Supply ChainManagement

The suppliers are close Chroma partners and the company expects to retain sustainable growth for both through close collaboration. The company is also promoting the purchase of local materials to support the domestic economy and provide employment opportunities in Taiwan.

Chroma develops excellent testing and measurement instruments. To produce them we purchase components from upstream manufacturers and assemble and produce our instruments in-house for delivery to customers everywhere. The nature of the industry dictates that the company purchase a large variety of customizable products. Currently, there are tens of thousands of different types of material in our supplier database. company procurement strategy is to purchase interchangeable products from two or more suppliers to ensure supply and competitive prices. This diversification of procurement lowers risks and reduces cost. In addition, our procurement and quality assurance units regularly conduct supplier evaluation to ensure stability and quality in the supply chain. This also helps to determine the suppliers’ production capabilities.

Currently, supplier chain evaluation is made using a comprehensive supply chain management approach based on Q (Quality), C (Cost), D (Delivery) and S (Service). The objective being to fulfill commitments to our trading partners and work closely with them through the QCDS approach. We seek effective management of information flow, logistics and cash flow, and aim to establish a sustainable and stable supply chain system with synergy generated by the vertical integration of the upstream and downstream. We plan to implement “social responsibility” in the standards for supply chain evaluation. Chroma will work with suppliers to maximize the sustainable value of our services and business and to minimize costs.

Meaning for Chroma

Suppliers are our important partners. To promote CSR and sustainable development, we have created management procedures for quality, the environment, occupational safety, society and other matters in accordance with various international standards. By doing so, we enable our partners to meet the expectations of customers and society regarding social responsibility. We can also achieve stable quality in the supply chain and make a contribution to society together with our partners.

Concrete Plans for 2018

Comprehensively implement the QCDS mechanism for supply chain management in aspects like quality and environment to meet industrial standards.

Goals for 2018

  • At least 95% of our suppliers have signed the form of commitment to the investigation of hazardous substances and conflict minerals.
  • Complete the audits of at least 400 suppliers on quality and environment.
  • The local procurement rate is at least 90%.

Resources Invested

  • The relevent R&D and the procurement and quality control staff review and manage our suppliers.
  • A total of 12 employees from the procurement division were deployed.

Evaluation Mechanism

Evaluation of suppliers is conducted twice a year.

Concrete Performance in 2018

  • 95% of our suppliers signed the form of commitment to the investigation of hazardous substances and conflict minerals.
  • The local procurement rate was 93%.
  • In the first and second half of 2018, the performance of respectively 488 and 437 suppliers was evaluated.

2019 or Medium-term to Long-term Goals

Keep strengthening supply chain management and cooperation, promote local procurement to meet green standards, implement the system for social responsibility in the supply chain, and push for sustainable development in the industry.
QCDS

Supplier Evaluation Committee and Signing of the Commitment Form

A “supplier evaluation committee” has been formed by the procurement division in coordination with R&D, quality control and other related divisions. 

The evaluation of new suppliers includes an assessment of technical capabilities and development, of the supply capacity of subcontractors, an audit of the procurement system and a field review. Newly qualified suppliers are asked to sign forms of commitment regarding hazardous substances and the prohibition of the use of conflict minerals. During the supply period, the suppliers are subject to relevant international laws and our regulations for suppliers. Furthermore, to ensure that suppliers fulfill their social responsibilities, we plan to introduce a form of commitment to social responsibility as well as to standards such as RBA. The electronics industry focuses more on the importance of social responsibility and management systems and standards nowadays. We also insist our suppliers remain in compliance with labor rights and ethical standards, and help them to do so.

Management of Hazardous Substances and Conflict Minerals

More than 500 local and foreign Chroma suppliers have signed the form of commitment with respect to hazardous substances and the form of declaration regarding the prohibition of conflict minerals, which is more than 95% of our suppliers. We will continue to follow up on the status of signing by new suppliers and suppliers with which we have conducted business.

In the future, we will send out questionnaires on the environment and social
responsibility to collect information from the suppliers about their environmental and social responsibility. We are going to keep strengthening the standards for the evaluation of suppliers in these aspects.

Supplier Evaluation

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The first evaluation of a new supplier of raw material will be conducted on site. The procurement division makes arrangements for this to be done by the evaluation committee (R&D/quality control/procurement). Suppliers that score 60 or more in the evaluation of quality and technical capability are rated as class C or higher and are eligible for listing as qualified suppliers. The evaluation committee must fill out the “supplier evaluation form” and submit it to the quality control division, which will then complete the “supplier interview form” and give approval. Transactions may only proceed after this has all been done. In the first and second half of 2018, 488 and 437 supplier evaluations respectively were carried out.

After a comprehensive evaluation, suppliers receiving a score below 60 are rated as class D and placed under observation. They are given suggestions for improvement and have six (6) months to take corrective measures. Failure to meet the standards after this period will result in disqualification. No suppliers were rated class D in 2018.

Implementation of Local Supply Chain Management and Procurement

Our main suppliers are listed under specific categories including components, electronics, institutions and trading companies. In 2018, there were 489 qualified suppliers. Among these, 450 (93%) were local contractors for procurement in Taiwan. The remaining 39 (7%) were international, We will continue to promote local procurement, enhance the efficiency of procurement, and maintain full cooperation with local suppliers.

We will keep improving, developing and offering state-of-the-art products and 
technologies, and a comprehensive process management system. We intend to play our part in protecting the environment and strive toward sustainable development of society.

 

Management of Hazardous Substances for Suppliers

In 2015, we began to introduce the hazardous substance management system. Based on customer demands , we have continued to reduce the use of hazardous substances for our products . Our goal is the comprehensive application of the system in 2018 to ensure our electronic products are in compliance with EU standards on global chemical control ( e.g., RoHS, REACH, EU). We have also asked our suppliers to sign the form of commitment on hazardous substances for the purpose of increasing the greenness of our products. By the end of 2017, over 95% of our suppliers signed the commitment form.

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Contact & Feedback

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