Sustainable Issues

Supplier management policies and related compliance specifications

The Company has a supplier management policy in place, and regards suppliers as
important partners of the Company’s operations. In promoting corporate social responsibility, the Company considers the participation of the entire supply chain, besides maintaining quality and delivery, we also drive the supply chain to value human rights, protection of environment, health and safety, strengthen suppliers’ Environmental, Social and Governance (ESG) management, including green environmental protection, labor human rights and ethics, health and safety, risk management and ethics, and prohibition of minerals from conflict areas, etc., to jointly establish a sustainable supply chain.
1. Supplier CSR risk management: AOT has developed the “Business Code of Conduct for Suppliers’ CSR” in accordance with Code of Conduct – Responsible Business Alliance,RBA In the procurement contract, AOT’s suppliers must pass the supplier evaluation and sign and commit to comply requirements. Assess the social, economic, and environmental risks of existing suppliers, and adopt audit control for suppliers assessed as high-risk, and supervise and correct actual and potential obvious negative deficiencies.
2. Supplier quality management: For the quality management of key materials, new suppliers are evaluated based on quality, cost, delivery time, technical ability, and selection is made for suitable suppliers for cooperation. The current key material suppliers are evaluated based on the non-performing delivery rate, service quality, and procurement delivery deadline. If they are not up to the standard, we would provide guidance and counseling. If there is still no effective improvement, the supplier will be removed from the qualified supplier list.
3. Procurement risk diversification
(1) Material shortage risk management: The Company coordinates the material preparation mechanism with suppliers and establishes safety stocks according to the preparation time required for each material to ensure a smooth supply chain. To avoid the risk of material shortage or having only a single supplier, we will select two or more qualified suppliers according to the material evaluation mechanism for product development, and select new qualified suppliers based on product development needs through selection and evaluation process to ensure the smooth supply of materials.
(2) Local procurement: AOT production is concentrated in Taiwan and China. The supply chain mainly includes suppliers and related contractors of machine equipment, key spare parts such as LEDs, printed circuit boards, electronic materials, lighting modules, and materials, energy resources, and transportation. In order to shorten the time required for material preparation and accelerate the development time of new products, the Company actively implements localization of materials, which can also reduce costs and carbon emissions generated during the transportation process, and create a triple-win situation for the AOT, suppliers, and the local economy.

The comprehensive management of suppliers

1. On supplier management for critical materials, quality meetings are held with suppliers regularly to review related issues and make continuous improvements, in order to meet quality improvement requirements.
2. On supplier management system verification, we would visit important suppliers as planned every year and conduct on-site audits. Once defects are discovered, the suppliers will be required to propose appropriate improvement plans to meet AOT expectations.
3. Assessments for critical materials are made on a monthly basis based on the non-performing delivery rate, service quality, and procurement delivery deadline. Provide evaluation results to suppliers to urge them to make improvements.

Supplier management policies and related compliance specifications

1. Procurement: The suppliers that pass the material evaluation must have the ISO9001& ISO14001 environmental certification and provide the quality guarantee and the environmental restricted substances testing consent.
2. Certification: Quality verification includes QSA and QPA.
(1) Suppliers with two scores >= 80% are qualified
(2) Suppliers with any item with a score of less than 80% cannot supply goods until the defects are corrected
(3) Performance and monitoring: In order to achieve stable quality and continuous improvement, monthly performance evaluation and annual audit (same certification content as above) are conducted.
3. Supplier sustainability assessment:
The Company conducts its Sustainability Index evaluation and selection of suppliers of raw materials. The annual evaluation of qualified suppliers in 2022 conforms to 100% of supply chain management mechanisms.

Communication Channels and Response Methods

Contact Person: Ms. Chang, Materials Procurement
Phone: +886-3-5976988 ext. 16876
Email: yuki.chang@aot.com.tw