Shihlin Electric offers a comprehensive product line, with its supply chain primarily distributed across Taiwan, the United States, and mainland China. The upstream network includes raw material suppliers, component providers, subcontractors, and contractors. Downstream, the company’s products are widely applied across various industries and sectors such as steel, metallurgy, petrochemicals, power, electronics, construction and commercial development, public infrastructure, industrial automation, automotive components, and consumer household goods. Shihlin Electric delivers total solutions to meet customers' diverse product and service needs.

To effectively utilize resources and focus on risk management, the Company identifies key suppliers based on procurement amount, criticality of supplied items, and potential impact on operations or sustainability issues. Due diligence management and sustainability promotion measures are concentrated on these key suppliers, gradually building a resilient and sustainable supply chain. Currently, due diligence efforts mainly target key suppliers, while non-key suppliers are not yet fully included in the assessment and management scope. Moving forward, the Company will expand the coverage of sustainable supplier management as resources and systems mature, aiming to enhance the overall sustainability performance and resilience of the supply chain.

Responsible Supply Chain Management

Based on the characteristics of products in each business group, suppliers are classified into raw material suppliers, subcontractors, and contractors. Shihlin Electric’s supply chain strategy evolves from traditional management (focusing on quality and delivery) toward sustainable supply chain practices. Starting with compliance with legal regulations, the Company communicates sustainability concepts with suppliers, integrates sustainable procurement practices, and identifies key suppliers for deeper management. Corresponding management mechanisms are established and continuously improved, ensuring progress through regular and ad-hoc inspections. Each business group adheres to principles of purchasing the right quality, quantity, price, timing, and location for materials and components required for production and sales. Upholding the philosophy of mutual growth and complementarity with suppliers, the Company fosters relationships built on trust and cooperation, enabling outstanding suppliers to deliver high-quality products punctually at competitive costs.

Sustainable Supply Chain Management Cycle

1. Establish Sustainability Criteria

• ISO 9001 / IATF 16949 Quality Management Systems
• Supplier Human Rights Clauses
• Procurement Ethics Guidelines
• Ethical Business Conduct Standards

2. Risk Assessment and Control

• Risk Assessment: Conduct on-site visits to understand suppliers’ operations and human rights practices; evaluate supplier service quality and responses for risk analysis.
• Risk Control: Establish a complaint mechanism to ensure procurement personnel adhere to ethical guidelines; provide a reporting channel through the Corporate Ethics Office to enforce oversight and control.

3. Management Mechanism – Sustainability Performance Evaluation

• ISO 9001 / IATF 16949: Conduct periodic and unannounced audits and guidance on suppliers’ quality, cost, and delivery performance.
• Supplier Human Rights Clauses: Conduct unannounced audits and corrective guidance for suppliers suspected of labor or human rights violations. Immediate spot checks are carried out for serious breaches.
• Procurement Ethics Guidelines: Internal audit staff regularly review procurement personnel’s adherence to ethical standards.

4. Continuous Improvement or Contract Termination

• Improvement within Deadline: If a supplier is identified as violating labor or human rights practices, they must improve within a specified period, submit a written report, and accept unannounced audits and guidance.
• Contract Termination: Contracts are terminated for suppliers who fail to make tangible improvements within the specified period.

5. Supervision, Evaluation, Accountability, and Learning

• Collect feedback from supplier site visits to provide suggestions for improvement.
• Use supplier CSR self-assessment forms for suppliers to review their sustainability practices and set improvement goals.