Sustainable Supply Chain Policy

For more information on Walsin Lihwa's upstream, midstream, and downstream supply chain, please refer to 2.1.1 Business Development of this report and the corporate website

Establishment of Procurement Center

For the purpose of corporate governance, integration of procurement resources and the implementation of Walsin Lihwa's procurement culture (sunshine, sustainable, professional, efficient), the company established a procurement center in October 2022 with the goal of establishing a standardized and transparent procurement process. We use information system tools for procurement management, select long-term strategic partners, and work with them to establish a sustainable supply chain, and guide suppliers to develop the common value of corporate social responsibility.

Key Supplier Identification

In order to implement effective supplier management, Walsin Lihwa identified 173 key suppliers based on important raw materials, equipment and construction contracts, and waste disposal projects according to the principles of procurement amount, importance, influence, and uniqueness. This is an increase of 8 companies from 2021, accounting for 62.66% of total purchases. These suppliers will be partners in the joint promotion of a resilient supply chain and corporate social responsibility.

Local Procurement

We work together with our suppliers in the pursuit of corporate sustainability and growth. We continue to engage in local procurement and to promote local economy and reduce energy consumption in transportation. 16.31% of procurements made by our key suppliers in Taiwan are sourced from local suppliers (key metals and minerals in Taiwan are mostly imported from abroad); 37.51% of procurements made by our key suppliers in mainland China are sourced from local suppliers; and 41.44% of procurements made by our key suppliers in Malaysia are sourced from local suppliers. Overall, 29.58% of our key suppliers are local suppliers, a decrease of 2.04% compared to 2021.

Green Procurement

In order to reduce the impact of our products on the environment, we are committed to green procurement. The Wire and Cable Business recycles old wood, iron shafts, and seal plated for reuse to reduce the number of new products procured. The Stainless Steel Business actively uses recycled raw materials such as scrap steel, scrap copper, and nickel/chromium crude iron. In 2022, Taiwan plants invested NT$10.37 billion in green procurement, accounting for approximately 12.80% of the overall procurement ratio in Taiwan.


COVID-19 Supply Chain Risk Management and Countermeasures

Due to the impact of the Covid-19 pandemic, to ensure the supply of raw materials, in addition to internal pre-contingency management to actively stabilize our supply chain partner relationships, Walsin ensured a stable supply of raw materials by regularly reviewing and establishing reasonable safety stock, decentralizing the purchase of goods, and flexibly adjusting the production mix of raw materials.

  • Wire and Cable Business

    We actively develop alternative material sources to increase the flexibility of supply and increase the supply from the Asia-Pacific region (the original medium and low voltage cable materials were purchased from the United States, Europe and other countries, and are instead supplied from the Asia-Pacific region, China, Korea, Japan, etc.) to reduce the impact of transportation on material sources. Strategically increasing the safety stock of certain key materials; In addition, flexible work practices such as teleconferencing, video conferencing or compartmentalization are used to increase the proportion of information operations to enhance operational efficiency.

  • Stainless Steel Business

    Since the beginning of the pandemic, the Stainless Steel Business has been actively coordinating with existing suppliers to confirm the status of shipments. All suppliers maintained a smooth production chain during the pandemic outbreak. On the other hand, we have developed the domestic production of raw materials that were imported and successfully increased the development of key items to stabilize the supply as well as reduce the cost.

Implementation of Supply Chain Management

Suppliers' Commitment to Sustainability and Self-Assessment

1. In 2022, the "Supplier Executive Certification of Compliance" and "Commitment to Ethical Conduct" merged and reformatted into a new version of "Supplier's Undertaking", which is issued to key suppliers and new
suppliers for signing. The Wire and Cable Business has 76 key suppliers, eight of the suppliers have published regular sustainability reports and disclosed ethical measures, and are considered to have signed the Conduct.
2. In 2019, we established a Key Supplier Risk Identification System for key suppliers.

Supplier Evaluation

To strengthen and implement sustainability of suppliers and to work with partners to build up the strength of the company, Walsin Lihwa not only evaluates suppliers' quality, completion/ delivery time, pricing, service/communication, and coordination to ensure that suppliers can meet the requirements, but we also strengthen the supplier management mechanism by requiring suppliers to fill out the "Supplier's Undertaking" to enhance supplier awareness. In 2022, a total of 161 key suppliers in the Wire and Cable Business, Stainless Steel Business, and Real Estate Business were the targets for evaluation. These suppliers would evaluate their own management status and fill out a new version of the "Corporate Social Responsibility (CSR) Sustainability Self-Assessment Form". The assessment items include economic (sustainability management, supplier management, trade secret protection), social (human rights, health and safety), and environmental (management systems, greenhouse gases, air pollution, waste management) aspects. The sustainability management of suppliers is analyzed based on results of the self-evaluation form, and then the probability, level of impact, and warning mechanisms for incidents that will threaten its sustainability are assessed, identifying the threat and impact of incidents that threaten the sustainability of key suppliers on Walsin Lihwa's operations.

Key Supplier Risk Identication

Note: Excluding Walsin Precision key suppliers

Supplier Audit and Guidance Mechanisms

To enhance the scope and intensity of the supply chain sustainable development, in addition to increasing the number of key suppliers and holding annual supplier conferences in 2022, we selected key suppliers for onsite audits and interviews, and provided guidance and assistance based on the risk of different sustainability issues, to prevent and reduce the chance of risk occurrence. Our measures include:
  1. Regularly hold communication and discussion meetings to support suppliers' growth and improve their business quality.
  2. Continue to carry out 100% pre-work safety education and training for existing contractors.
  3. Onsite checking of suppliers' practices in management, social and environmental aspects, and continue to improve the assessment and checking of deficiencies.
  4. Establish risk identification mechanisms

Sustainable Supply Chain Management Courses

Sustainable Supply Chain Management Courses have been held since July 2022, so that we can improve sustainable supply chain management. We will also establish a supply chain sustainability onsite review mechanism and supply chain sustainability risk assessment mechanism, in order to improve the plant and procurement unit employees' sustainable supply chain promotion and management abilities.

Deepen Sustainable Supply Chain Management and Partnership

▪ Wire and Cable Business Supplier Partner Exchange Meeting

Taiwan (Hsinchuang Plant / Yangmei Plant)
The Hsinchuang/Yangmei Plant held the 5th Supplier Meeting online to continue the promotion and expand the scope and depth of sustainable management issues. At the same time, we explained the future outlook of the cable business group with our supplier partners and invited two exemplary manufacturers to share their experience on the issue of energy saving and carbon reduction to learn and grow together with our partners.

Mainland China (Shanghai Walsin / Dogguan Walsin)
The Shanghai Walsin and Dongguan Walsin Plants held the second CSR supplier meeting in November 2022 with three themes: "Honest Business Practice", "Sustainable Green Supply Chain Management", and "Contractor Blue Book of Safety and Health Management" to exchange and interact with suppliers. The Company also invited our suppliers to share their carbon reduction practices and insights on the issue of climate change, hoping that Walsin Lihwa and our supply chain partners can make an impact together to promote sustainable economic, social, and environmental development.

Deepen Sustainable Supply Chain Management and Partnership

▪ Stainless Steel Business Supplier Partner Exchange Meeting

Taiwan (Yenshui Plant / Taichung Plant)
In October 2022, the Stainless Steel Taiwan Purchasing Department held a CSR supplier exchange meeting at the Yenshui Plant. With business integrity as the main axis, we promoted the green supply chain, safety and security policy, and contracting terms and conditions with our partners, and we hope that we can work together with them to exert social influence.

Mainland China (Yantai Walsin)
In October 2022, the Stainless Steel China Purchasing Department held an online CSR supplier exchange meeting promoting the green supply chain, safety and security policy, and the contracting terms and conditions with our partners. Through Q&A sessions, the partners are able to understand the importance of practicing corporate social responsibility.

▪ Stainless Steel Business Supplier Partner Exchange Meeting

Customer Service

Walsin Lihwa's Adheres to the Spirit and Philosophy of Serving Customers: Focused on customer and industry development, optimizes the service process and enhances customer trust to create a win-win situation.

In order to improve the quality and efficiency of customer service, the Stainless Steel Business has fully implemented the CRM system in Taiwan and Mainland China to integrate the management of business activities such as quotation, customer complaints, and billing to provide high quality and efficient customer service. In terms of production, we will continue to use data analysis to improve the raw material purchase and production schedule to enhance delivery stability, the iSCM system is planned to be built at the Yenshui plant in 2023 to demonstrate specific products. Through interfacing with customers' systems and optimizing information exchange, it will facilitate customers to track order progress and reduce inventory, while shortening order communication time and facilitating production planning so that products can be delivered to customers as scheduled. In the future, we also plan to expand our products and factories to enhance the quality of our services to domestic and overseas customers.

Customer Satisfaction

In order to understand customers' feedback on product quality, the Stainless Steel Business Group held 32 customer technical seminars in 2022 in addition to occasional customer visits, and completed a number of customer material improvements and new product tests. We also strengthened the cross-type product knowledge of our sales staff so that customers can purchase different types of products through one single sales window, which improves the problem of having to deal with multiple windows in the past and enhancing customers' trust in sales staff.

Customer satisfaction survey

2022, a total of 1,483 customer satisfaction surveys were issued, and 1,238 copies were returned, with a return rate of 83.5%. Overall satisfaction rate 86.3% increased by 0.4% compared to 85.9% in 2021.

Protection of customer privacy

Adhering to the principle of protecting business information and customer privacy, Walsin Lihwa has established regulations such as the "Employee Code of Ethical Conduct" and "Information Security Management Procedures" to prevent unauthorized access, tampering or improper disclosure of information, and to protect customers' privacy and rights. At the same time, through publicity, management review, internal audit, etc., all employees are required to abide by relevant management regulations. In 2022, the Company has not violated the privacy of its customers nor received any complaints from customers about the violation of their privacy.

Customer Satisfaction

Wire and Cable BG

Data source: 2018-2019: Hsinchuang Plant, Shanghai Walsin; 2020-2021: Hsinchuang Plant, Yangmei Plant, Shanghai Walsin, Dongguan Walsin, Jiangying Walsin (Steel Cable); 2022 : Hsinchuang Plant, Yangmei Plant, Shanghai Walsin, Dongguan Walsin

Stainless Steel BG

Data source: 2018-2021 : Yenshui Plant, Jiangying Walsin (Specialty Alloy Materials), Changshu Walsin ; 2022 : Yenshui Plant, Jiangying Walsin (Specialty Alloy Materials), Changshu Walsin, Jiangying Walsin (Steel Cable)

Real Estate BG

Data source : Nanjing Walsin (Property Mgmt.)
Note: Due to the impact of the COVID-19 pandemic, the Real Estate Business Unit customer satisfaction questionnaire does not include data from 2019.

Walsin Precision

Data source: Walsin Precision