Sustainable supply chain management
Chroma's strategic partnerships with suppliers are not only important because they allow us to offer our customers valued products and services, but also because they include great social and environmental value. We have a vital corporate mission “to develop globally leading products as a world-class enterprise” using a sustainable supply chain. We share this social and environmental responsibility with the supply chain.
Low-carbon supply chain
Chroma and its subsidiaries engage in a wide range of activities. We design, assemble, manufacture, trade, maintain, repair, calibrate, and distribute software and hardware for computers and peripherals. We also work with, automated testing systems, precision testing and measurement instruments, signal generators, power supply units, and telecommunication power supply equipment. We are also involved in the trading, design, manufacture, and installation of automation equipment. Our current main product lines include:
1. Test and measurement instruments
Chroma is a developer of testing and measurement instrumentation in the field of information technology and electronics. Products are primarily produced and assembled by the Company and subsidiaries with parts procured from upstream component manufacturers. These products are then marketed to customers under our own brand. Chroma and its subsidiaries offer a wide variety of products. Our clientele spans many industries including the CCTV, power supply, passive component, LCD module, LED, semiconductor, solar energy, and electric vehicle industries, where we offer products for testing and verification. The diagram below illustrates the relationships between the upstream, midstream, and downstream sectors of the industry:
1. Test and measurement instruments
Chroma is a developer of testing and measurement instrumentation in the field of information technology and electronics. Products are primarily produced and assembled by the Company and subsidiaries with parts procured from upstream component manufacturers. These products are then marketed to customers under our own brand. Chroma and its subsidiaries offer a wide variety of products. Our clientele spans many industries including the CCTV, power supply, passive component, LCD module, LED, semiconductor, solar energy, and electric vehicle industries, where we offer products for testing and verification. The diagram below illustrates the relationships between the upstream, midstream, and downstream sectors of the industry:
2. Automated equipment
We leverage our strong capabilities in test equipment, automation systems, and MES software to offer customers integrated turnkey automation solutions. The Chroma subsidiary, MAS Automation, mainly produces turnkey solutions such as automated production and system integration for solar module lines, TFT-LCD automated production, automatic battery module testing systems, and cleanroom equipment planning and systems integration.
Chroma and its subsidiaries produce a diverse assortment of instruments in small quantities. A wide range of materials are required which include main components such as programmable gate array ICs, converter ICs, memory chips, relays, materials for making enclosures, PC boards and so on. Currently, we have three or more suppliers for each type of material who are our long-term partners. We have excellent relationships with our suppliers who are all distributors of products from world-famous manufacturers, and their quality and supply of materials remains stable. To ensure mutual substitutability and competitiveness, diversify procurement risks and reduce cost, and to obtain better services, all procurements are made by the central Company Procurement Unit from domestic and foreign suppliers. The procurement unit regularly reviews the prices and the suppliers are audited by our quality control and procurement personnel to ensure both quality and stability and to monitor their manufacturing capacity and supply.
We leverage our strong capabilities in test equipment, automation systems, and MES software to offer customers integrated turnkey automation solutions. The Chroma subsidiary, MAS Automation, mainly produces turnkey solutions such as automated production and system integration for solar module lines, TFT-LCD automated production, automatic battery module testing systems, and cleanroom equipment planning and systems integration.
Chroma and its subsidiaries produce a diverse assortment of instruments in small quantities. A wide range of materials are required which include main components such as programmable gate array ICs, converter ICs, memory chips, relays, materials for making enclosures, PC boards and so on. Currently, we have three or more suppliers for each type of material who are our long-term partners. We have excellent relationships with our suppliers who are all distributors of products from world-famous manufacturers, and their quality and supply of materials remains stable. To ensure mutual substitutability and competitiveness, diversify procurement risks and reduce cost, and to obtain better services, all procurements are made by the central Company Procurement Unit from domestic and foreign suppliers. The procurement unit regularly reviews the prices and the suppliers are audited by our quality control and procurement personnel to ensure both quality and stability and to monitor their manufacturing capacity and supply.
Local procurement
The proportion of local procurement in Taiwan remains above 85%
There were no significant changes in the main supplier data or their consolidated financial statements in 2023. Suppliers are key partners in our Company operations and share our common pursuit of sustainable management and growth. We are actively committed to implementing local procurement. To enforce this policy, the proportion of local procurement in Taiwan remains above 85%, ensuring an efficient and flexible supply chain.
Working with Suppliers for Green Transition
Chroma works closely with customers and suppliers to jointly create a low-carbon supply chain, collaborating to construct a sustainable business model. Some achievements have been made in 2023:
Key components and control of hazardous chemical substances
By implementing eco-design with respect to materials, parts, accessories, and packaging, and based on our “Standards for Controlling Hazardous Chemical Substances in Materials”, we have categorized environmentally controlled substances into the foll owing five groups:
- RoHS-limited substances: All hazardous chemical substances restricted or limited by the EU Restriction of Hazardous Substances (RoHS) and the Chinese "Administrative Measures for Controlling Pollution in the Production of Electronic Information Products".
- REACH-SVHC-limited substances: Substances of Very High Concern (SVHC) to humans and the environment published by the European Chemical Agency (ECHA).
- Other regulatory limited substances: Hazardous chemical substances whose use is restricted or limited by law in the major trading countries. Please refer to IEC 62474 - Material Declaration for Products of and for the Electrotechnical Industry.
- Ozone Depleting Substances (ODS): Please refer to the controlled chemical substances published in the Montreal Protocol.
- ELV- and GADSL-limited substances: Controlled substances defined in the Directive 2000/53/EU on End-of-Life Vehicles (ELV) and Global Automotive Declarable Substance List (GADSL). We also require suppliers to sign a “Statement of Environmental Protection” and the “Statement of SVHC Substance-Free and Conflict Metal-Free” to ensure continuous legal compliance of mass-produced products and to ensure Chroma maintains production sustainability. We have introduced the concept of green product design in the R&D process. The relevant units are tasked with making products more energy-efficient and ensuring their compliance with all the regulations on hazardous chemicals. We use renewable and recyclable materials as much as possible. Improvement and evaluation are carried out on a continuous basis to ensure that our massproduced products meet the requirements and standards of quality assurance and environmental protection.
In addition to controlling hazardous substances, the R&D unit also actively introduces circuit digitization technology to reduce the number of parts and components and promotes a shared module design philosophy for different products. The sharing of specific modules reduces the number of semi-finished products and the total number of parts and components. It also makes the launch of new products more efficient and extends green product coverage. It can also reduce energy consumption in both procurement and production.
Our strategic partnerships with suppliers are not only important because they allow us to offer our customers valued products and services, but also because they include great social and environmental value. We have a vital corporate mission “to develop globally leading products as a world-class enterprise” using a sustainable supply chain. We share this social and environmental responsibility with the supply chain.
Chroma has been implementing hazardous chemical substance management since 2005. All new products conform to applicable environmental protection requirements, and many legacy products have been changed for compliance. As of early 2023, there were still 632 products that did not meet the requirements, with 168 products awaiting processing after production was discontinued, or design changes had been made. It is anticipated that by the end of 2025, all products will conform to the requirements.
Our strategic partnerships with suppliers are not only important because they allow us to offer our customers valued products and services, but also because they include great social and environmental value. We have a vital corporate mission “to develop globally leading products as a world-class enterprise” using a sustainable supply chain. We share this social and environmental responsibility with the supply chain.
Chroma has been implementing hazardous chemical substance management since 2005. All new products conform to applicable environmental protection requirements, and many legacy products have been changed for compliance. As of early 2023, there were still 632 products that did not meet the requirements, with 168 products awaiting processing after production was discontinued, or design changes had been made. It is anticipated that by the end of 2025, all products will conform to the requirements.
Supplier management
Supplier evaluation
According to the “Supplier Management Regulations,” when selecting new suppliers, the Procurement Unit requests suppliers to provide information on the pricing, delivery times, specifications, or samples of materials. These are then verified by the relevant department to confirm the requirements. Suppliers are also asked to conduct self-assessments, and if necessary, on-site evaluations are performed. If suppliers cannot meet the requirements within six months, their qualification as a supplier is revoked. Oversight of supply chain-related management is conducted by senior executives from the Quality Assurance and Purchasing departments.
A total of 12 evaluation items are listed as A to M below. For corporate sustainability management, which includes environmental management, occupational safety and health management, corporate social responsibility, and hazardous substances management, 13 suppliers were evaluated through on-site assessments in 2023.
A total of 12 evaluation items are listed as A to M below. For corporate sustainability management, which includes environmental management, occupational safety and health management, corporate social responsibility, and hazardous substances management, 13 suppliers were evaluated through on-site assessments in 2023.
Supplier Risk Assessment Questionnaire
Also, to determine how all suppliers are responding and preparing for ESG, the Company conducts risk assessment questionnaires alongside supplier self-evaluations. The evaluation covers various aspects, including:
2023 Supplier Questionnaire Survey
Existing 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 also aim to establish a sustainable and stable supply chain managed by the vertical integration of the upstream and downstream systems.
In 2023, performance evaluations were conducted for 592 suppliers, and all were rated within the A, B, or C grades. Over many years of evaluations, most suppliers have met our requirements. Suppliers rated as “D” have improved after receiving guidance and are now under focused observation for the second half of the year. The continued monitoring of these suppliers will be overseen by senior executives from the Quality Assurance and Procurement Departments.
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