PCSC Sustainability Development

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Sustainable Supply Chain Management

PCSC 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 suppliers adhere to our stringent quality standards using our supplier management rules and evaluation system.

Supplier Code of Conduct

PCSC 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 formulated the “PCSC and PCSC Subsidiaries’ Code of Conduct for Suppliers” 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, PCSC 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 Management Policy

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 PCSC’s rules in terms of company incorporation, product quality and testing. PCSC 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. 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.

Supplier Type Measures
All suppliers Product Quality Guarantee Agreement
Private-label brand Product manufacturers Rules for On-site Appraisal of Manufacturers for Private-label products
Suppliers of raw materials through direct transactions Raw Material Supplier and Raw Materials Management Rules
Suppliers of store food safety supplies (Note) Management Measures for On-site Evaluation of Suppliers of Food Safety Products in Stores

(Note) This refers to domestic manufacturers of disposable paper cups, bowls, and other products that come in contact with food in stores.

 

 

Supplier Training

PCSC’s Supply Chain Management Department communicates regularly each year with major suppliers of materials for its private-label products on the concepts of sustainable procurement and traceability management, as well as asking them to provide us with materials that meet PCSC’s sustainable procurement standards. In addition to working with suppliers to promote ESG services with key technologies, PCSC provides suppliers with examples of peers with excellent ESG performance for benchmarking.

 

 

Supplier Appraisal System

PCSC 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. Significant supplier assessment points, standards, frequency, and results are disclosed below. In response to current ESG developments, the percentage of ESG-related assessment items among overall assessment score will be consider in the supplier assessment. The evaluation of sustainability indicators is intended to help us unite and strengthen the PCSC supply chain so that we can jointly implement sustainable development.


PCSC lays great emphasis on “sanitation of the operational environment” and “occupational health and hygiene of workers” in supplier ESG assessments. Since many of PCSC’s private-label brand suppliers are tied to food product manufacturing or raw materials, to ensure that suppliers conform to food product safety laws and regulations and PCSC’s private-label product quality management requirements, sanitation of the operational environment has been added to the list of assessment items for suppliers. Furthermore, we stress that suppliers protect workers and their rights by requiring suppliers to exercise their corporate social responsibility without violating the Labor Standards Act. We believe that the occupational health and hygiene of production line workers have an impact product quality. Therefore, this is an important social aspect to which we attach great importance.


In order to effectively reduce ESG risks for the overall supply chain and increase suppliers’ attention to sustainability issues, PCSC has set a long-term goal of increasing the proportion of tier-1 suppliers with ESG risk assessment and the proportion of non-tier-1 suppliers in raising the awareness for sustainability. In terms of tier-1 suppliers, we interacted with significant tier-1 suppliers to understand the feasibility of ESG risk assessment implementation, as well as further designing an ESG risk assessment mechanism. For non-tier-1 suppliers, we collected promotional materials of ESG trends and sorting of sustainability promotional themes and materials.


PCSC hopes to work together with its suppliers to realize corporate social responsibility. We monitor whether they comply with occupational health and hygiene requirements requested by the Labor Standards Act and related regulations through our supplier assessments, as well as creating a positive social impact to protect supply chain workers’ labor rights.

 

New Supplier Appraisal

We set our standards based on the relevant legal conditions, quality certification, management systems, and plasticity of materials of new suppliers. We also include economic, environmental and social standards in the assessment system to evaluate and stay on top of supplier quality. Potential suppliers are all required to undergo these assessments and pass before they are accepted as new suppliers.

 

Existing Supplier Appraisal

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.

 

Conformity Standards

Assessment results are scored into four categories: A (≧90 points), B (80-89 points), C (70-79 points), D (<70). In the event of failure to meet standards, a penalty will be imposed as per the “Product Quality Guarantee Agreement” or “Supplier Assessment Agreement.”