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Sustainable management of supply chain

 Sustainable management of supply chain

 

1. Management policy for suppliers

Winbond's procurement includes six categories: equipment, parts and components, raw materials, factory affairs, automation, and outsourced processing. Winbond has gradually expanded its implementation of corporate social responsibility from the Company to its supply chain. Winbond’s policy for suppliers aims to create an everlasting partnership with our suppliers. In addition to quality, delivery date, price and technology capability of manufacturing process, suppliers are also required to be in accordance with technology capabilities regarding corporate social responsibility, such as green products, conflict minerals, and ethical corporate management. We look forward to help our suppliers to having the same corporate social responsibility concepts and standards with Winbond.


 On the basis of the concept of practical implementation of corporate sustainable management, Winbond is committed to cooperating with suppliers, enhancing the flexibility of supply chain, creating a good and stable supply chain relationship with suppliers, and actively pursuing the practice of corporate social responsibility. We actively request our suppliers to comply with the subjects such as conflict minerals, ethics and integrity to be in line with the trend of global social responsibility.


Winbond’s new supplier management includes the assessment of quality system questionnaire in regards to quality, delivery date, services, technology and Responsible Business Alliance (RBA). Winbond disseminates corporate social responsibility to suppliers every year and requests all suppliers to sign the Integrity Agreement. As of 2019, all of the suppliers (a total of 159) have signed the agreement.


Winbond convenes a suppliers conference every year to disseminate Winbond's policy for electronics quality and corporate social responsibility. We reinforce our cooperation with the outsourced suppliers through communication and interaction between both parties. We also award suppliers with excellent performance to show our appreciation for long-term cooperation and support from our suppliers.
 

(1)Contractor management

(2)Localized procurement

Winbond’s suppliers come from the United States, Japan, South Korea, Taiwan and some other countries; our localized procurement is mainly based on important operating bases such as Japan, South Korea and Taiwan. The ratio of Winbond's localized procurement of raw materials has reached 99.5% in 2019, with a decrease of 0.4% compared to the previous year (one new foreign vendor was added). The procurement of direct materials accounted for the highest procurement proportion over the years, with a ratio as high as 43%.

 

(3)Supplier's local procurement status in 2019

2. Supplier audit

Winbond conducts regular assessments on qualified suppliers. The assessment contents include quality, delivery date, services, technology and price standard aspects, to define the rating grades for suppliers. In addition, Winbond conducts audits on suppliers and subcontractors on a yearly basis to reduce the possible risks in the supply chain. The audits are based on the three major aspects of economy, environment and society and the standards include corporate social responsibility (CSR), Responsible Business Alliance (RBA) Code of Conduct, Conflict Minerals, RoHS, REACH and relevant guidelines of QC 080000. For suppliers who are rated under Winbond’s prescribed scores, Winbond will handle the matter according to the inspection specifications for suppliers. The audit results of 37 raw material suppliers and 11 subcontractors in 2019 fulfilled Winbond's requirements.

(1)The Result of the audit assessments for suppliers/subcontractors in the economic, environmental and social aspects

(2)The ratio/number of new suppliers (raw material suppliers) through the screening with environmental standards

(3)Conflict minerals

In accordance with the Conflict Minerals Regulations of the Responsible Business Alliance Code of Conduct (RBA CoC), Winbond not to purchase and refuse to use conflict minerals that may directly or indirectly finance or benefit armed groups through mining or mineral trading in the Democratic Republic of Congo (DRC) or an adjoining country, including gold (Au), tantalum (Ta), tungsten (W) and tin (Sn). All of our main suppliers have signed the Winbond SUPPLIER CODE OF CONDUCT COMMITMENT LETTER. We had made formal statement to our suppliers regarding Winbond's policy of not using conflict minerals through the public website or dissemination letters. Winbond uses the Conflict Minerals Reporting Template (CMRT) of the Responsible Business Alliance (RBA) Code of Conduct to investigate our suppliers on conflict metals. We request our suppliers to reveal the refinery information of related materials according to Winbond’s requirements and we also verify the correctness of suppliers’ information. In the future, Winbond will continue to cooperate with suppliers to ensure that all of our suppliers use the Tier1 certified Conflict-Free Smelter announced by the Responsible Business Alliance (RBA) Code of Conduct. Winbond had conducted conflict mineral investigation on 20 vendors (14 raw material suppliers and 6 subcontractors). All suppliers met the relevant regulations and there is no prohibition on Winbond’s sale of products.

3. Plan for collaborative growth with suppliers

Suppliers are deemed as important partners for Winbond and hence one of our social responsibilities is to enhance the sustainable competitiveness and performance of suppliers. Winbond will regularly hold the suppliers conference and help improve suppliers' performance in the economic, social, and environmental aspects based on the inspection standards for sustainability.

(1)Suppliers conference

Winbond convenes a suppliers conference every year to disseminate Winbond's policy for electronics quality and corporate social responsibility. We regularly update and share Winbond’s quality requirements and innovative technologies in the industry. We reinforce our cooperation with the outsourced suppliers through communication and interaction between both parties. We also award suppliers with excellent performance to show our appreciation for long-term cooperation and support from our suppliers.

(2)Suppliers/subcontractors competency counseling

(3)Supplier/subcontractors counseling results

(4)Winbond’s sustainability review standards for electronics suppliers/subcontractors

Winbond practically implements the suppliers audit system to ensure that the relevant mechanisms are properly operated and control the supply chain risks. The audit contents include three major aspects of "quality management", "green inspection" and "social responsibility review". A total of 11 subcontractors and 37 raw material suppliers were audited in 2019.

(5)Education and training for security guards

Winbond also plans training courses for the security guards of the factory on a yearly basis. We regularly implement education and training regarding subjects such as human rights. We also conduct RBA audit on the security companies. In 2019, all security companies had passed the RBA audit. The audit includes a total of 10 human rights/health and safety items. This will not only maintain Winbond’s workplace safety but also enhance the security companies’ understanding and performance towards social responsibility.

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