Supply Chain Management
Formosa Laboratories primarily engages in the development of manufacturing processes for APIs, and the production and sale of APIs. In the biopharmaceutical industry, Formosa Laboratories is a specialized API manufacturer in the midstream sector, which purchases chemical raw materials and natural substances from chemical raw material suppliers and sell them to downstream pharmaceutical companies. With a commitment to implementing supply chain management, Formosa Laboratories carries out quality screening on new suppliers and conducts supplier risk assessments, evaluation, and audits on a regular basis to ensure the safety of raw materials.
▼Management of material topic “supply chain management” at Formosa Laboratories in 2023
Formosa Laboratories 2022 Material Topic: The Management of Supplier Management
FORMOSA
FORMOSA
Supplier Risk Assessment
Aside from requiring raw material suppliers to sign the Statement of Use of Hazardous Substances and the Declaration of Non-Use of Conflict Minerals, Formosa Laboratories conducts the Supplier Qualification and Assessment Certification Procedures through our internal SOP. At the same time, this policy is included in the list of items required in supplier procurement management as primary raw material suppliers are required to commit that the products or components they supply, along with their implementation of corporate governance and human rights protection for workers are in line with the ESG management philosophy at Formosa Laboratories. We also actively assist suppliers that do not meet the requirements in the implementation of improvement programs. In the event of any violation of the relevant rules and regulations, Formosa Laboratories has the right to terminate or cancel our contract with the supplier in order to minimize supply chain risk.
In addition, Formosa Laboratories continues to require new suppliers to sign the relevant declarations and statements to ensure that the quality and source of raw materials meet safety standards, and that they do not use unregulated hazardous substances. In 2023, 15 new suppliers have signed the statement and declaration, accounting for 13.9% of the total number of new suppliers for the year. Apart from requiring suppliers to sign the relevant statements and declarations, Formosa Laboratories will conduct questionnaire surveys among suppliers in the future, in which relevant topics such as environmental protection, labor conditions, occupational safety and health, and human rights will be included for assessment, with a view to establishing a more complete supplier assessment system.
- 100% of our primary raw material suppliers have signed the Statement of Use of Hazardous Substances.
- Suppliers have signed the Halal Declaration, the Allergen Declaration, the Melamine Declaration, and the Genotoxic Impurity Declaration,
- Suppliers have signed the Halal Declaration, the Allergen Declaration, the Melamine Declaration, and the Genotoxic Impurity Declaration,
Note:Primary raw materials refer to raw materials that can form the main structure of a product (API).
Supplier Evaluation
The Procurement Department conducts supplier evaluation in accordance with the Raw Material and Material Supplier Evaluation Procedures. A supplier evaluation form is created on a regular basis in the first quarter of the following year based on the transaction status in the previous year. Weighting is assigned to each item in the evaluation form based on the level of impact on operations. Suppliers with scores of less than 60 points are required to make improvements within the prescribed time period. Suppliers that fail to make the required improvements will be disqualified. Furthermore, Formosa Laboratories established the CO-202 General Affairs Supplier Management Regulations in 2023, aimed at effectively managing the general affairs suppliers at Formosa Laboratories while ensuring that the quality, quantity and price of supplies are stable and reasonable.
▼Results of raw material supplier evaluation at Formosa Laboratories over the past three years
| Vendor category | Vendor category | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Suppliers | Above 90 points | 78.4% | 94.1% | 92.7% |
| 76 to 90 points | 21.1% | 4.9% | 5.% | |
| 60 to 75 points | 0.4% | 1.0% | 1.1% | |
| Below 60 points | 0.1% | 0.1% | 0.4% | |
| Number of suppliers evaluated | 544 | 526 | 537 |
Note:There could be some errors in the data presented in the table above as the percentages have been rounded to one decimal place.
| Environmental Risks |
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|---|---|
| Social Risks |
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Note: Main raw materials means raw materials that can form the main structure of the product (API).
Based on the degree of impact on operations, we have adjusted the weightings of the supplier evaluation items.
In 2022, the Company's supplier evaluation items and weightings include: quality assurance 70%, delivery stability 10%, and service 20%. The supplier evaluation results for Formosa Laboratories in the past 3 years are as follows:
Formosa Laboratories Supplier Evaluation Results in the Past 3 Years
Note: The statistics are rounded, so there may be some errors in the calculations.