We hope to work with our suppliers and brand clients to become important partners in value creation, using different internal and external policies, risk assessments, and communication methods to promote business ethics and social responsibilities within our supply chain, reducing consumption of environmental resources and environmental impacts as we enhance our capabilities to create economic, social, and environmental value that enables industrial development and sustainable growth.
Ennostar Supply Chain
The Group actively works to establish close ties with local partners, stabilize supply through long-term collaborations and strategic alliances, and reduce risks from supply shortages to enhance supply chain efficiency, accelerate development of new products, and reduce additional expenditures. We hope to build mutual trust and benefits with our suppliers through long-term collaborations, establish more competitive transactions and payment models for joint achievement of sustainable development targets, and work together to create mutually beneficial optimizations of costs and quality. For example, Lextar’s main procurement categories from existing suppliers are equipment, components, raw materials, outsourcing, and factory affairs.
We are a professional manufacturer of LED products providing OEM services for epi wafers, chips, packaging, SMT, and compound semiconductors. Our main raw materials and components include sapphire substrates, gallium arsenide substrates, special gases, metals, brackets, and LED motherboards. All key materials and components are purchased from more than two suppliers to maintain procurement flexibility and reduce risks from over-concentration of raw materials.
Supply Chain Management Strategies
EPISTAR works with supplier partners to achieve economic, social, and environmental goals associated with sustainable management through four main strategies. The Group’s two main subsidiaries (EPISTAR and Lextar) have taken the lead in implementing the RBA Code of Conduct in recent years. Apart from establishing corresponding factory regulations, we also implement these practices for related departments, all suppliers, and contractors. All raw material suppliers and contractors within the scope of RBA verification, including staffing agencies, waste disposal, and cleaning companies, are required to sign relevant documents required by RBA. The Group will continue to implement management, reviews, and improvements to ensure comprehensive management of sustainability responsibilities in our supply chain.
Selection of New Suppliers
When selecting new suppliers, we review various aspects of new suppliers, including operational services, quality systems, R&D capabilities, manufacturing, environmental management, labor rights (prohibition of child labor and forced labor), and ethics and integrity. Following this, we compile investigation reports on potential suppliers and contractors, written guarantees to avoid use of environmentally damaging substances, statements of commitment to supplier/contractor social and environmental responsibilities, quality assurance agreements, procurement agreements, and non-disclosure agreements. Only companies that adhere to specified standards can be listed as qualified suppliers for the Group.
Management of Supplier Risks
To prevent sudden supplier closures from affecting material supplies and reduce supply shortage risks from extreme climate and major natural disasters, we conduct periodic and non-periodic checks on supplier operations and finances, diversify material sources, and keep informed of geographical distributions of supplier production lines to keep abreast of supply chain conditions. We have also established an emergency response team and emergency response processes for handling of abnormal supplier incidents. We conduct regular situational drills to ensure that we adopt the most appropriate prevention measures for supply chain risk management, thereby protecting stakeholder interests from operational hazards.
In terms of supplier risk assessments, the Group has established different risk assessment processes and assessment items based on the different business models adopted by new suppliers, existing suppliers, and our subsidiaries. We also require all collaborating companies to sign a “Integrity Commitment Statement.” All Group subsidiaries will gradually incorporate sustainability concepts in risk assessment items.
The following table depicts EPISTAR policies for 2022:
√ None of our suppliers were faced with major human rights risks related to freedom of association, collective bargaining, child labor, or forced or compulsory labor in 2022.
Commitment to Conflict-Free Minerals
All Group subsidiaries practice responsible procurement and conduct reasonable due diligence as required for business dealings to ensure that no Group products use or contain conflict minerals (including gold, tantalum, tungsten, or tin) from the Democratic Republic of Congo (DRC) or surrounding regions controlled by military groups or non-governmental/illegal military factions. Suppliers included in our “qualified supplier list” are required to sign a “Supplier Commitment to Conflict-Free Minerals” to achieve joint fulfillment of social and environmental responsibilities.
Contractor Health and Safety Management
We consider contractor health to be an important asset. To protect the safety of contractor personnel and equipment, we formulated the “Regulations and Procedures for Contractor Management” in accordance with the Occupational Safety and Health Act. We set aside a fixed portion of fees for health and safety management in project costs, and require that construction sites be equipped with labor health and safety supervisors who are required to patrol project sites during construction periods. Project contractors are required to submit applications for construction projects, high-risk operational control plans, and construction protection plans for all construction projects before project commencement. Contractors are also required to attend contractor hazard classes before entering factories, and must convene toolbox safety meetings on the day of construction commencement, as well as implement analysis of operational hazards.
√ No contractor accidents occurred in 2022.