Supply Chain Management
Supplier Management
To provide safe, reliable, high-quality and sustainable green chemical products, Everlight Chemical works with its raw material supply chain partners to jointly fulfill the responsibility for sustainable development, with business integrity as the foundation for partnerships. We promote green procurement practices and implement a supplier management policy to oversee suppliers’ performance in corporate social responsibilities. We expect our supplier partners to follow applicable labor and human rights regulations, implement proper environmental health and safety practices, ensure product quality and timely delivery, offer competitive prices and provide quality services, all of which would facilitate win-win collaborations.
Supplier Screening & Evaluation
We require all suppliers familiarize with standards regarding regulated substances in raw materials as well as information about restricted substances per regulations in various countries. Based on these requirements and more, we have established criteria to select suppliers who meet out environmental protection and social responsibility standards. Our environmental and social criteria for supplier selection are based on domestic and international ESG standards as well as the Responsible Business Alliance (RBA) Code of Conduct:
Environmental Protection Standards
Based on domestic and international ESG standards and requirements
Record of awards by government agencies for environment-related accomplishments or outstanding environmental management
No record of environmental violations
Proper management of toxic and restricted substances, solid waste, wastewater and exhaust; having the licenses, proposals and dedicated personnel per local regulatory requirements
Proper management of energy, resources and greenhouse gas (GHG) emissions
– Records of energy and resource consumption and GHG emissions
– Energy/Resource consumption and GHG emissions reduction plans
– Records of energy and resource consumption and GHG emissions
– Energy/Resource consumption and GHG emissions reduction plans
Assessment and treatment of environment-related risks and opportunities
– Assessment on significant environmental impacts
– Implementation of measures to mitigate significant environmental impacts
– Assessment on significant environmental impacts
– Implementation of measures to mitigate significant environmental impacts
Social Responsibility Standards
Supplier Selection Criteria with reference to the RBA guidelines
Commit to providing (workers with) acceptable living (working) environment
Forbid forced labor
Protect freedom of association and collective bargaining
Ensure employee health and safety
Ensure employee health and safety
Humane treatment of employees with disciplinary procedures clearly defined and communicated to employees
Adhere to the maximum working hours limit
Zero tolerance for discrimination
Prohibit child labor
Local Procurement Ratio
Due to the nature of the chemical industry, a large portion of our materials is sourced from China. In recent years, due to the impact of the COVID-19 pandemic, procurement from local suppliers has slightly increased, reaching 28% in 2022. Going forward, we will give priority to local procurement as long as it meets our product specification criteria.
Local Procurement Ratios of Everlight Chemical Taiwan Headquarters (2020-2022)
Category
Year
2020
2021
2022
Local Procurement
Taiwan (%)
26
24
28
Non-local Procurement
China (%)
37
42
41
India (%)
23
24
17
Europe and Americas (%)
14
10
14
Year
Local Procurement—Taiwan
2020
26%
2021
24%
2022
28%
Year
Non-local Procurement—China
2020
37%
2021
42%
2022
41%
Year
Non-local Procurement—India
2020
23%
2021
24%
2022
17%
Year
Non-local Procurement—Europe and Americas
2020
14%
2021
10%
2022
14%
Local Procurement—As % of Total Procurement Value
Everlight Chemical
27.85％
Everlight Suzhou
11.64％
Trend Tone Imaging
0.20%
Non-Local Procurement—As % of Total Procurement Value
Everlight Chemical
72.15％
Everlight Suzhou
88.36％
Trend Tone Imaging
99.8%
Note: The two subsidiaries belong to the toner industry and work with domestic/overseas upstream suppliers of resin, metal powder and color chemicals to ensure steady supply of raw materials.
2022 Local Procurement Ratios of Everlight Chemical & Production Facility Subsidiaries
Category
Region
As % of Total Procurement Value
Local Procurement
Everlight Chemical
27.85
Everlight Suzhou
11.64
Trend Tone Imaging
0.20
Non-Local Procurement
Everlight Chemical
72.15
Everlight Suzhou
88.36
Trend Tone Imaging
99.80
Note: The two subsidiaries belong to the toner industry and work with domestic/overseas upstream suppliers of resin, metal powder and color chemicals to ensure steady supply of raw materials.
No Data Found
Supply Chain Changes in 2022
In 2022, 72% of the raw materials used by Everlight Chemical were imported from overseas. To minimize the shipping distance for raw materials, we have gradually shifted our import sources from Europe and Americas to China, India, Japan, South Korea and other neighboring countries.
In recent years, China has been strengthening its environmental protection requirements, imposing higher standards for air, water and soil pollution, which has indirectly added to the uncertainty in the supply of chemical intermediates. In addition to seeking more suppliers and shifting to suppliers in other countries, we have also implemented hedging practices to avoid the risk of supply disruption.
Impact of the COVID-19 pandemic persisted in 2022, with port congestion, labor shortage, container and capacity shortage and longer shipping routes during the first half of the year continuing to affect the supply of raw materials. In response, Everlight Chemical has enhanced production-marketing coordination internally, while maintaining close communication with suppliers through diverse communication tools. The Company has also implemented various measures, including conducting advanced procurement, increasing inventory, monitoring shipping schedules more closely, and helping suppliers secure container slots, to ensure raw material supply meets production needs.
Supply Chain Risk Management
To ensure the reliable supply of raw materials and align with the Company’s strategy to enhance organizational resilience and strengthen raw material sourcing management, we have expanded the scope of supplier risk evaluation to evaluating suppliers by all raw material items. The results of our assessment in 2022 showed that 96.9% of suppliers were in the low-risk category.
To proactively address supply chain risks, we have included the percentage of medium/high-risk suppliers as a key performance indicator (with a target of ≦3% for the year) under Organizational Resilience, one of the material topics identified for 2022.
2022 Supplier Composition by Risk Level (%)
n = 521
No Data Found
Year | 2020 | 2021 | 2022 | |||
Risk Level | No. of Suppliers | ％ | No. of Suppliers | ％ | No. of Suppliers | ％ |
Low | 497 | 96.7 | 529 | 96.7 | 505 | 96.9 |
Medium | 13 | 2.5 | 14 | 2.6 | 14 | 2.7 |
High | 4 | 0.8 | 4 | 0.7 | 2 | 0.4 |
Total | 514 | 100 | 547 | 100 | 521 | 100 |
In response to increased supply chain risk from the pandemic, we have implemented strategies such as increasing inventory levels and advanced procurement. As a result, the number of mid/high-risk suppliers has not increased substantially, indicating that increased inventory and advanced procurement had effectively reduced risks.
Looking ahead, we will keep track of the inventory status of raw materials with single-source supply on a monthly basis and expand sourcing options to reduce the risk of supply disruption. Meanwhile, we continue to maintain increased inventory levels, make advanced procurement and utilize weekly reports to monitor material consumption and restocking progress. Towards medium- and high-risk suppliers, we utilize the Supplier Evaluation Form to enable closer monitoring of the suppliers’ performance on product quality, process management, environmental protection system, safety and health system and business continuity.
Green Supply Chain Management Performance
To promote green supply chain development, we divide suppliers into three categories (major, critical and new suppliers) and send out supplier evaluation forms to assess each supplier’s ESG/CSR policy (or lack of) and performance in environmental and social aspects. We also require critical suppliers to complete our Regulatory Compliance Survey, which assesses the following items: (a) improvement on wastewater generated per ton of finished product and wastewater treatment, (b) compliance with occupational health and safety regulations, and (c) compliance with relevant local government regulations regarding labor practices.
Supplier Type | Major Supplier | Critical Supplier | New Supplier | ||
Assessment Method | Supplier Evaluation Form | Supplier Evaluation Form | Environmental/Social Regulatory Compliance Survey | Supplier Evaluation Form | |
No. of Suppliers | 171 | 32 | 32 | 16 | |
Survey Response Rate | 58% | 78% | 84% | 100% | 100% |
No. of Suppliers that Completed the Survey/Form | 99 | 25 | 27 | 32 | 16 |
Compliance Rate | 100% (Note 1) | 100% | Improved wastewater generation: 96% (Note 2.1) Improved wastewater discharge: 93% (Note 2.2) | Occupational safety and health regulations: 94% (Note 2.3) Labor laws: 100% (Note 2.4) | 100% (Note 1) |
Note: The criteria for compliance on respective environmental and social indicators are as follows.
1. Supplier Evaluation Form: For supplier evaluation forms, a supplier is marked as “compliance” only if they score >50% on all environmental and social indicators. (The 2020 evaluation form used a 3-point scale, where a score of >2 qualified as compliant. The 2022 evaluation form used a 5-point scale, where a score of >3 qualified as compliant)
2. Regulatory Compliance Survey:
(2.1) Improvement on wastewater generated per ton of finished product: Out of 27 suppliers, one showed declined performance. The increase in water consumption and wastewater volume was due to improvements in product quality, but the wastewater was treated and recycled, resulting in improved wastewater discharge performance compared to the previous year.
(2.2) Improvement on wastewater discharge performance: Out of 27 suppliers, two showed declined performance. One supplier had increased wastewater discharge due to excess rainwater and residential water use. The other had increased wastewater discharge due to increased production capacity, but their performance on reducing wastewater generation improved.
(2.3) Compliance with occupational safety and health regulations and (2.4) labor laws is calculated separately. A supplier is rated “non-compliant” as long as there was an incidence of violation or non-compliance with applicable regulations. In 2022, two suppliers were found with records of violating occupational safety and health regulations, resulting in an overall compliance rate of (32-2)/32 = 94%.
(2.1) Improvement on wastewater generated per ton of finished product: Out of 27 suppliers, one showed declined performance. The increase in water consumption and wastewater volume was due to improvements in product quality, but the wastewater was treated and recycled, resulting in improved wastewater discharge performance compared to the previous year.
(2.2) Improvement on wastewater discharge performance: Out of 27 suppliers, two showed declined performance. One supplier had increased wastewater discharge due to excess rainwater and residential water use. The other had increased wastewater discharge due to increased production capacity, but their performance on reducing wastewater generation improved.
(2.3) Compliance with occupational safety and health regulations and (2.4) labor laws is calculated separately. A supplier is rated “non-compliant” as long as there was an incidence of violation or non-compliance with applicable regulations. In 2022, two suppliers were found with records of violating occupational safety and health regulations, resulting in an overall compliance rate of (32-2)/32 = 94%.
Among all suppliers, the response rate of major suppliers was 58%, and all responding suppliers complied with the environmental and social indicators. Among critical suppliers, the response rate for the environmental compliance survey was 84%, with compliance rates of 96% and 93% for the two indicators respectively. The response rate for the social compliance survey was 100%, with compliance rates of 94% and 100% for the two indicators respectively. For suppliers that failed to comply with relevant indicators, we will continue to engage in communication and collaboration to facilitate the adoption of green chemistry principles. In 2022, all newly added suppliers were 100% compliant with our environmental and social indicators.
Raw Material Supplier Satisfaction Survey
Raw Material Suppliers
We conduct the Raw Material Supplier Satisfaction Survey to identify areas of improvement in our interaction and procurement process with suppliers. By engaging in constructive and specific communication, we strive to foster a strong relationship with our suppliers for win-win partnership. In 2022, we conducted the Supplier Satisfaction Survey with 35 suppliers (excluding suppliers for outsourcing projects) whose annual procurement exceeded NT$30 million. The survey response rate was 100%, and the overall satisfaction score was 92.3 points.
Two areas scored above 95 points, which were the professional ethics and integrity of our purchasing personnel, and the professional competence of our purchasing personnel. Two areas scored below 90 points, which were handling of non-compliant raw materials from suppliers and supplier education and training, both involving individual suppliers. We will enhance communication with related suppliers and provide necessary assistance to address these issues.
On-Site Contractors
1. In 2022, a total of 8,527 contractors received on-site hazard briefings. We also organized 42 training sessions for contractors, with a total of 359 participants, aiming to enhance contractors’ operational safety awareness.
2. In the fourth quarter of 2022, each plant conducted its first satisfaction survey for contractors, covering 89 contractors in total. The overall contractor satisfaction score was 96.8 points. The “Ethics and Integrity of Purchasing Personnel” item in the survey received a high average score of 9.9 points, while the “Review Process prior to Operations” item scored a slightly lower score of 9.6 points. We will continue to communicate and collaborate with contractors to address their concerns and make improvements accordingly.
2. In the fourth quarter of 2022, each plant conducted its first satisfaction survey for contractors, covering 89 contractors in total. The overall contractor satisfaction score was 96.8 points. The “Ethics and Integrity of Purchasing Personnel” item in the survey received a high average score of 9.9 points, while the “Review Process prior to Operations” item scored a slightly lower score of 9.6 points. We will continue to communicate and collaborate with contractors to address their concerns and make improvements accordingly.