4-2 Sustainable Supply Chain Management and Responsible Procurement
With more than 20 years of experience in process supply system construction, Novatech aims to be the "best helper in high-tech industry". With professional technical development experience and the most competitive engineering team, we actively select quality suppliers and maintain good partnerships to build a strong supply chain team, so that we can immediately grasp the changes of raw materials and construction outsourcing prices, effectively control the execution progress, cost and construction quality of each project, and then provide customers with the best quality
construction services and competitive project quotations. In addition, we have established a comprehensive supplier assessment and responsible procurement mechanism as the basis for selecting excellent third-party contractors, and regularly conduct quality assessment and replacement of third-party contractors based on the assessment of construction progress control, construction quality, construction cooperation and work
safety performance. Additionally, through regular promotion and communication of human rights, social and environmental issues, we strengthen our suppliers' awareness of sustainability and establish a localized integrated supply chain to maintain our sustainable competitiveness.
Upstream, midstream, and downstream connectivity of high technology manufacturing process supply system industries
2022 Category and Number of Suppliers
Novatech has always treated suppliers as strategic partners, and believes that a business needs to co-exist and grow together with our supplier partners. Novatech's suppliers can be divided into three main categories, namely material manufacturing, equipment manufacturing, and subcontractors. The total number of suppliers in 2022 was 482. Novatech's main production and operation base is in Taiwan. In order to promote local industry clusters and enhance regional economic development, we have chosen to cooperate with local suppliers as much as possible, except for some bulk chemicals that cannot be sourced locally because the technology is held by overseas suppliers.
Local Procurement
Suppliers and contractors are important partners in Novatech's business. Through good communication, close cooperation and proper management and supervision, the Company can work together with our suppliers towards sustainable operation. We believe that as a responsible company, we should promote local economic activities. Therefore, for the purpose of assisting local development and developing local economy, the Company gives priority to local material suppliers when selecting partners for construction projects and appoints local contractors for construction planning. In 2022, 90.03% of the local procurement were made from Taiwan-based manufacturers(Note). Due to the shortage of foreign raw materials and the significant increase in transportation costs, Novatech actively communicated with customers to promote local procurement, resulting in a significant increase of 4.13% in the proportion of local procurement compared to 85.9% in the previous year.
Product Packaging and Transportation
In order to implement the policy of energy saving and carbon reduction, and to reduce the environmental hazards caused by over-packaging or long-distance transportation of products, Novatech adopts the principle of green transportation and follows the following four points in its operation.
Supplier Management Policy
Novatech regards suppliers as important partners and an indispensable part of the supply chain team, and iscommitted to maintaining long-term relationships with domestic and foreign suppliers to jointly establish a stableand sustainable supply chain.
Based on strict observance of the Code of Ethical Conduct and the Code of Business Conduct of Integrity, Novatechrequires supplier to prohibit any act of bribery, acceptance of bribes, offering or accepting of unreasonable gifts,hospitality or other improper benefits, infringement of trade secrets, trademarks, patents, copyrights and otherintellectual property rights, and declares and undertakes that neither Company nor supplier will accept the use ofmetals from the Conflict Minerals.
In addition to ensuring the quality, price and delivery of our suppliers' products, we also urge our suppliers to fulfilltheir corporate social responsibility in line with the spirit of the United Nations' sustainable development goals. Weadhere to the principles of fairness and openness, cooperate with cooperating manufacturers, and carry out risk management and operation continuity plans. We believe that only excellent quality, reasonable price
and proper service are the basis for a long-term partnership and the cornerstone of sustainable development of the enterprise.
When working with a supplier, an “Agreement of Subcontractor Commitment” is signed with the supplier, which covers the requirements of the Corporate Social Responsibility Clause, including compliance with local laws and international safety and environmental laws, prevention of exposure to or mixing of hazardous controlled substances in the manufacturing and transportation process, avoidance of child labor, and prohibition of any form of labor discrimination. In 2022, we completed the signing of the "Agreement of Subcontractor Commitment" with 41 suppliers, including the top 10 suppliers in Taiwan and China with a 100% sign-up rate and the top 60 suppliers with a 68.3% sign-up rate.
