President Chain Store Corporation has four main types of suppliers, including private-label product manufacturers, suppliers of raw materials through direct transactions, suppliers of egg products and suppliers of items related to store food safety. We ensure that supply chain partners adhere to our stringent quality standards using our supplier management rules and evaluation system, as well as adopting measures such as supplier coaching and empowerment training to build a sustainable value chain with our suppliers.

Supplier Management Policy

Supplier Management regulations

In order to stay updated with and monitor supplier quality, we included a dedicated chapter on “Product Safety Management” to ensure all suppliers conform to laws and regulations and to President Chain Store Corporation’s rules in terms of company incorporation, product quality and testing. President Chain Store Corporation requires all suppliers to sign a “Product Quality Guarantee Agreement.” Among them, a number of the rules are set for suppliers and manufacturers of our private-label products based on the nature of each, since they have a more direct impact on our operations and brand. These rules clearly require that specific standards be adhered to for product manufacturing, packaging, testing and appraisal.

In 2024, President Chain Store Corporation completed its “Sustainable Supply Chain Policy,” declaring the Company’s business philosophy on sustainable procurement and supplier ESG management through nine commitments, as well as formulating relevant policies, systems, management guidelines and the authority and responsibilities for promoting specific plans.

Supplier Code of Conduct

President Chain Store Corporation hopes to make itself an example to encourage suppliers to practice corporate social responsibility. In addition to the aforementioned management rules and assessment systems, we have also revised the “UNI-PCSC’s Supplier Code of Conduct” based on the United Nations Global Compact (UNGC) and UN Guiding Principles (UNGPs), with requirements for suppliers’ performance in Environment, Social and Governance, as well as requiring them to sign an “Agreement on Ethical Corporate Management and the Corporate Social Responsibility.” For suppliers unwilling to sign the agreement, President Chain Store Corporation will examine their existing internal regulations and the scope of commitment. Additionally, they will be required to commit to certain important items. If communication fails but it is still necessary to purchase from the supplier, the supplier will be asked to sign a “Affidavit on the Ethical Corporate Management” to require our supplier to practice corporate social responsibility.

The principles and agreement stipulate that suppliers are not to obtain inappropriate gains through bribery, monopoly, or the giving of gifts, are not to violate labor laws or regulations (including hiring rules, hiring child labor, working conditions, salary and remuneration, occupational safety and health), are to guarantee labor equality, a non-discriminatory workplace, fundamental human rights, and provide products that conform to environmental protection and food safety laws and regulations to reduce their impact on the economy, society and environment.

Supplier Screening and Identification

New Supplier Screening and Assessment

We set our standards based on the relevant legal conditions, quality certification, management systems, and plasticity of materials of new suppliers. We also include sustainability indexes such as Environment, Social and Governance in the assessment system to evaluate and stay on top of supplier quality. To implement the Company’s sustainable supply chain policy, we require new suppliers to sign a statement of self-assessment (Note 1) as part of the initial assessment. The new suppliers must score on all basic criteria (including 15 points for ESG weight) and score a total of 80 points or above to be listed as qualified suppliers after passing the review of relevant departments. If the ESG documents and manufacturer assessment do not meet the minimum requirements and fail to improve within the specified timeframe, the supplier is considered to have failed and will not be taken on board. To encourage suppliers to engage in ESG management actions, new suppliers with better ESG performance and specific proof will be given priority. Preferential processing fees, discounts and so on will be provided to encourage good suppliers to get on board. Additionally, we do our utmost to ask that suppliers of private-label products to obtain food safety and sanitation management system ISO 22000 certification to improve supplier quality(Note2).

Note1：The statement of self-assessment requires new suppliers to guarantee that they comply with President Chain Store Corporation’s Agreement on Ethical Corporate Management and Corporate Social Responsibility, and Code of Conduct for Suppliers, as well as agreeing to issue relevant documents.
Note2：Verified by independent third-party verification agencies that comply with ISO 17021.

Supplier Identification

President Chain Store Corporation has three types of suppliers, including private-label product Contract manufacturers, non-private-label product suppliers and other suppliers. Among these, private-label product suppliers have the closest relationship with President Chain Store Corporation, and President Chain Store Corporation also has a greater responsibility correspondingly. From our private-label product contract manufacturers, President Chain Store Corporation identifies “tier-1 suppliers” and “non-tier 1 suppliers.” Tier-1 suppliers are defined as suppliers that trade directly with President Chain Store Corporation’s private-label brand such as food manufacturers. Non-tier 1 suppliers are defined as suppliers of raw materials for private-label products that President Chain Store Corporation does not directly trade with.

Based on the procurement amount, product categories and corresponding ESG risks, we also take country-specific risks into consideration (such as the impact of local regulations on cross-border procurement of raw materials), sector-specific risks (such as food safety) and commodity-specific risks (such as packaging materials and other resource consumption), as well as whether they have signed the “UNI-PCSC’s Supplier Code of Conduct” to further identify “significant tier-1” and “significant non-tier 1” suppliers so as to strengthen the control mechanism of significant suppliers.

Supplier Appraisal System

President Chain Store Corporation follows the aforementioned rules to undertake periodic evaluations of suppliers of private label products, suppliers of raw materials by direct transaction, and suppliers of egg products, drafting different assessment criteria based on the characteristics and risks of each supplier type. This rigorous assessment allows us to provide safe and quality food for customers. Our stringent standards enable us to stay on top of product quality and safety on behalf of our customers.

In addition, President Chain Store Corporation has responded to trends in sustainable development by integrating ESG (Environment, Social and Governance) into its scope of supplier assessment in the hope of the incorporation of ESG metrics will serve to combine the efforts of President Chain Store Corporation’s supply chain to help make sustainable development a reality.

Note：The weighting of ESG in supplier assessment please refer to 2023 sustainability report.

Existing Supplier Assessment

Supplier assessment items are based on the characteristics of the manufacturer, supplier of raw materials by direct transaction, egg product supplier or supplier of store supplies. Environment, society, and governance (ESG) are all included in the assessment, comprising manufacturing, quality, environmental sanitation, and management systems. The aforementioned items for inspection ensure that product safety and organizational operations are well-managed.The frequency of assessment differs based on the results of the previous on-site assessment.

The communication content of production quality control meeting

The factory corrective/improvement actions schedule and the factory on site visit records

Conformity Standards

Assessment results are scored into four categories: A (≧90 points), B (80-89 points), C (70-79 points), D (<70).The rules state that existing manufacturers failing to qualify in the overall evaluation must submit a review report. In addition to requiring suppliers to provide feedback on corrective/improvement actions after the evaluation, knowledge-sharing and case-by-case response will be given through raw material sub-committee or production quality control meetings, with the hope of reducing and avoiding recurrence of such deficiencies. Meetings, discussions during unspecified site visits or video and other communications targeting the issues will be held to focus on the improvement, ensuring the factories can improve defects within a specific timeframe. Subsequent meetings/site visits will be held. Alternatively, the improvement will be verified during the next audit.

 

In compliance with “UNI-PCSC’s Supplier Code of Conduct,” “Product Quality Guarantee Agreement” or “Supplier Assessment Agreement,” suppliers who fail the assessment and fail to improve within the specified time will be given a penalty or excluded (Note).

Note1： The supplier contract and code of conduct state that if any violation of ESG standards will be deemed as a major violation of the aforementioned contract or agreement. President Chain Store Corporation reserves the right to terminate the contract or impose a fine accordingly.

Supplier Development and Empowerment

In order to effectively reduce ESG risks for supply chain as a whole and raise suppliers’ awareness of sustainability issues, President Chain Store Corporation’s Marketing Planning Department communicates regularly each year with suppliers of raw materials for its private-label products on the concepts of sustainable procurement and traceability management, as well as asking them to provide us with raw materials that meet President Chain Store Corporation’s sustainable procurement standards. In addition to the signing of contracts, President Chain Store Corporation actively conducts supplier training and empowerment by providing suppliers with ESG forums, guidance for management system incorporation such as ISO 45001 and ISO 14064, introduction of FSC/PEFC-certified sustainable raw materials, examples of peers with excellent ESG performance for benchmarking, as well as working with suppliers on promoting ESG services with key technologies.