ASMI is engaged in manufacturing products of increasing complexity in a challenging business environment, which requires quick responses to customized solutions. A robust supply chain management system, with a diverse scope and global footprint, becomes critical to meet ASMI business aspirations. This requires our global supply chain organization to continuously drive operational excellence by employing policies, initiatives, and tools to proactively engage our suppliers to ensure business compliance and continuity. These include regular supply and financial risk monitoring, performance management, and Responsible Business Alliance (RBA) commitment from our critical business partners. ASMI's global supply chain organisation is committed to maintaining a supply portfolio that is value creating, sustainable, and ethical.
Our mission at ASMI is to build a world-class supply chain that provides our customers with the most technologically advanced products, services, and global support network, at a competitive cost of ownership. We partner with hundreds of suppliers who provide goods and services used to manufacture our products and serve our customers. They play a critical role in enabling us to achieve our mission, covering a broad spectrum of commodities across 20+ countries and regions worldwide. The main categories include, but are not limited to, contract manufacturers, precision machining, gas systems, robotics, electronics, and high-tech chemistries. These suppliers manufacture advanced materials to tight tolerances and performance attributes, as required to achieve our stringent design specifications and requirements. This approach enables us to remain innovative and swiftly meet the challenging demands of our customers.
Our supply chain is a critical part of our end-to-end value chain. To fulfill our customers’ expectations and requirements, we need to manage our suppliers effectively and ensure that they meet their performance requirements.
Our customers and other stakeholders increasingly expect greater transparency within our supply chain, including how our products are manufactured, whether labor standards are upheld, and workers are treated fairly, and what impact the supply chain has on the environment.
To extend our commitment and approach to corporate responsibility, we use the RBA Code of Conduct as our Supplier Code of Conduct, and we have established management systems for our critical suppliers that match the industry-standard supplier assessment process. By integrating corporate responsibility into our supply chain management process, we believe that we can create long-term business value and further mitigate supply continuity risk.
As part of our supplier relationship management process, we have developed a critical supplier risk assessment process based upon a multitude of criteria. Every year, we assess our supply chain and identify our critical suppliers based on key elements such as, but not limited to, the amount we spend with them, how many similar or alternative suppliers exist, and the amount of time we would need to switch suppliers if we had to.
We communicate our expectations and measure conformance to our expectations with our critical suppliers. This approach manages our supply chain risks by focusing on the areas where a majority of our materials come from and spending occurs.
Our critical supplier requirements include, but are not limited to, their commitment to:
These requirements are outlined on our public supplier management web page.
We believe that building a sustainable supply chain begins with solid business partnerships. Our goal is to find the most capable suppliers in the industry, treat each supplier with respect, and conduct business fairly across all facets of our operations.
By adhering to these principles, we believe we can forge lasting partnerships that will provide long-term benefits to ASMI, our suppliers, our customers, and our stakeholders.
Suppliers who share our vision for an integrated supply chain model routinely demonstrate a commitment to solving many of our customers’ challenges. They understand industry dynamics and recognize the need to partner in developing solutions that improve the overall strength of ASMI.
When faced with a particular opportunity, they will quickly use their industry expertise to highlight opportunities and share recommendations, whether technical, commercial or environmental. In many cases, these suppliers can call on a wide variety of global industries and disciplines from which to share best practices. By building a strong relationship with our suppliers, we are able to build upon a foundation of experience and rapidly respond to the business environment.
We operate globally and have partnerships with suppliers from 20+ countries across Asia, North America, and Europe. We place high expectations on our supply chain when it comes to operational flexibility and responsiveness, and together we must be prepared to respond quickly to a wide range of unplanned events. This requires working proactively with our supply chain partners to ensure they are able to assess and manage risks.
Our supply chain risk management process consists of a combination of critical supplier risk assessments, supplier self-assessments, RBA audits, and training and capability-building activities to help our supply chain be both resilient and responsible.
We actively engage our critical suppliers to drive:
Consideration is also given to other suppliers that we are actively developing or that have key capabilities.
Keeping pace with Moore’s Law means the semiconductor industry is advancing at an impressive rate and placing increasing demands on our products. This means we need to make advances across a number of areas simultaneously, including in material properties, operational capability, manufacturing processes, and capacity management.
These advances and demands are quickly shared with our supply chain, which means we need to continually evaluate our supplier landscape to partner with those suppliers who have demonstrated the right level of business commitment.
We continue to invest in our own capability to meet these increasing challenges, which includes growing our capabilities and resources in our global procurement organization, inclusive of our supplier development and supplier quality engineering teams. These investments are consistent with our commitment to continuous improvement. As part of our supplier selection and recertification process, our supplier engineers perform comprehensive audits, evaluating supplier compliance across a multitude of business elements. In 2017, these audit areas included their employee health and safety, quality management system, ISO compliance, and intellectual property management. During these audits, we had a 93% closure rate on corrective actions.
We are committed to working with each of our suppliers in developing the right technology, operational capability, or investment in capacity. In addition, we are also committed to helping them adhere to our corporate responsibility expectations. For our critical suppliers, we not only communicate our expectations, we also offer free hosted webinars to help them to understand the code requirements and the measurement methods, and to gradually build up their knowledge to enhance their management systems.
Conflict minerals are those minerals mined in the Democratic Republic of Congo (DRC) or adjoining countries. Profits from the sale of these minerals may directly or indirectly benefit those involved in rebel conflicts and human rights violations. These minerals and the metals created from them – tin, tantalum, tungsten, and gold – can make their way into the supply chains of products used around the world, including the semiconductor industry. As a member of the global community, we have a strong commitment to our sustainability programs, including conflict minerals disclosure requirements, aimed at preventing related human rights violations.
We do not directly source minerals from mines anywhere, including from the DRC or adjoining countries. Our Conflict Minerals Policy, which is published on our website, communicates our commitment to responsible sourcing. To enforce this policy, we developed, and have been executing, our supply chain Conflict Minerals due diligence process annually since 2014.
We joined, and have participated in, the widely-recognized Conflict-Free Sourcing Initiative (CFSI). The CFSI brings together the electronics, automotive, and other industries to jointly improve conditions in the extractives industry (www.conflictfreesourcing.org).
Our programs focus on communicating of our policy, training and surveying our critical suppliers, and collecting supply chain sourcing information on the sources of tin, tantalum, tungsten and gold (3TG) using the industry-standard CFSI template, known as the Conflict Minerals Reporting Template (CMRT). We actively engage with critical suppliers for Reasonable Country of Origin Inquiries (RCOI) and conduct due diligence based on OECD guidance.
After we complete our due diligence survey, we carry out detailed data verification and analysis with identified smelters, from whom our critical suppliers source. This process establishes traceability to the smelters and measures the smelters identified with the validated conflict-free smelters (CFS) list published by the CFSI. This helps us ensure that the products and components we source are DRC conflict-free. We encourage all of our suppliers to source 3TGs responsibly, and to use certified conflict-free smelters using recognized certification organizations, such as the Conflict-Free Smelter Program (CFSP). Our goal is to trace all of our critical suppliers and ensure they are using only certified conflict-free smelters, and that our sourcing funds do not finance conflict in the covered countries.
We are committed to the RBA Code of Conduct, including its commitment to conflict-free sourcing, and will continue our active participation and contribution to the CFSI and our engagement with other relevant stakeholders. These include the European Parliament and other international NGOs, through our engagement with CFSI. Current information on the due diligence process and our policy can be found on our website, in the supply chain section under corporate responsibility.
In November 2016, an agreement was reached by European institutions on the text of an EU Regulation which will require upstream importers, smelters and refiners to conduct due diligence checks from 2021 to ensure they do not source conflict minerals. ASMI is a downstream company, and uses the industry tools to conduct due diligence of our supply chain.