Kaori had a total of 667 supply chain partners in 2022 and made purchases amounting to NT$2.225 billion. Of the purchases made, 77.84% were for raw materials, followed by outsourced manufacturing. The percentage of localized purchases (from local suppliers in Taiwan) was reported at 38.57%. Suppliers can be classified into six main categories: sundry services, outsourced manufacturing, raw materials, consumables and spare parts, equipment, and components. The upstream consists of steel mills or customer-designated material suppliers, whereas the downstream consists of small, direct processing plants. Kaori's suppliers include steel mills and foreign providers of advanced technologies and products, all of which are capitalintensive businesses and have imposed high standards on environmental protection, green energy, and public interest. Kaori operates in the midstream of the industry and provides end customers with products that are processed and assembled from the above-mentioned materials.
In March 2022, the price of nickel surged by more than 300%, forcing raw material suppliers to suspend quotations, which negatively affected the production schedule. In response to this situation, Kaori took the initiative to sign long-term procurement contracts with local suppliers for enhanced resilience.
A total of 57 key suppliers were identified for 2022.
Kaori introduced a sustainable supply chain management system in the 4th quarter of 2022 and held a supplier conference in September 2022 to convey its philosophy on sustainable governance and to teach suppliers on the completion of self-assessment questionnaires, which had an attendance rate of 100%. In October, Kaori held two internal training sessions for procurement staff and conducted document review of sustainability self-assessments on 30 suppliers immediately afterwards, including one on-site inspection.
After taking a comprehensive inventory of documents used in the procurement system, Kaori added five new documents: “Supplier Sustainability Management Policy”, “Supplier Behavior Guidelines”, “Supplier Statement on Sustainability Development”, “Sustainability Evaluation Sheet for New Suppliers”, and “Supplier Sustainability Review and Improvement Suggestion Form”. One document was amended: “Supplier Control Procedures”. A set of key performance indicators has been developed based on the aforementioned procurement system while taking into consideration the industry standard and the Company's current practices to enforce sustainability management over suppliers.
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The inaugural Sustainable Exchange Meeting aims to enhance procurement in supply chain management by facilitating direct communication with key suppliers to promote green products. Through collaborative efforts, the event focuses on carbon management and emphasizes the principle of local procurement to achieve sustainable operations and create a brighter future.
The regular review and selection of supplier selection criteria to ensure alignment with the company's needs and standards. Through methods like expert assessments or data mining, objective and specific selection criteria are established, and supplier performance and capabilities are continuously improved. By analyzing the selection results, companies can plan supply chain management strategies to enhance overall supply chain performance and competitiveness.
Select business partners primarily based on the quality, timeliness, and consistency of goods/services supplied and their willingness to commit to long-term relationships.
Kaori conducts annual supply audits for effective management and maintenance of relationships with qualified suppliers. Suppliers are evaluated on product quality, delivery timing, service, technological background, and the quality management system. Furthermore, Kaori requires suppliers to present quality system certificates issued by independent third parties, and to complete questionnaires on the management of hazardous substances. All raw material suppliers are required to sign a commitment to ethical conduct and anti-bribery. Suppliers are evaluated not only for the prices they offer, but also for their overall contribution to Taiwan as well as their ability to complement the Company's role and position. With the introduction of the sustainable supply chain management system in 2022, Kaori will gradually replace suppliers that are found to be incompetent, thereby creating a more resilient and sustainable supply chain.
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