● Strategy: Implement green supply chain management, secure competitive material sources, constantly encourage and guide suppliers achieve sustainable development, transformation, and upgrading.
● Goals of 2030：Local procurement ratio up to 75% / On-site supplier evaluation: 100%
Suppliers are the important partners to CLC’s growth and burgeoning. Ensuring the best supply chain management can help CLC reduce operational risk, stabilize product quality, provide well services, and create added value to maintain customer relationship and realize sustainable development. We also demonstrate our influence as a leading papermaker. Through management approaches, the evaluation mechanism, and guidance, we guide the up- and down-stream industrial chain to make continual improvement. Through the CLC e-procurement platform, we establish a stable supply chain ecosystem and team up with Taiwanese and global suppliers to create job opportunities and promote economic growth. To ensure the supply chain’s ESG capability, we organized the 1st CLC Supplier ESG Conference in 2020 to share opinions on the ESG trends and strategies with major suppliers online.
Supply Chain Management Policy 2020
●Creation of a friendly workplace
●Enhancement of ESH management
●Emphasize sorting and recycling
●Grasp environment-friendly recycling business opportunities
●Reduce impact on the environment
●Fulfill the responsibility as a citizen of the Earth
●Implement supply chain management
●Take more flexible procurement strategies
2. Exchange information on a regular basis, adapt to the global deployment of the Group, and share and understand the market development of important material sources.
3. Investigate all potential material sources transparently and openly and strive for stable sources of reasonably priced raw materials.
4. Perform joint procurement of important domestic and overseas raw materials for the Group to upgrade its competitiveness.
CLC organized the 1st Supplier ESG Conference and promised to improve green and local procurement.
In order to enhance the sustainability of the supply chain, CLC organized the first "2020 CLC Supplier ESG Conference" on November 2, 2020. In the face of climate change, we emphasized that CLC will increase the amount of green procurement, and promised to focus on supporting local manufacturers, assisting supply chain partners to enhance international competitiveness and create job opportunities.
Procurement Policy and Commitment
We uphold a rigid, fair, and open transaction principle; abide by the laws and social norms; actively cultivate excellent suppliers, contractors, and alternative sources; conduct investigations and evaluations according to the related evaluation regulations, and establish the supplier graded management system to ensure the quality, delivery time, price, and after-sales service of supply sources. However, investigation will be conducted when suppliers have made significant changes. All CLC suppliers are requested to sign and constantly publicize the “Integrity and Non-Disclosure Agreement” (renamed “Supplier Code of Conduct” in 2021) to implement risk management.
In 2020, we maintained cooperation with 311 major suppliers (annual purchase amount over NT$10 million), with purchases mainly including raw materials, manufacturing, energy, chemicals, equipment and construction projects.
Supplier CSR Evaluation
To further practice CSR within the overall supply chain, we established the “Supplier CSR Regulations” in 2012 and requested suppliers to sign the regulations according to their scale of operations, industry type, and annual transaction amount with CLC. In 2019, we established the “Supplier CSR Identification and Investigation” to request suppliers to comply with the required CSR disclosure items of the CLC supply chain and provide the related information according to the evaluation to improve the self-management ability of suppliers. We also established the “CSR Information Disclosure: Supplier Integrated Performance Checklist” and “Supplier CSR Identification and Investigation Sheet” to request major suppliers to perform CSR evaluation in aspects covering operations, environmental, labor human rights, safety, and social. We also request all new suppliers to sign these documents. In 2019, a total of 324 major suppliers completed self-evaluation, then we had provided guidance for 15 suppliers with a “B grade” in the result.
In 2020, we have completed the evaluation of all 311 major suppliers, and no significant negative impact was identified. The evaluation results will also become the reference for related evaluations in the future. For suppliers with a lower score in the evaluation, we also guide them to make improvement and encourage them to pass certification of environmental management and related management systems.
On-site supplier evaluation
In addition, besides constantly providing active guidance for suppliers to engage in four major aspects: “R&D/manufacturing, environmental protection and safety, procurement, and quality assurance,” we also actively guide them to implement risk management to reduce the operational risk of suppliers. In 2020 we began to implement, for the first time, “on-site evaluation” on important raw materials suppliers having high connections to CLC products and manufacturing, hoping that they can meet the CLC requirements in product quality, supplier capability, and CSR (including integrity management, labor rights and security, social participation, etc.) In 2020, we conducted on-site evaluation on 46 suppliers, the result was “28 Excellent, 8 A grade, 8 B grade, and 2 C grade”. According to the evaluation results, besides continuously optimizing the evaluation standards to meet the evaluation requirements of different industries, we also provide guidance to manufacturers with lower scores (C grade). In the future, we will continue to plan and implement on-site evaluation and on-site audit every year. Also, we are committed to routinizing the evaluation system to promote sustainable development and management through close cooperation with CLC suppliers.
Right Uses for Proper Materials – Recovered Paper Supply Chain Upgrading Program 2.0
To improve domestic recovered paper quality to the world standard and enhance the supply chain competitiveness, in 2018 we planned a three-stage: guidance-observation-replacement upgrading guidance program with CLC’s 90 recovered paper suppliers across Taiwan. The program included the distribution of 2,000 classified posters, revision of the recovered paper procurement regulations, introduction of Taiwan’s first “recovered paper moisture analyzer.” Every year, we select more than 2 suppliers to provide focused guidance. In 2020, we implemented the Guidance Program 2.0 to repeatedly publicize the program and review the status of implementation. Until 2020, we have successfully guided 4 recovered paper suppliers to complete transformation and launch the first document destruction center in eastern Taiwan. The number of waste food paper container suppliers also increased from 1 to 36. Through the program, we help recovered paper suppliers to innovate profitable business models for sustainable development.
※For more information, please refer：《Special Report 4》Right Uses for Proper Materials CLC Activated Recovered Paper Supply Chain 2.0 Upgrading Program
Supplier Education and Training
To promote green procurement and reach the ESH consensus in supply chain partners, we actively arrange related education and training for suppliers. In 2020, we organized one education and training activity respectively at Tayuan Mill, Chupei Mill, and Houli Mill, with the participation of 124 suppliers (36 from Tayuan, 69 from Chupei, and 19 from Houli).
Support for Local Procurement
To pursue the stability and localization of the supply chain, we prioritize the use of Taiwan local suppliers. Besides shortening the delivery time and reducing transportation risk, we can also benefit local enterprises and thrive domestic economic development. CLC's number of local purchasers and local purchase amount are rolled every year according to the company's operating needs. The local purchase amount in Taiwan has been maintained higher than 70% over the past three years. In 2020, the ratio of local suppliers in Taiwan is 85.2%, the ratio of local purchases in Taiwan was 71.0% (YoY -0.6%). This is mainly due to the company's low-carbon and energy-saving project in 2020 to purchase more advanced environmental protection equipment from abroad.