with the main raw material procurement units of FEDZ, FEAZ and FEIW as well as the procurement units of FEFC, OGM, FEAV, FENV and FEPV. (3) Stage 3: Launched in 2021, targets include Suppliers that work with the procurement units of FIGP and APG Polytech. |
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 1,828 new suppliers in 2021, and 1,671 (92%) 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 2021
Assessment Aspect | Environment | Labor Practice | Human Rights | Society |
Total Number of Selected Suppliers | 3,615 | 3,790 | 4,367 | 3,738 |
Number of Suppliers That Have or May | 0 | 0 | 0 | 0 |
Number of Suppliers That Have Made | 0 | 0 | 0 | 0 |
Number of Supplier That We Have | 0 | 0 | 0 | 0 |
| Note: 1. 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. 2. In terms of labor practices, 2 suppliers are identified as posing negative impacts. Two OPSC suppliers did not submit health check reports for the welders, which is a potential risk. The governmental work safety department issued a penalty to OPSC and set a deadline for improvement. Health check for the welders has since been conducted with reports submitted. Improvements were 100% completed. |
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 2021
| Percentage of Procurement from Local Suppliers | Percentage of Procurement from Local Suppliers after Deducting Main Raw Material | |||||
| 2019 | 2020 | 2021 | 2019 | 2020 | 2021 | |
| Taiwan | 47% | 51% | 44% | 90% | 75% | 51% |
| Mainland China | 56% | 64% | 77% | 86% | 81% | 76% |
| Vietnam | 31% | 23% | 19% | 77% | 56% | 40% |
| Japan | 78% | 96% | 96% | 71% | 90% | 96% |
| U.S. | 97% | 97% | 76% | 93% | 93% | 100% |
| Total | 56% | 60% | 54% | 85% | 77% | 60% |
| Note: 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. Data collection for FEAV began in 2020. 4. Main raw materials included in the 2021 statistics are PX, PTA, MEG, Bio-MEG and cotton, including recycled cotton. |
Supplier Engagement
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.
