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.

 

Supply Chain System 

D-Link supplier classification:

General Administrative and General Affairs 
Building maintenance, office requirements, etc. 
Product Procurement 
Procurement of wireless network devices, commercial network devices, commercial cloud network devices, home network devices and other networking products from various suppliers, which are sold to the customers. Because the administrative and general procurement amounts are smaller, the items are more varied, the procurement times are not fixed, and the suppliers change, therefore the following supply chain management measures are mainly for product procurement suppliers.

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.

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 and Integrity

D-Link offers a diverse line of products. In 2022, 28 suppliers have been registered in the Company’s qualified suppliers list. In 2022, no new suppliers were added. However, D-Link strives for excellence, so we seized the opportunity to deepen our 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

2020

2021

2022


Number of New Suppliers

to Apply

1

0

0


Number of Suppliers to

Pass the Onsite Audit

1

0

0


Percentage of New Suppliers

to Pass the Audit

100%

-

-

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 Declaration. 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.

Existing Suppliers
D-Link conducts hierarchical management for qualified and continued suppliers:


Supplier Selection Tiers

Tier Standards

Management Approaches


Tier 1 (class A)

- The total shipment volume in the previous year or the procurement amount proportion ranks in the top 80%

- Major (entire batch) abnormalities with shipment quality

- All new suppliers are included

Onsite audits are conducted in the first half and second half of each year


Tier 2 (class B)

The total shipment volume or annual procurement amount in the previous year is increased to 90%

Conduct one onsite audit every year


Tier 3 (class C)

The total annual shipment volume or annual procurement amount is < 1%

If the supplier adopts self-management, if the supplier violates legal regulations or ESG-related clauses, the supplier will not be selected

D-Link formulates the tier 1 key supplier list every year according to the above-mentioned principles. We implement the annual quality management system, the environmental safety and health or labor integrity audits and promote improvements. Furthermore, we follow the evaluation results to identify the risk levels of tier 1 key suppliers in order to formulate subsequent counseling plans.
Follow-up Process for Suppliers Participating in the Evaluation
In 2022, no new suppliers joined D-Link. In 2021, due to the impacts of the COVID-19 pandemic, the onsite audit operations for qualified and registered suppliers have been slightly adjusted. Annual audits for tier 1 (class A) suppliers has been changed to once a year and quality monitoring of every shipment from tier 2 (class B) suppliers have been implemented. A total of 9 tier 1 key suppliers were selected according to the selection criteria. The suppliers were prioritized for investigation or audit. The regular audits for tier 1 key suppliers have been 100% completed.
 
The tier 1 key supplier evaluation in 2022 discovered 147 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, 13 deficiencies were discovered, which were mainly related to management systems and overtime. D-Link requires tier 1 suppliers to quickly compile internal improvement solutions and submit replies after receiving the audit report. The suppliers shall propose specific improvement plans according to the actual situation in the factory. D-Link will subsequently review the supplier audit improvement report and follow up on the improvement progress to ensure the continuous implementation of the improvement plans.
 
Apart from the supplier’s products and labor tangibly affecting the Company’s products, services, and operations, the supplier’s sustainable actions will also indirectly impact the Company’s intangible reputation and brand value, or become potential risks. Therefore, in terms of ethical management, D-Link required all suppliers to sign the “integrity commitment letter” in 2022. We require suppliers and company employees to not pay any bribes, offer or pay other improper gains, or indirectly benefit D-Link employees or related persons to complete transactions or fulfill contracts. If a supplier is engaged in illegal behaviors, they shall be immediately terminated or the contract shall be terminated.

Supplier Code of Conduct

In order to ensure a safe working environment, dignity and equal treatment of workers, and environmental protection and ethical conduct in the supply chain of D-Link, the Company formulates the “Supplier Code of Conduct” in accordance with the “D-Link Sustainable Procurement Policy”, which requires suppliers to comply with the laws and regulations of the countries and regions in which they operate, and also complies with the requirements of this Code, and encourages suppliers to require their suppliers, contractors and service providers to agree and adopt this Code.

The provisions of this Code are based on the Responsible Business Alliance (RBA) Code of Conduct, with reference to the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work Work) and the UN Universal Declaration of Human Rights.

This Code covers the following standards of conduct.

Human Rights and Labor

Forced Labor and Child Labor

Working conditions (e.g., working hours, physical/mental needs of the workplace, wages, benefits)

Occupational Health and Safety, Discrimination and Harassment

Freedom of association and collective bargaining

Environment

Greenhouse gas emissions and energy consumption

Pollution prevention and waste management

Resource efficiency

biodiversity, no deforestation or land conservation

Business ethics

Business ethics, anti-corruption, conflict of interest

Anti-competitive

 

D-Link products strictly comply with local laws and regulations, and the products produced by our suppliers are sold to the EU and their products must comply with local EU regulations, such as RoHS, WEEE and REACH commitment…,D-Link pays attention to the conflict mineral issues and requires suppliers to sign the “Conflict Minerals Due Diligence Statement” to prevent the procurement of minerals from conflict mining areas. We also require all suppliers to sign the “Conflict Minerals Declaration” to ensure that the metals in the supply chain, such as gold (Au), tantalum (Ta), tungsten (W), tin (Sn), cobalt (Co), and mica, were not procured from mines in conflict areas operated by non-government armies or illegal groups, or not procured through illegal smuggling.
D-Link requires suppliers to commit to the following:
  • Do not purchase conflict minerals from conflict areas.
  • Refuse to use conflict minerals from conflict areas and sign the “Conflict Minerals Declaration”.
  • Manage the supplier’s upstream and downstream suppliers and comply with the requirement of no conflict minerals.
  • Suppliers are required to commit to becoming long-term partners of D-Link Technology and disclose their partner smelting plants and mines in detail, in order to comply with the RBA Code of Conduct and fulfill our social responsibilities together. If the information provided is found to be untrue after verification, the supplier shall assume all legal responsibilities and compensation within the attributable scope.encourages major suppliers to develop materials and processes that mitigate environmental impact, or to save energy and reduce carbon emissions from process utilities, and actively participate in the disclosure and verification of Scope 1 and Scope 2 coverage of the GHG Agreement.

Number of New Suppliers

Number of NEW Suppliers Screened with Environmental/Social Standards


Number of Existing Suppliers

Number of EXISTING  Suppliers Screened with Environmental/Social Standards

0

0


32

9

Number of existing suppliers: 32

Number of major suppliers: 9

Number of new suppliers: 0

Number of major suppliers screened with
environmental/social standards: 9

Number of new suppliers screened with
environmental/social standards: 0

Definition of main supplier: the supplier with an


overall delivery volume greater than 85%

 

2020

2021

2022

All suppliers

37

36

32

Main suppliers

19

13

9

Number of main suppliers conducting RBA/CMA audits

19

13

9

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

In response to its operational strategy, D-Link actively increases the proportion of MIT (Made in Taiwan) procurement in the local market. Although some products with a low proportion of procurement volume in 2022 no longer have local procurement demand, the proportion of local procurement amount has increased by more than twice compared to the previous year, and will be increased year by year in the future.

Overview of Main Suppliers

D-Link’s products have been outsourced to suppliers for production since it cancels the OEM and manufacturing department in 2003. At present, there are a total of 9 main suppliers that produce D-Link products through OEM, accounting for over 85% of the procurement amount in 2022. 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 2022 and the number of products produced, the total manufacturing area is approximately 475,000 square feet.
Ratio of Successful Supplier Shipments in the Past 3 Years


Year

2020

2021

2022


Order Fulfillment rate

66%

50%

50%


Time to confirm delivery schedule

81%

90%

81%

Supply Chain Management

Supply Chain Management