Supply Chain Management

Suppliers are the driving force behind D-Link’s competitive edge. By implementing due diligence, D-Link leverages its market influence to enhance the sustainable value of the overall industry chain and continuously improve the value chain management strategies of its upstream and downstream partners. Through long-term and stable collaboration, D-Link reduces operational risks and costs, continuously providing reliable and high-quality products and services to customers and achieving sustainable supply chain management.
(In view of the purchase amount and depth of cooperation, the following content takes product procurement suppliers as the main category.)

Supply Chain Management Policy

Apart from providing high-quality products and services, D-Link hopes that suppliers can also focus more on social and environmental values and actively implement energy conservation and environmental protection. D-Link views suppliers as important partners for long-term development and growth. We uphold the principle of mutual benefit and co-prosperity with suppliers to promote sustainable operations together.
D-Link uses the management standards for supplier quality, costs, delivery dates, and services as the management basis and refers to the requirements of the Responsible Business Alliance (RBA) Code of Conduct. We have expanded the scope of supplier management to include ESG issues such as environmental sustainability and social inclusion, which include labor rights, environmental protection, health and safety, ethics and management system, etc. These issues have been listed as supplier selection and auditing conditions and used to establish the risk management items. Improvement measures are subsequently formulated according to the evaluation results to help suppliers continue to improve. We aim to enhance sustainable supply chain management and reduce supply chain operational risks, in order to establish partnerships for sustainable growth.In addition, we also regularly investigate the ESG behavior of our suppliers through the “ESG Implementation Self-Assessment Form”, and thereby encourage suppliers to publicly disclose relevant performance on a regular basis, thereby driving the sustainable development of the entire value chain.
To establish the capabilities of sustainable supply chain members, D-Link executes management from the four aspects of evaluation, counseling, communication, and collaboration. The execution process corresponds to the supply chain management structure to ensure that the implementation of important issues in the supply chain management structure can be managed.
  • Evaluation: Qualification evaluation for new suppliers, tier 1 key supplier selection, and management system risk evaluation (quality, environment, social ethics, etc.)
  • Counseling: Regular supplier evaluations, tracking of deficiency improvements, promotion of policies and projects
  • Communication: Regular/irregular quality meetings, quarterly operational meetings
  • Collaboration: Continue to promote projects, enhance sustainable operation competency of suppliers

Supplier Risk Grading Assessment

D-Link offers a diverse line of products. In 2023, 34 suppliers have been registered in the Company’s qualified suppliers list. Despite no new suppliers added in the past 3 years, D-Link strives for excellence, so the Company seized the opportunity to deepen its relationships with existing suppliers and local suppliers.
The number of suppliers and the scale of cooperation often increase or decrease due to business growth and decline. In addition to conducting sustainable development issue surveys for new suppliers, D-Link also conducts a risk assessment and classification. Different audit strategies are regularly formulated for the different levels of risk to eliminate systematic risk.


Year

2021

2022

2023


Number of New Suppliers

to Apply

0

0

0


Number of Suppliers to

Pass the Onsite Audit

0

0

0


Percentage of New Suppliers

to Pass the Audit

-

-

-

New Suppliers
In order to assess whether suppliers can produce products that meet the company’s quality requirements, provide stable material quality, and ensure supply, new suppliers must have ISO 9001 quality management system certification and meet the environmental management substance requirements. We also encourage suppliers to pass the ISO 14001 environmental management system certification. Furthermore, suppliers must sign the procurement contract, Integrity and Anti-corruption Pledge, and Conflict Minerals Due Diligence Statement. The suppliers must undergo onsite audits for procurement, quality, technology, hazardous substance management environment, and social ethics before they can be registered as an official supplier of D-Link.

 

D-Link’s Qualification Requirements for New Suppliers
Existing Suppliers
D-Link’s Classification Management System for Existing Suppliers


Classification of Suppliers

Criteria for Classification

Management Approaches


Class A

• The previous year's total shipment volume or annual procurement amount accounts for over 85%.

• Significant (wholesale) abnormalities occur in shipment quality.

• Newly added suppliers are all included.

Conducting on-site inspections

annually.


Class B

For the previous fiscal year, if the total

shipment volume or annual procurement

amount accumulates to 90%, excluding Grade A suppliers, all others are classified as Grade B.

Monitoring the quality of each

batch of shipped goods.


Class C

The total annual shipment volume or annual procurement amount is less than 1%.

Adopting supplier selfmanagement;

however, if a supplier violates regulations or ESG-related terms, they will not be selected.

Responding to the organization’s supplier integration policy in 2023, the annual supplier audit and evaluation resources focus on Classe A major suppliers as the primary target, while Class B suppliers are monitored based on shipment quality.
Follow-up Process for Suppliers Participating in the Evaluation
D-Link requires the suppliers to prepare the internal improvement programs and respond as soon as possible after receiving the on-site audit report if there are any deficiency, and provide specific improvement plans based on the actual situation of the factory. If there are serious quality abnormalities during shipment, meetings must be held with the manufacturer to confirm the cause and discuss solutions; subsequently, dedicated personnel will review the supplier’s audit improvement report and continue to track the improvement progress to ensure the continuation and completion of the improvement plan.
The key supplier evaluation in 2023 discovered 125 deficiencies in terms of the quality system, which were mostly management system and operational negligence. In terms of health and safety, environment, labor, supply chain, and ethics, 12 deficiencies were discovered, which were mainly related to management systems and overtime.
2023
Improvement rate of addressing deficiencies for suppliers: 81.02%
Number of suppliers listed as unqualified suppliers for violating social responsibility standards: 0
Reports on bribery of suppliers: 0



2021

2022

2023


All suppliers

36

32

34


Main suppliers

13

9

7


Number of main suppliers conducting RBA/CMA audits

13

9

7

Proportion of main suppliers conducting RBA/CMA audits

100%

100%

100%

Number of high-risk suppliers

0

0

0

Percentage of suppliers in high-risk suppliers conducting RBA/CMA audits

-

-

-

※ Definition of main suppliers: the supplier with an overall delivery volume greater than 85%

※ Definition of high risk: Manufacturers seriously violating the regulations are high-risk suppliers

※ Not yet audited by a third party

Local Procurement

The key material of D-Link products is active components: integrated circuits, or IC. In order to mitigate the risk of unstable supply of this material, the Company actively develops multiple sources of supply, reviews their distribution proportions in a timely manner, and deliberately maintains the supply of local suppliers at a certain proportion for the effective control and flexible responses; based on this operating strategy, D-Link actively increases the proportion of made-in-Taiwan (MIT) local procurement. Although the global market demand decreased in 2023 and the total procurement amount decreased, the proportion of local procurement still increased by 7.02% year-on-year, and is expected to continue to grow in the future.

Overview of Main Suppliers

D-Link is a brand company, its business scope does not include manufacturing, and its products are all commissioned to suppliers. Currently, there are 7 main OEM suppliers for D-Link products.
D-Link does not have a production department. Calculated based on the four main suppliers who accounted for over 50% of D-Link’s total procurement in 2023 and the number of products produced, the total manufacturing area is approximately 555,000 square feet.
Ratio of Successful Supplier Shipments in the Past 3 Years


Year

2021

2022

2023


Order Fulfillment rate

50%

50%

76%


Time to confirm delivery schedule

90%

81%

74%

Supply Chain Management