Supplier Management Policy

Supply Chain Sustainability

1. Supplier Management Strategy

Create Maximum Competition

Together with suppliers, we attach importance to the sustainable development of economy, society and environment. 82% of local purchases.

Workplace Safety

Pay attention to workplace safety and reduce occupational accidents

Energy Saving and Carbon Reduction

Together with suppliers to respond to energy saving and carbon reduction.

Environmental Friendly

Reuse of resources, reduce environmental pollution, and promote an environmentally friendly supply cycle.

Conflict Minerals

No Conflict Minerals are Used.

Risk Management

Evaluate and replace unsuitable suppliers.

Moral Integrity

Require suppliers to operate with integrity and abide by ethical codes of conduct.

Second, Supplier Sustainability Management Capability Evaluation

The company adheres to the supplier policy of “treating suppliers as partners and taking long-term cooperation as the benchmark”, plans supplier management methods, and conducts evaluation and evaluation based on the following criteria Counseling, expecting to establish a supply chain management mechanism for sustainable growth.

Implementation criteria: Follow the company's "Supplier Corporate Social Responsibility Assessment Operation".

(1) According to labor/occupational health and safety/environmental pollution/business ethics/management system, five aspects of assessment. (2) The evaluation objects are the top 20 suppliers, main suppliers and indirect suppliers.

Risk Rating

(1) Suppliers found to be deficient during the assessment will be classified as A-level/B-level/C-level suppliers according to the assessment area. (2) Identify the degree of risk of the supplier:

A-level suppliers: 90 points or more are A-level (excellent) suppliers.

B-level suppliers: 70 to 89 points are classified as B-level (qualified) suppliers.

C-level suppliers: unqualified suppliers whose evaluation score is lower than 70 points are listed as C-level suppliers, and C-level suppliers need to conduct a quarterly document review or video audit , and counseling is required until passing.

Field Audit

(1) Follow the company’s “Supplier Corporate Social Responsibility Assessment Operation” to conduct on-site audits. (2) Indirect suppliers and key manufacturers need to conduct on-site audits every year.

Counseling Improvement and Tracking

(1) A document review or video audit is required every quarter. (2) The corrective measures must be put forward and supporting documents should be attached, and then re-examined by SQE. (3) Counseling until passing.

Supplier Sustainability Assessment

For the implementation criteria of supplier selection, please refer to the following three and four points.

The company attaches great importance to social corporate responsibility and will join RBA as a full member in 2021. Xuande takes RBA’s goals, vision and norms , fulfill the social responsibility of a corporate citizen, and maintain the sustainable development of the electronics industry together with the members of the RBA alliance.

According to the five aspects of RBA, labor/occupational health and safety/environmental pollution/business ethics/management system, 32 suppliers will be evaluated in 2021. Xuande is committed to safeguarding labor human rights, health and other rights, and abides by integrity management, Protect the sustainable environment, implement occupational safety in the workplace, and establish an efficient and communicative management system.

Total number of suppliers
assessed in 2021

Total number of suppliers
assessed in 2022

3. Specific practices of supply chain management

Establish a supplier evaluation team, and the applicant unit will convene quality control, engineering, procurement and other units to form a supplier evaluation team to understand and evaluate various capabilities of suppliers. Treat suppliers as partners, and regard sustainability and risk management as important strategic guidelines. In addition, review supplier quality, price, and delivery status every six months, and adjust strategic suppliers.

Supplier Evaluation

All suppliers must follow the supplier management procedures, pass the supplier evaluation, and sign the manufacturer’s integrity commitment to ensure that the supplier’s delivery time is accurate, thereby stabilizing the quality of incoming materials and establishing the company’s market reputation.

Supplier Audit

In order to enable the company’s cooperative suppliers to maintain and improve the original quality, delivery time and coordination to meet the company’s needs, thereby ensuring delivery quality and reducing failure costs, the company organizes quality, procurement, SQE, safety and environmental protection, etc. The responsible unit conducts relevant assessments on a quarterly basis.

Supplier Meeting

The company will organize training and publicity from time to time. Through different forms of guidance and communication, the quality of suppliers can be effectively improved, and suppliers are required to comply with company policies such as sustainable management and moral integrity.

4. Sustainable supplier rating and response measures

The company’s supplier evaluation is based on the “Supplier Social Responsibility Evaluation Form” to evaluate suppliers in terms of environmental protection, occupational safety and health, or labor human rights, such as: passing RBA certification Or ISO-related certification, or provide corresponding management policies.

Rating level	Rating score	Response measures
A	90-100 points	Suggest increasing purchases.
B	70-89 points	Maintain the current operation, but require the supplier to continue to strengthen the management mechanism.
C	Under 70 points	1. Quarterly review or video audit. 2. The corrective measures must be put forward and the corroborating documents should be attached before being re-examined by SQE. 3. Counseling is required until passing.