Supplier Sustainability Management

Supplier Classification
TWM classify our suppliers in 6 categories: Telecommunication Equipment, Information Services and Equipment, Consumer Electronic Products, Construction, Marketing/ Query and General Affairs, and Installation and Repairs. The spend analysis of the 6 categories is as follow:

Critical Supplier identification

Critical tier 1 supplier identification
We define and identify critical tier 1 supplier by the following criterion:
  • TWM will screen the suppliers by their spending within each category to identify high volume suppliers.
  • Critical component: The providers of the main information software system, hardware, and materials bonded by equipment and non-substitutable suppliers, which are the exclusive agents designated by the original equipment manufacturers, technology leaders and exclusive suppliers in the market. There are 16 suppliers meets these criterion and identified as critical suppliers.
  • A total of 177 critical tier 1 suppliers are identified in 2016.
Critical non-tier 1 supplier identification
The non-substitutable providers of the main information software system, hardware, and professional services necessary to TWM daily operation are considered as critical non-tier 1 suppliers. In the total of 50 key non-tier 1 suppliers, 18 of them are identified as critical to TWM.
supply chain CSR self-evaluation
Since 2014, Taiwan Mobile begun to enforce supply chain CSR self-evaluation. In 2016, in response to international trends, the Company referenced international supply chain sustainable management standards for the first time, including: GRI G4, PAS7000, and CERES, for the design of CSR self-evaluation questionnaires. The topics cover 15 issues including the economy, the environment, the society, etc. The Company also held a two-day course of content explanation and key trainings for suppliers and Taiwan Mobile procurement staff. The questionnaires were mainly released to major suppliers; a total of 250 questionnaires were recovered, a 19% increase than the previous year.
Furthermore, in order to understand and improve supplier sustainable management abilities, we conduct document reviews according to the responses on the questionnaires and request further explanation and supplementary information from the suppliers. We also organize on-site survey plan, to understand the supplier's sustainable management first-hand and offer improvement suggestions. Currently 20 on-site supplier surveys have been completed.

Supplier sustainability risk analysis and evaluation
To further facilitate and improve the supplier's sustainable management ability, started from 2017, we have a formalized risk assessment process in place.

The Risk Assessment Process

Targeting the tier-1 critical supplier and secondary key tier 1 suppliers, by multiplying the score of management status, likelihood of occurrence of the threats and impact level of the threats, the risk levels of the suppliers are calculated. After the results came out, The tier-1 critical and secondary-critical suppliers are divided into 3 groups by their risk level. For those risk scores fall into the first group are identified as sustainability high-risk.

Risk Assessment Results in 2017

The risk assessment covers critical Tier-1 and secondary key tier 1 suppliers and we totally identified 55 suppliers with 75 high sustainability risks mainly in aspects of trade secret protection and health (Occupational hazards). Due to lack of management approach on these particular issues, high-risk suppliers tends to acquire a high score on the “vulnerability” and therefore, got a high risk level.

Corrective action plans for suppliers
TWM has conducted audit for one of our high-risk engineering supplier and found the supplier did not follow the safety regulation when setting up the Scaffolding. TWM immediately asked the supplier the stop its work until proper corrective actions has been made.
Before corrective action, the supplier did not set up safety net, skirting board and interior ladder as the safety regulation requested. After implementing corrective actions, the supplier has added necessary safety devices as requested.
Also, TWM has made a corrective plan for a high-risk supplier after the onsite audit. After a few months, improvements have been made by the supplier by setting up Internal and external feedback mechanism and designing quality and human rights training for employees. TWM will keep tracking the supplier and support its plan.
Since it’s the first year conducting sustainability risk assessment, the main focus is to educate suppliers and promote the idea of sustainability management. TWM will ask all suppliers with high sustainability risks to provide corrective action plan starting from the end of 2017.