Supply Chain Management

Supply Chain Framework

The production and operating activities of ChipMOS, not only create the direct economic values, more importantly, help the upand downstream industrial chain to create the indirect economic values via the technology cooperation. By following the RBA code of conducts as the policy guidelines for the supplier management, it is committed to promote the local sourcing strategy and supplier coaching, seeking to improve the overall competitiveness and create the win-win situation.

 

 

Driving Suppliers' Green Competitiveness

Through the climate change/water security survey, we can ensure more effective management and oversight of the environmental actions of both direct and indirect material suppliers. The supplier questionnaire distribution rate increased from 80% (70 companies) in 2022 to 82% (99 companies) in 2023, resulting in an overall response rate of 100%. In 2023, we will be focusing specifically on distributing the questionnaire to the top 20 greenhouse gas emitters (13 companies). The carbon and water survey investigates 7 material topics, including climate governance, climate advocacy and action, compliance with applicable regulations or drivers, adoption of international standards, goal-setting for management, organizational GHG emissions assessment, and organizational water security assessment. Upon collecting and analyzing the survey responses, ChipMOS will carefully review the feedback from suppliers and based on the analysis results and improvement suggestions, offer constructive feedback to suppliers for discussion and explore the feasibility of implementing improvements.

 

Through the SCM platform, all suppliers are made aware of our attitude and direction on climate issues. Suppliers are encouraged to evaluate and invest in related plans to enhance their green competitiveness.

 

ChipMOS publish the information of climate change on the SCM platform


Suppliers shall accelerate the preparation and dedicate themselves to signing or committing to climate issues. The commitments are as follows:
 

 

Local Sourcing Strategy

By enhancing the local sourcing strategy, ChipMOS reduces the supply chain risks, as well as the carbon emssion in the overall supply chain and creates the local jobs. The term “local supplier” refers to the manufacturing plants of suppliers locate at the same area as the production bases of ChipMOS. For instance, if a manufacturing plant of a supplier locates in Taiwan, this is a local supplier to ChipMOS’ plants in Taiwan. In 2023, 63% of the procurement expenditure came from local suppliers. In recent years, the proportion of local procurement has shown a slight upward trend. In 2023, due to factors such as changes of gold price/exchange rate/rising inventory level and rising price of some raw materials, the order amount in Taiwan was increased. 

 

Looking to the future, we will insist the local sourcing strategy and spirit, to select quality suppliers in Taiwan, and increase the proportion of local sourcing, while expecting to bring more jobs to Taiwan, and further enhance the development of overall local industries.

 

 

Supplier Management Committee

 

ChipMOS complies with the code of conducts of the Responsible Business Alliance (RBA) and applies such as the policy and guidelines to manage the suppliers in terms of environment and human rights, and clearly specifies the five management scopes for suppliers, including labor, health and safety, environment, professional ethics and management system.

 

ChipMOS has established the “Supplier Management Committee” consisting of five groups, namely engineering, subcontracting, production and material management, procurement, and quality. The Committee works in a cross-function way to implement the supplier management scopes together, including new supplier selection, supplier audit, and supplier appraisals, to be committed to conform to the standards of RBA’s code of conducts, and work with the suppliers to grow together, and operate sustainably.

 

Supplier Code of Conduct

 

Supplier Ethical Management Policy

To ensure that suppliers understand ChipMOS's adherence to honest and integrity in all business activities, we require for additional clauses regarding Regulations Governing Professional Moral Conduct when signing procurement contract with suppliers. In case of illegal conduct from ChipMOS's employees or relevant suppliers, the incident can be reported via our whistleblowing mailbox at Audit_Committee@chipmos.com. To collectively bear the responsibility of ethical practices with our suppliers, ChipMOS will investigate and punish the illegal conduct, while keeping the identity of the whistleblower confidential and to adopt proper protection measures.

 

Supplier's CSR Statement

Since 2014, ChipMOS have been asking its suppliers of raw materials, equipment and specific services (including human resource agencies, janitors, security personnel, resident employees of vendors, catering personnel and so forth) to sign the Declaration of Corporate Social Responsibility, which clearly requires the partners in the supply chain to fulfill the corporate social responsibilities together. As of the end of 2023, a total of 267 suppliers have signed the Declaration of Corporate Social Responsibility; the signature reply rate is 100%.

 

Selection of New Suppliers

 

ChipMOS has built a set of new supplier selection process. When the unit in need request for new suppliers, the Supplier Management Committee will evaluate, including for major dimensions: engineering technical capability, quality management system, price, service (including capacity and promise of delivery time), as well as the industrial history from the supplier's existing customers, to evaluate the risks of introducing the supplier in a holistic manner.

 

ChipMOS expects the suppliers agree with our philosophy of the sustainable operation, and the requirement of ensuring product quality. We adopt the highest reviewing criteria for the evaluation; for the new suppliers of the key materials, their certifications of international quality systems are verified, e.g. ISO 9001, ISO 14001, IATF 16949, and ISO 45001; implementation of the process management, green product, Responsible Business Alliance (RBA) and health and safety management are reviewed, to ensure the suppliers meeting the requirements in terms of environment and labor practices, including product quality, prohibition of hazardous substances, and employee protection. The selection process of new suppliers is as the following figure. These who pass the evaluation will be registered in ChipMOS’ Approval Vendor List (“AVL”) for subsequent daily management. To be more flexible in terms of deploying supply sources and coping with customers' demands, 3 new suppliers were added in 2022. All of them 100% passed the evaluation, conforming to the ChipMOS' requirements for quality, environment and social sustainability practices.

 

 

Supplier Appraisal

Supplier Audit

 

ChipMOS Suppliers Audit Focus and Implementation

▪ 2023 Supplier audit focus and audit results

 

 

 

Coaching and training suppliers

 

By correcting the defects found during the appraisal and audit, ChipMOS insists a positive and open attitude to discuss with the suppliers, plus promotions and training from various aspects, to learn from each other while growing together, and ensuring no ecurrence of defects. If suppliers obtain certification of international standards, it is a plus for audit and evaluation. ChipMOS will keep on coaching suppliers to obtain various certification of international standards.

 

Actively coaching supply chain partners to pass automotive specification verification

In recent years, our suppliers have shown improvements in their accreditations to relevant international standards and specifications. In light of our customers’ demands for automotive application products in 2023, ChipMOS has not only obtained IATF16949 certification, the but also enforced more stringent standards in the control of relevant suppliers’ production quality. Apart from requiring suppliers to incorporate relevant automotive specification components in their annual supplier audit quality questionnaire, we have also implemented stricter assessment and evaluation for automotive product suppliers pursuant to Germany’s VDA 6.3 Process Audit. Through the process of supplier coaching and audits, we hope to help suppliers better understand the requirements of pertinent automotive specifications so that they can obtain relevant certifications. The percentage of ChipMOS’ suppliers that have obtained IATF 16949 certification has grown from 42% in 2021 to 48% in 2023. Not only that, the percentage of suppliers that have obtained the certification in the past three years has grown by 10%, reflecting a significant increase in the quality and competitiveness of our suppliers.