Supply Chain Management

Management Approach (MA) for Material Topics

Supply Chain Management

Management Policy

In the industrial value chain, FPCC has been keeping a desirable relationship with all partners. Our suppliers and contractors mainly include manufacturers, distributors, or dealers and engineering contractors (construction or outsourced design, etc.).

We have MAs in place for the management of suppliers and contractors. These policies fulfill quality and industrial safety requirements. In addition, efforts are made to require that manufacturers doing business with us meet environmental protection, industrial safety, and human right requirements in compliance with'fair trade principles. Suppliers are required to 100% comply with the Company's suppliers and contractors management policy. If suppliers are found to have a negative impact on the  environment and do not comply with the Company's regulations, they will be rejected and rated for subsequent dispositions. It is our hope to jointly pay attention to and minimize environmental impacts associated with operations with the value chain, and help each other on the road to sustainability.

Raw Materials Procurement Management

Local procurements accounted for 8% of the Company's total procurement amount in 2024 due to the special nature of the industry, which relies on imports for the main raw materials (crude oil, naphtha), accounting for 90% of all procurements. If the main raw materials are excluded, local procurements account for 74% of procurements. Hence, raw material procurement has a massive effect on the Company, and the Company has adopted the following methods to maintain stable raw materials supply:

Implementation of Management and Evaluation

Suppliers that intend to apply for business dealings with the Company must pass a documentary evaluation, and will be subjected to an on-site evaluation when necessary. We will only begin business dealings with suppliers that pass the evaluation and a profile is set up. If a supplier makes a late delivery, delivers products with poor quality, or is found in violation of labor safety rules, the Procurement Department’s supplier evaluation mechanism will assess whether to blacklist the supplier. This allows us to select excellent partners for long-term cooperation.

We require that all suppliers comply with government laws and regulations during each procurement, including: applicable industrial safety qualifications, ISO qualifications, indications of hazardous materials, and illustrations. Manufacturers are required to properly recycle used containers or carrying aids, and give priority to products made by organizations for persons with disabilities. In the Quotation and Order Notice, suppliers are asked by the Company to precisely follow the requirements, furthermore, the Company's stance on the spirit of corporate sustainable management and the requirement to comply with fair trade principles are stated. Our goal is for vendors we do business with to meet requirements on environmental protection, labor safety, and human rights.

We began requiring vendors to sign the “supplier/contractor social responsibility commitment” and administering the  “supplier/contractor social responsibility questionnaire” in 2019, so that vendors will understand our philosophy and jointly fulfill their social responsibility. Vendors are required the sign the commitment and respond to the questionnaire when they log into Formosa Technology E-Market Place or after placing an order, and are required to comply with related regulations. The environmental and social impact assessment was based on 1,547 commitment letters and 1,542 questionnaires, and the assessment results found no significant or potential negative impacts.

Vendor evaluations are arranged in the following year as needed based on the response to the “supplier/contractor social responsibility commitment” and “supplier/contractor social responsibility questionnaire” in the previous year, ensuring that our vendors fulfill their CSR according to requirements. Evaluation results in 2024 showed that no major risks, such as those associated with child labor, forced labor, freedom of association, and collective bargaining, were found among suppliers/contractors.

Supplier Opinion/Complaint Mechanism

Formosa Technology E-Market Place has a professional customer service center to provide suppliers with complete consultation services around the clock for questions regarding use of the Company's online price quotation platform or questions about the Company. Furthermore, Formosa Technology E-Market Place has a report and complaint platform with dedicated personnel to look into and respond to reports. Suppliers expressed their opinions in 91 cases in 2024, which can be broken down as follows:

Green Procurement

To reduce carbon emissions from vehicles making deliveries, we worked together with freight forwarders in implementing electronic operations for concentrated delivery by suppliers. As of the end of 2024, electronic operations for concentrated delivery by suppliers reached 96.9%.

Furthermore, we have replaced paper invoices with electronic invoices, and 91.1% of the vendors we do business with are also using electronic invoices as of the end of 2024.

Ratio of Electronic Invoices Over the Years

The use of products with the Green Mark reduces resource consumption, reduces environmental pollution, and mitigates the impact on Earth. It can also drive suppliers to develop green products, and elevate the production of green products in Taiwan. We procure 363 green products, including plastic pallets, toner cartridges, and fluorescent lamps, and the procurement amount of green products recognized by the government was NT$124 million in 2024.

Authorized Economic Operator (AEO) Certification