Types of Supply Chains and Localization of Procurement
To satisfy all the demands of our global customers, Innodisk's products are very diverse. Therefore, we also need a large number of suppliers to assist Innodisk in providing a wide range of products. In 2020, a total of 129 suppliers had transactions with Innodisk. The sources of suppliers are very diverse, including top-tier internationally renowned electronic component manufacturers, as well as local manufacturers providing special production services. Suppliers are mainly distinguished by their relevance to production materials, and are divided into manufacturers of production materials, agents who do not directly produce but indirectly provide production materials, and outsourcing factories that provide production services.
In terms of the proportion of suppliers' local procurement, Innodisk has always set "Develop in Taiwan while thriving in the international market” as its major business principle, and hopes to contribute to Taiwan's economy and employment. Therefore, local manufacturers in Taiwan as always first considered as supplier candidates. According to the statistics of the number of individual suppliers, firms registered in Taiwan have reached 115, which is as high as 89.15% of all Inodisk’s suppliers.
Ever since its establishment, Innodisk’s business strategy has revolved around “Develop in Taiwan while thriving in the international market”. Our procurement policies have also been established in line with this approach. To meet the characteristics of industrial products in being diverse but few in numbers, our production lines are based in Taiwan, accompanied by adopting diversified product portfolios and flexible production strategies to meet the diverse needs of global clients. To this end, locally registered manufacturers in Taiwan are always our first choice when selecting suppliers. After ten years of growth, Innodisk has gradually become an international corporation. At the same time, we have made adjustments to our supply chains to meet the strict requirements of our numerous international clients.
Aside from cost competition, production process, product quality, and technical services, Innodisk is now concerned with issues such as labor rights, environmental protection, as well as safety and health risk control within our supply chains; we have therefore adopted a multitude of measures that aid suppliers to improve their management. The goal is to lower operational costs and risks for Innodisk and its suppliers, achieving a partnership with mutual growth.
All suppliers of Innodisk are selected following the Guidelines on Supplier Management established by our ISO, and all suppliers are required to fully comply with all relevant laws and regulations in Taiwan or in their registered countries during their business operations. In addition, suppliers are also required to pay special attention to issues like business ethics, labor rights, work environment, safety and health, and so on.
Supplier Risk Management
To ensure a steady supply of raw materials, most raw materials required by Innodisk come from more than two suppliers. For special materials in which Innodisk only has one supplier, Innodisk will negotiate a long-term supply guarantee with the supplier. Should the suppliers plan to cease their supply of products, they are required to notify Innodisk a year prior and are obligated to provide six months to two years’ worth of products in ensuring smooth material provider transitions.
Innodisk has preventative measures responding to cases where suppliers are unable to deliver their products on time, or the occurrence of any unexpected situations. Generally, Innodisk’s inventory includes at least two months’ worth of supplies for most raw materials, as well as a month of external orders, ensuring smooth operations at all times.
《Supplier Social Responsibility Audit And Coaching》Inspection and Guidance of Suppliers’ Social Responsibility
Innodisk has established supply chain management procedures and has introduced RBA (Responsible Business Alliance) into our supply chains to perform inspections and offer guidance regarding the “human rights, environment, safety, health, and management systems” of our suppliers. Innodisk is constantly aware of the measures implemented by suppliers in aspects such as environment, safety, and health. We will continue to encourage suppliers to reinforce business ethics, protection of labor rights, attention to the working environment and safety of workers, and the development of materials and operational procedures that reduce environmental impact.
Guidelines on Ethical Behavior of Procurement and Suppliers
To avoid fraudulent behavior between any person and the suppliers, procurement personnel at Innodisk are periodically rotated and are strictly prohibited from accepting money or any form of a rebate from suppliers. Procurement personnel are also prohibited from dining and gathering with suppliers without their supervisor’s approval.