Supplier Management Policy
Tung Ho Steel regards its suppliers as important partners in its operation. In addition to ensuring the quality, cost, delivery and quality of service of its suppliers, the Company also urges its suppliers to jointly implement environmental protection, climate change response and disclosure of information of labor rights and human rights to fulfill the social responsibility, aiming at growing with its suppliers and establishing a mutually beneficial, long-term and stable supply chain.
- To urge suppliers to comply with laws and regulations to achieve sustainable development and create a win-win situation in the three major aspects, including economic, environmental and social aspects as the core of common development.
- To protect the stakeholders’ rights and interests and at the same time include topics of social responsibility, labor safety, human rights and environmental protection as the basis for management decision and implementation.
- To attach importance to business ethics and morality, equal opportunities and fair trade as the prime directives for the interaction of the supply chain to eliminate illegal interests and severely punish illegal acts.
- To jointly strengthen the response and information disclosure concerning the impact of climate change and take actions on GHG emissions.
Tung Ho Steel’s products are steel materials for building and construction. In Tung Ho Steel, more than 90% of the primary raw materials are scrap steel. There are no products or packaging materials that can be directly recycled. Ore resources are non-renewable raw materials, but their characteristics are that they can be reused and remanufactured, making them the materials that are with the highest recycling rate. They also play an important role in the regenerative cycle. The Company uses the unique characteristic of steel that can be indefinitely and recycle steel scraps from urban mines to produce steel products in a more energy-saving, low-carbon, and eco-friendly way. The Company uses steel scrap as the main raw material and uses electric arc furnaces to smelt it to produce steel products for building structures. When the building reaches the end of its service life, the waste steel is recycled again through the resource recovery system to be used as steelmaking raw materials for the electric furnace plants.
We have established the ISO 9001 management system and set up standards for steel scrap acceptance inspection and electric furnace operation. We increase the procurement amount of domestic scrap steel based on the monthly production plan, set up the crush workshop and increase the recovery rate in the steelmaking process to reduce the consumption of raw materials and energy to further reduce the environmental impact. The use of raw materials over the years is detailed as follows.
The connection of upstream, midstream and downstream of the industry
Our suppliers are important partners for the operation of Tung Ho Steel. Through close cooperation, we jointly pursue corporate sustainable management and growth. There were about 1,525 suppliers and contractors working with us in 2022.
Tung Ho Steel has incorporated Integrity Clauses and corporate social responsibility into the supplier management regulations, requesting the suppliers to sign the Supplier Social Responsibility Commitment, and the commitments include labor rights and human rights, environmental protection, emphasis on climate change mitigation and adaptation, integrity management and ethics. If the suppliers fail to fulfill the commitment, the Company may require improvement first within a time limit, and if improvement is not made within the time limit, the contract may be terminated or rescinded at any time, and the supplier shall not claim any damage. In 2019-2022, a total of 591 manufacturers have signed the Supplier Social Responsibility Commitment, accounting for 89% of the Company’s transaction amount. Among them, 8 suppliers were newly added secondary material suppliers in 2022, and all of them have signed the Supplier Social Responsibility Commitment.
The Company has set up the Regulations Governing the Selection and Evaluation of Suppliers of Primary Raw Materials, Secondary Materials and Materials and established basic information of suppliers to have a series of effective management of supplier selection and evaluation. We carry out self-inspection or inspection carried out by a third-party notarization for every batch our suppliers deliver. Every 6 months, we make evaluation of our suppliers in terms of quality reliability, delivery quantity, price level, handling quality improvement for customers, and corporate social responsibility. Based on the evaluation results, we will discuss the reason with the suppliers, make an improvement plan, and track the improvement results to reconfirm the improvement of the deficiency. When the quality of materials provided by suppliers is not good and improvements have not been made, the result of the regular evaluation will be determined as non-conformity. The qualification of such supplier shall be re-determined, which will also be noted in the supplier’s basic information sheet, and the supply from such supplier will be suspended. For semi-finished products and secondary materials supplied by suppliers at home and abroad fail to pass the incoming material inspections for three times in a row, the Quality Management Section will fill out the "Incoming Material Quality Improvement Notice" and notify the Trading Department or the personnel in the Material Department, while such supplier will be notified to put forward the cause analysis and countermeasures for improvement within a time limit, and the effectiveness of the countermeasures proposed will be tracked.
We guide secondary material suppliers to take into account regulations concerning product quality, energy saving and environmental protection. For example, whether the selected suppliers pass the ISO 9001 quality management system verification and the ISO 14001 environmental management system verification, whether the products have the environmental protection mark, whether the products have eco-friendly and recyclable packing methods and materials, and whether the suppliers comply with our environmental protection policies and regulations concerning reduction in industrial waste, energy conservation, pollution prevention and environmental regulations. Currently, the secondary materials are all directly imported by suppliers without domestic production process and are directly placed in large bags or shipped by tank trucks, leaving little negative environmental impact, so no identification was conducted.
In February, 2022, the procurement unit conducted a questionnaire survey on the GHG inventory and verification status of the 197 major suppliers. The results showed that a total of 9 suppliers have conducted GHG inventory and have been verified by a third party, accounting for 4.6% of all suppliers. In March, 2023, the Standard Supplier Assessment Form was revised and “climate-related responsibility” has been incorporated into the scoring items to encourage suppliers to complete GHG inventory and verification as soon as possible. The next stage is to gradually raise the distribution ratio and include the signing of the collaborative carbon reduction agreement into the scoring item.
In addition, to strengthen the prevention of disasters causing losses from contractors’ workers or temporary workers during construction or repair work in the factory area, we have also set up the Safety and Health Management Regulations for Contractors to allow every worker to understand the potential hazards of his work before operation and also require them to comply with the safety regulations to maintain work safety. In 2022, all domestic and foreign steel scrap dealers met the evaluation criteria, and the 165 secondary material suppliers all received the supplier evaluation, with 100% passing rate. There were no suppliers having significant or potential impact on the environment or society.