Supply Chain Management

The construction industry is a highly complex, highly professional, and highly integrated sustainable industry. In the process of constructing buildings on the ground, interface integration and division of labor discussions between various teams are required; Consideration of how to effectively use our land and formulate workable plans for construction in compliance with the Building Act, becomes a profound knowledge. We effectively and accurately divide the responsible project and construction sequence between the supplier and the construction side. Our highest standard is always the on-time, on-budget, and on-spec construction. From the quality control of raw materials to the overall project construction period planning, we keep constant record of all the details and leave them under careful management and control, to achieve the highest efficiency, stable quality, and policy transparency and also to establish a cooperative relationship with suppliers, so as to create mutually beneficial high-level construction projects.

Raw Materials Procurement Policy

As for the raw materials required for each construction site and project, we collect data and classify it in advance to make an estimate through big data analysis, and then purchase materials sequentially in stages or at one time to cut down cost expenses. We select local materials. To assure our customers, we strictly control the quality of materials and comply with various laws and regulations, and give priority to the use of raw materials with various energy label certifications.

Response to energy conservation and carbon reduction and green procurement

Suppliers who implemented ESG-related actions account for 30% of the total number of materials delivered

Energy conservation and carbon reduction is the consensus of all people in today’s society. Starting from 2022, we require suppliers of materials to meet ESG requirements, such as certified product carbon footprints, greenhouse gas inventory and other related actions. We require our annual material contracting needs to reach 30 %, and the goal is to reach 40% in 2023. In order to respond to this consensus and protect the precious earth, we demonstrate the continuous action and determination of energy conservation and carbon reduction, and purchase building materials with water-saving and energy-conserving, green building material labels, and carbon footprint certificate in accordance with the owner’s regulations or suggestions. This year, we also purchase materials with environmental labels and electrical scooters. This demonstrates our continuous commitment to green and sustainable development. In the future, we will include recycled procurement and carbon-reducing materials in the statistics of green procurement amount.

Procurement status of main raw materials

Supply status of main raw materials

The main raw materials we require include rebars, cement, ready-mixed concrete, tiles, aluminum windows, steel structures, etc. Unless in the case with the contract specified in the contracts, we purchase all raw materials on our own. Based on the needs for actual materials used in the various construction projects, we sign procurement contract with each supplier to clarify the project requirements and the relevant responsibilities, so as to grasp the source of materials. In particular, when purchasing key materials such as rebars and steel plates, we first compare the price of the materials with the domestic market prices and then decide to purchase them in large amount, to ensure the quality of raw materials and reasonable prices. We estimate the costs of the remaining bulk materials and manpower for the second half of the year every six months, as per international economic trends and fluctuations, to bid for new projects and control costs.

Countermeasures against raw material fluctuations

In 2022, we outsourced all procurement projects for 4 equipment and materials as one project, accounting for 88.88% of the previous purchases and 89.24% of the budget.

We outsource all procurement projects as one project to seek the best outsourcing price.

We compare the domestic prices to determine the timing of bulk purchases. Otherwise, we purchase in small quantities to cut costs.

For the second half of the year every six months as per international economic trends and fluctuations, to bid for new projects and control costs.

Assessment and Evaluation System

We undertake engineering projects with a certain scale in various fields in Taiwan, covering hospitals, scientific and technological plants, buildings, and bridges. Due to the differences in expertise in various fields, excellent suppliers are the key to the success of all projects. We have formulated standardized processes to ensure project quality, from initial evaluation to regular evaluation and management after a contract is signed to ensure construction quality and enhance our competitiveness in the industry. Kedge Construction’s suppliers include:

Suppliers of manpower required to complete and deliver projects, suppliers of equipment and materials, such as diaphragm walls, doors, and windows, stones, all of which have a certain scale of business and sufficient liquidity.

Suppliers provide professional and technical workers, such as form workers, painters, and tile setters, whose scale is smaller and has less sufficient liquidity.

Subcontractors provide various construction materials or other materials, such as rebars, cement, sand, red bricks, and tiles.

Raw material suppliers provide general non-technical workers.

They provide qualified suppliers in alignment with customers’ needs.

Equipment suppliers provide architectural design ideas to assist with turnkey design, planning, professional reporting, and selection of professional suppliers.

Such companies provide or lease general software and hardware and facilities to construction sites or companies.

Suppliers not in the categories above.

Ethics agreement signing

In 2022, a total of 584 ethical agreements were signed. As a publicly listed company, Kedge Construction upholds integrity in business and requires suppliers to specialize in their techniques and complete work with a sincere and pragmatic attitude. Therefore, when we sign each contract, an affidavit is attached, and the contract clearly specifies the requirements on environmental protection, participation in associations, no child labor, and no forced labor to regulate both parties’ conduct and allow Kedge to break through the stereotype of the traditional construction industry.

Evaluation and Assessment policy and Sustainable Commitment

In order to achieve excellent engineering quality, we carefully select material suppliers and construction suppliers, emphasizing their engineering experience and professionalism. Before moving materials and equipment to the sites, we must plan and communicate with relevant suppliers in advance to develop excellent partnerships on the basis of ethical management. We regularly conduct assessments of suppliers in accordance with the ISO 45001 supplier management method procedures to guide or replace them as per the assessment results. Through a well-developed supplier management system, we have established an effective, complete, high-quality, and stable supply chain to facilitate the construction progress and cost control.

Greenhouse Gas Inventory Clause

In response to climate change, we add to the contracts with suppliers the clauses with regard to the Greenhouse Gas Inventory【Party A must disclose greenhouse gas inventory information year by year in accordance with the FSC’s “Sustainable Development Roadmap for TWSE/TPEx Listed Companies.” For facilitating Party A to calculate the annual greenhouse gas emissions, Party B should provide the data of various emissions as per the needs of Party A’s construction sites. The records and certificates of the emission data include but are not limited to: the consumption, weight, specification and model of fuels, refrigerant, acetylene, ground powder, engineering and construction materials, machinery and facilities, purchased electricity, etc. If Party B fails to provide the necessary records and certificates within the time required by Party A, Party A may suspend the valuation until Party B makes improvements.】, in line with the environmental policies to select collaborative suppliers.

Self-assessment sheet for newly added suppliers

In order to make suppliers understand more our ESG policies, we inserted in the self-assessment sheet items such as environment, human right, ethics, and corporate governance, so that the suppliers can meet our sustainable development goals when undertaking construction projects. Starting from July 1, 2022, 210 suppliers have won bids, and 189 of them have filled in the sheet, with a filling rate of 90%.

Suppliers Evaluation System

We select excellent new suppliers and rigorously assess old ones. It is one of our keys to maintain high quality in construction projects. Therefore, we have developed a complete set of evaluation and evaluation systems, such as

Supplier communication, education and training and health maintenance

In response to issues such as green energy, environmental protection, and circular economy, we actively seek, visit, and collaborate with relevant suppliers, or introduce them to our construction site through cooperation to save manpower, increase labor efficiency, and reduce costs. In order to prevent the impact of shortage of workers and materials due to the pandemic, a shift database is established to understand the dynamics of shifts, so as to quickly assist the construction site with the labor force from migrant workers to reduce the impact of shortages of on-site manpower. For materials or shifts specified in our contracts, we regularly contact the suppliers to confirm the stable supply of goods. If the supplier’s incoming materials are affected by the pandemic, they must report to us immediately, and evaluate the impact of the pandemic on the import of materials as a countermeasure.

We provide various communication channels to maintain good communication with suppliers. We hold regular sessions of education and training for projects, so that the overall project can be completed smoothly and on schedule, and we cooperate with hospitals to conduct health examination for all personnel. The following is some of the communication channels for suppliers:

  • We asked 160 suppliers to fill in the questionnaire and listened to the suppliers for suggestions on our social corporate responsibility.
  • We advocate to suppliers for using the supplier area on our website, EPO (Electronic Procurement) and other communication methods for solving problems they encounter.
  • In 2022, we conducted a total of 9 interviews with manufacturers to understand the assistance needed by suppliers and capital turnover.
  • In 2022, we held a total of 14 education and training sessions on procurement instructions.
  • We cooperate with hospitals to conduct health examinations of all personnel.
  • We held the first supplier conference on March 25, 2023, inviting 200 construction engineering partners to participate, focusing on low-carbon engineering, industrial sustainable development and other themes.
  • We will issue e-newsletters in future to integrate the company’s ESG policies and relevant information and guide suppliers on a quarterly basis. We look forward to working together with suppliers to create a more low-carbon, sustainable, and influential construction supply chain.