Chun Yuan Steel Supply Chain Management
Sustainable supply is a crucial task for the sustainable operation and corporate governance of businesses. In order to enhance the sustainability and resilience of the supply chain, we closely collaborate with suppliers to create a mutually beneficial industry chain. Suppliers play a significant role as our important partners in this endeavor.
Supplier Prosperity
Chun Yuan's steel purchases are primarily based on raw material purchases, which account for approximately 80% of our purchases. Starting from August 2023, we adopted new supplier assessment standards. As of December 31, 2023, a total of 892 suppliers were reassessed, with 7 rated as A+, 8 as A, 229 as B, 593 as C, and 55 as D. The majority of Chun Yuan's primary raw material procurement is supplied by the top 10% of suppliers based on score ratings. In anticipation of mutual growth with our suppliers, we have established the following policies:
01.Formulate Supplier Policies:
Define the company's expectations and requirements for suppliers, including adherence to product quality specifications, stable supply, reasonable pricing, sustainability, ethical practices, and regulatory compliance.
02.Quality Objectives:
We are committed to continuously providing products and services that meet customer expectations and comply with applicable laws and regulations. Upholding professionalism, integrity, quality, and efficiency, we adhere to the ISO 9001:2015 international standard, implementing relevant activities in quality management. We establish specific, measurable, and quantifiable control indicators to effectively monitor various quality management activities.
03.Sustainable Operation:
Accumulate and leverage relevant quality practices, continuously monitor operational risks, and incorporate medium to long-term strategic planning in business units to ensure the maximum benefit for the company, customers, and stakeholders, achieving sustainable business goals.
04.Supplier Performance Evaluation and Selection:
Establish a supplier evaluation system and reevaluate and select suppliers every six months to ensure new suppliers meet company standards and continuously monitor the performance of existing suppliers.
05.Establish Partnerships:
Building a solid partnership with suppliers, build trust and mutually beneficial collaboration, enable both parties understand the goals and visions of the partnership. Providing supplier training and support to help them meet Chun Yuan’s expectations and standards.
06.Transparency and Communication:
Ensure open and transparent communication with suppliers is crucial. Chun Yuan Steel may arrange regular meetings as needed to address issues promptly, improve collaboration, and establish a communication platform for discussing problems and building honest and transparent relationships. Chun Yuan Steel encourages suppliers to provide feedback and actively considers their suggestions, establishing a two-way feedback mechanism to truly improve the cooperative relationship.
07.Sustainability and Social Responsibility:
Chun Yuan Steel conducts periodic supplier assessments to understand the sustainability of suppliers. The assessments cover environmental, sustainability and social responsibility issues and encourage suppliers to adopt environmental and social responsibility measures, and where necessary Chun Yuan Steel will provide recommendations to help suppliers improve their sustainability practices. Social responsibility audits are conducted to ensure suppliers comply with labor rights, human rights, ethical standards, and refrain from using conflict minerals, ensuring compliance with all relevant regulations and laws.
08.Risk Management:
Develop contingency plans to cope with unexpected events or risks in the supply chain to ensure business continuity. Additionally, considering China Steel as the main supplier, Chun Yuan Steel assesses risks related to international raw material trends, upstream steel mill pricing changes, and downstream industry conditions to quickly respond to cost fluctuations and effectively manage production and inventory conditions.
Most importantly, Chun Yuan Steel should formulate a unique supplier management strategy based on its business requirements and values to ensure the reliability, sustainability, and compliance of its supply chain.
Notes:
Level A+: Excellent, 100-91 points
Increase order quantity, priority consideration for new procurement
Level A: First Grade, 90-81 points
Increase order quantity, priority consideration for new procurement
Level B: Second Grade, 80-71 points
Maintain current status
Level C: Normal, 70-60 points
Reduce order quantity, observe and guide improvement
Level D: Poor, below 59 points
Request supplier improvement or cease transactions
Notes:
Level A+: Excellent, 100-91 points
Increase order quantity, priority consideration for new procurement
Level A: First Grade, 90-81 points
Increase order quantity, priority consideration for new procurement
Level B: Second Grade, 80-71 points
Maintain current status
Level C: Normal, 70-60 points
Reduce order quantity, observe and guide improvement
Level D: Poor, below 59 points
Request supplier improvement or cease transactions