Phison sees suppliers as our important partners. We are committed to building mutual trust and a stable sustainable supply chain, as well as flourishing businesses together with our suppliers. By the three center factors in measuring the sustainability: economic (quality, price, delivery, service), environmental (corporate environmental commitment, environmental management system, control of hazardous substances), social (corporate social responsibility, responsible business alliance, human rights), we use our corporate influence to ask our suppliers to perform their responsibility on corporate sustainability.
Committed with our social responsibility, Phison has built a responsible supply chain in accordance with the four major principles of supply chain Management: Code Compliance, Risk Assessment, Auditing Programs, Continuous Improvement, and Implementation of Responsible Supply Chain Management.
In the purchase contract signed with the supplier, Phison Electronics clearly stipulates that the supplier must follow the "RBA Responsible Business Alliance Code of Conduct" and fulfill the management responsibilities of human rights, occupational safety, environmental protection, and integrity.
In 2021, Phison establishes a supply chain management platform. We put important policies such as Human Rights Policies and Supplier Codes of Conduct on the platform and encourage suppliers to click and read. At the same time, we require all new suppliers and existing suppliers to fill in the sustainability risk assessment questionnaire, which covers the five aspects of labor, occupational health and safety, environmental protection, supply chain management and sustainability & risk management. After the supplier's self-assessment, we will conduct a re-evaluation. The supplier's sustainability risk level will be divided according to their scores. Ultimately, we will adjust and optimize the supply chain in accordance with the suppliers' long-term sustainability performance.
To control the sustainability risk in our supply chain, Phison has established the "RBA Vendor Management Policy", with an annual audit being conducted on all of our critical suppliers with
respect to labor rights, health and safety, environmental management, code of ethics, and compliance and effectiveness of their management systems through documentation audit or on-site
audit. Auditors will promptly inform the supplier of any defects found during their audits. The defects will then be reported to the department head and the supplier will be asked to provide an
improvement plan; furthermore, the supplier will be required to complete the improvement works within two weeks.
In 2020, we conducted audits on 21 raw material suppliers, 21 contractors and system service providers, and 5 service providers, with a passing rate of 72.3% for their audit results. Among the reasons for unacceptable audit results, failure to implement relevant management measures is the main common defect. 84.6% of our suppliers have completed the improvement of their defects within the deadline.