Supply Chain Management And Responsible Procurement

Supply Chain Management And Responsible Procurement

With extremely high requirements for quality and expertise, engineering services entail a strong supply chain. The Novatech group has years of experience in engineering supply systems. We maintain good relationships with our suppliers to keep abreast of the prices of raw materials and outsourcing services, as well as progress of construction. Therefore, we are able to control construction costs and quality effectively, further providing clients quality engineering services and competitive pricing. We have a sound supplier evaluation system as a basis for selecting outstanding suppliers and contractors. We also communicate our respect for human rights, social and environmental issues to our partners from time to time in hopes of achieving sustainable development together with the supply chain. In the future, the Company will continue perfecting the supply chain locally to improve productivity, quality and competitiveness for business sustainability.

 

Management Approach

Disclosure	Novatech's Practices
Importance	Select quality suppliers and contractors to provide high-end engineering services for clients
Management strategies	Conduct on-site audits on contractors in point of construction progress control, construction quality, degree of cooperation, and occupational safety as a basis for continuous partnership Communicate our respect for human rights, social and environmental issues to our partners from time to time in hopes of achieving sustainable development together with the supply chain
Policies/ commitments	Supplier Management Process, Procurement Management Process, Code of Ethical Conduct, and Ethical Corporate Management Best Practice Principles
Goals and targets	Conduct on-site audits on contractors thrice Achieve a 50% improvement rate on the defects found in supplier audits。 Have 50% of active suppliers sign the "Supplier Commitment"
Responsibility	Procurement Department, Engineering Department, and Project Department
Resources	Joint supplier evaluation system
Grievance mechanisms	Company website: Contact Us/Business Contact Suppliers contact: Vickie Tu E-Mail:Vickie_Tu@novatech.com.tw Ways of communication: email, telephone and meetings
Action plans	Request top 10 suppliers in terms of total annual transaction amounts to sign the "Supplier Commitment" Have main suppliers evaluated in 2019 fall in tier 1 according to the Supplier Management Process
Effectiveness assessment	Request top 10 suppliers in terms of total annual transaction amounts to sign the "Supplier Commitment" In 2019, 10 existing suppliers signed the "Supplier Commitment" containing corporate social responsibility clauses

 

Our Supply Chain

ovatech sells, engineers, and constructs high-tech processing equipment. Our high-tech processing supply system falls between project clients and project materials, equipment, and project outsourcers, providing clients process supply system equipment and project services. The association between upstream, midstream and downstream is shown in the following drawing:

 

Association between Upstream, Midstream and Downstream of the High-Tech Processing Supply System

Novatech always regards suppliers as strategic partners. We firmly believe that the survival and prosperity of a business rests on good supplier partnerships. Our suppliers are divided into three main categories: material manufacturing, equipment manufacturing and subcontractors. We had 405 suppliers in 2019.

 

 

 

Supplier Management Policy

The Company regards every suppliers as an important partner. We are committed to maintaining long-term relationships with our suppliers at home and abroad in hopes of building a stable and sustainable supply chain. Novatech strictly abides by the Ethical Corporate Management Best Practice Principles and the Code of Ethical Conduct. We also require that our suppliers should not bribe or take bribes, provide or accept unreasonable gifts, entertainment or other improper benefits, or infringe on trade secrets, trademark rights, patent rights, copyrights and other intellectual property rights. We declare and promise that we will not use metals in conflict and that we will requests suppliers to comply strictly.

In addition to ensuring the quality, delivery and prices of products provided by suppliers, the Company also urges suppliers to fulfill their corporate social responsibilities for environment, health and safety, human rights and integrity. We deal with suppliers and contractors in a fair and open manner while implementing risk management and business continuity planning. In our opinion, good quality, reasonable price and proper service are the very basis for supplier partnerships to last long. To maintain long-term partnerships with our suppliers, we ask them to sign the "Supplier Commitment" that advances a win-win situation for both the Company and the suppliers.

In 2019, we added corporate social responsibility clauses to the "Supplier Commitment" to enlist suppliers and contractors in achieving corporate citizenship together with us. The "Supplier Commitment" stipulates that suppliers should obtain product certifications or licenses, comply with local laws and international safety and environmental regulations, avoid contacting or mixing hazardous or controlled substances in course of manufacturing and transportation, and disallow child labor and any form of workplace discrimination. In 2019, our top ten suppliers (Note) signed the "Supplier Commitment." We expect to have all tier 1 suppliers sign the "Supplier Commitment" in the future.

 

Supplier Evaluation Process

 

Four Evaluation Items