Regular evaluation and audit of Suppliers
Regular evaluation and audit of Suppliers
Every year, the Company conducts regular monthly evaluations of existing suppliers based on quality, delivery, supply coordination and cost competitiveness in accordance with internal procedure documents to ensure that AVL suppliers meet Ability's supplier standard requirements and to screen out potential supplier risks, and to require suppliers with deficiencies to submit deficiency correction and improvement and recurrence prevention reports within the deadline. The evaluation reports are summarized and provided to the purchasing unit as an important basis for supplier management, and there are four grades:
- Grade A - 90 points or more for excellent suppliers. If the grade is A for three consecutive months, the order quantity will be increased and priority will be given to the production of newly developed products.
- Grade B - 89 ~ 80 points for stable quality.
- Grade C - 70 ~ 79 points for unstable quality. Consider reducing the order quantity, arrange quality engineers to meet with vendors for review and counseling, and notify the purchasing unit simultaneously, and re-audit the supplier two months after completing the counseling and improvement, and if no improvement is seen within the time period, the vendor will be removed from the approved supplier list. If this particular vendor is still required to work together in the future, Ability will reevaluate and review the vendor before proceeding with the transaction.
- Grade D - Below 70 points. Consider immediately reducing the order quantity, immediately arrange quality engineers to meet with vendors for review and counseling, and simultaneously notify the purchasing unit, with a deadline of three to six months to complete the improvement. If no improvement is seen within the deadline, the vendor will be removed from the list of approved vendors. If this particular vendor is still required to work together in the future, Ability will reevaluate and review the vendor before proceeding with the transaction, unless the vendor under concern is designated by the customer.
Ability organizes the annual audit plan for the following year based on the delivery quality, level of cooperation and material risks of suppliers at the end of each year. For incidents, audit targets are subject to the question points. Ability form the audit team based on the audit plan, visit suppliers for on-site quality audit, procedure system audit, and green product audit, and request suppliers to adopt corrective and improvement measures based on problems discovered. If the audit issues continue to be unsolved or the supplier has no intention to improve, the transaction will be reduced or the supplier will be removed from the Approved Supplier List (AVL) depending on the situation.
The supplier on-site audit plan is formulated at the end of each year. In addition to evaluating the supplier's process and quality management system, Ability also requires suppliers to conduct environmental protection, occupational safety and health, employee human rights (such as no child labor, no forced labor), etc. to conduct self-assessment to understand suppliers' risk control and response in environmental and social sustainability aspects, and encourages suppliers to contribute to social sustainability.