Sustainable Value Chain

Chroma stays ahead of emerging technologies and provides innovative
test & automation turnkey solutions for customers to ensure the performance, quality, and success of their products.
Chroma and its subsidiaries produce instruments in small quantities with a diversity of products, which requires a wide variety of raw materials. The main raw materials include programmable gate array ICs, converter ICs, memory, relays, mechanism materials, PC boards, etc.   

Chroma and its subsidiaries require various types of raw materials and components for precision instrumentation products. At present, the procurement unit purchases from both domestic and foreign suppliers and selects more than two suppliers as far as possible to provide interchangeability and competition. This diversifies purchasing risk, reduces cost, and results in better services. The procurement unit regularly reviews suppliers' prices and audits by quality control and purchasing personnel to ensure stable quality and determine the suppliers' manufacturing capability.   

There were no significant changes to the major supplier information disclosed in the 2020 Consolidated Financial Statements. (Suppliers accounting for more than 10% of net purchases in the last two years)
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Suppliers are key partners in our Company operations and share our common pursuit of sustainable management and growth. In recent years, we have adhered closely to a policy of local procurement to ensure a highly efficient and versatile supply chain. We have maintained that 94% of all Chroma’s purchases are local procurement (local refers to Taiwan).

Supplier Evaluation Criteria

GRI 308-1
Chroma adheres to the "Supplier Management Measures", when selecting a new supplier: the procurement unit will ask the supplier to provide a price, delivery time, and specifications or samples of the material. These are forwarded to the relevant units for confirmation of requirements, and the supplier is requested to perform a self-evaluation. Supplier EHS management performance is incorporated as an evaluation component to comply with the ISO 14001: 2015 Environment Management Systems. Consequently, suppliers at a medium to high risk level and those engaging in transactions exceeding a value of NTD5 million must be fully evaluated. A total of 90 (13%) supplier evaluations were completed, all of which fell between low to medium risk. The Safety and Health Center will evaluate whether to conduct visits and counseling at the supplier side in 2021, depending on the situation. We are hoping to work with our suppliers in fruitful collaborations so that we can operate with the lowest costs and create the highest product quality, services, and sustainable value.  

We have aligned ourselves with the latest trends in environmental protection around the world. To this end and to do a good job in raw material control in light of environmental related regulations such as RoHS/REACH/the Dodd Frank Act of 2010, H.R 4173, and avoid the use of conflict minerals, Chroma suppliers are now required to submit a “Verification Report Detailing all Restricted Chemicals”. The declaration includes an undertaking that all raw materials, inks, solvents, consumables, packaging materials, and processes involved in the manufacture of all products supplied to Chroma are in compliance with the ingredients and hazardous substance values provided in the verification report. An “Environmental Protection Declaration Statement” must also be provided.  

The term “conflict minerals” refers to natural resources mined in conflict zones in the eastern provinces of the Democratic Republic of the Congo (DRC) controlled by non-government military and rebel groups. The four most commonly mined conflict minerals are cassiterite (for Sn), coltan (for Ta), wolframite (for W), and gold (for Au). The mining of these “conflict minerals” in the DRC and surrounding regions has led to serious issues of human rights violation and environmental problems. Chroma has pledged never to buy or use conflict minerals mined from conflict zones in the DRC. We require our suppliers to commit to the same pledge of never buying or using conflict minerals mined from conflict zones in the DRC by signing our “Supplier Non-Use of SVHC Substances and Non-Use of Conflict Metals Declaration”.
Fifty-three new suppliers were added in 2020 and 49 signed the "Supplier Non-Use of SVHC Substances and Non-Use of Conflict Metals Declaration" and "Environmental Protection Declaration", accounting for 92%.

Supplier Management Process

At present, we conduct supplier chain evaluation through the comprehensive supply chain management approach based on Q (Quality), C (Cost), D (Delivery), and S (Service). The goal is to develop a commitment and close cooperation with trading partners through QCDS supply chain evaluation. We seek effective management of logistics and the flow of information and cash. We aim to establish a sustainable and stable supply chain system managed by the vertical integration of the upstream and downstream systems.
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