Supply Chain Management

In addition to partnering with the counter vendors in the store, FEDS also works with suppliers that can be split into 5 big categories: construction, administration, IT, publicity, and labor. Through the supplier management and evaluation system, FEDS ensure that the suppliers not only comply with laws and regulations, but also together with FEDS emphasize sustainability issues such as health and safety, labor rights, environmental protection and ethical requirements. In order to strengthen a sustainable supply chain, FEDS holds an annual vendor networking meeting, sharing with vendors the year’s performance and future developmental visions. At the same time, FEDS praises the outstanding counter vendors, and hopes to bring customers better shopping experience through innovative products and enhanced services to transform the operating model of the department store industry.

Timeline of Driving Supply Chain Management

2016

In September 2016, the Procurement Department was established to coordinate the internal purchasing system.

2017

Suppliers accounting for more than NT$1 million in procurement must sign the "Supplier CSR Commitment Letter".
Introduced the procure-to-pay system to improve the efficiency of procurement management.

2018

Formulated the supplier selection system and established a database of high-quality suppliers.
Promoted "Supplier Construction Insurance" to reduce industrial safety accidents.
Strengthened four key measures for contractors' operational environment, safety, sanitation, and management.

2019

"Supplier CSR Commitment Letter" is extended to suppliers whose purchase amount is less than NT$1 million.
Conducted relevant education and training for colleagues and management trainees to strengthen professional procurement knowledge.

2020

The combined purchase of products was increased to achieve the three goals of integration, cost-saving, and process simplification.
Standard bids were formulated for construction projects to ensure the consistency of bidding documents, saving time for the bidding process.
The "Urgent Requirement SOP" was formulated to ensure the execution of the case and timely handling in case of urgent procurement.

2021

Suppliers with a purchase amount of more than NT$800,000 were required to sign a mandatory "Supplier CSR Commitment Letter".
Consolidated 8 types of unified bid and combined purchase.
Adjusted the "Supplier Construction Insurance Standards" and formulated management rules for labor service manufacturers.
Promoted “Preferred use of products with environmental labels and certifications” through supplier meetings.

2022

All contracted suppliers are required to sign a mandatory "Supplier CSR Commitment Letter".
Continue to consolidate 2,769 items of combined purchase.

2023

Discuss supplier database requirement specifications with relevant departments.
Added collectively purchased items to 3,000
Continuously optimizing the procurement, inspection and payment system

Future plans

Plan to establish 3 major systems in the next 3 years
Establish a supplier database: facilitate procurement colleagues to search online and select high-quality suppliers.
Establish a price comparison database: Allow the purchasing staff to compare the purchasing information of various items, specifications, and minimize work hours.
Establish an online quotation platform: Provide online quotations for certified vendors to improve operation efficiency and quotation transparency.

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FEDS holds an annual vendor networking meeting, sharing with vendors the year’s performance and future developmental visions. At the same time, FEDS praises the outstanding counter vendors, and hopes to bring customers better shopping experience through innovative products and enhanced services to transform the operating model of the department store industry.

FEDS works with suppliers who comply with environmental sustainability and labor laws and whose quality meets the standards. Meanwhile, FED follows the requirements such as credit investigations that the Far Eastern Group’s Joint Purchasing Center has towards suppliers, and requires suppliers to sign CSR commitments, clearly pointing out the need to abide by actions such as labor rights, health and safety, and environmental protection, in order to strengthen the supplier’s sustainable management mechanism.

Supply Chain Diagram

Subsidiary Supply Chain Diagram

Supplier Selection Process

Phase 1: Select the Members of The Supplier Selection Committee

Selected according to position in the company: “Headquarters” and “Branch stores” each account for 50%
Selected according to profession: “General staff” and “Professionals” each account for 50%

Phase 2: Planning the Selection of Suppliers

Planning the selection of suppliers according to construction/general affairs/counters.
Selected suppliers are included in the list of evaluated suppliers after the compliance review based on the basic information of suppliers are conducted

Phase 3: High-Quality Suppliers are Selected in a Fair, Just and Open Manner

Convened committee: 10% of the selection members are chosen randomly by a computer to form the supplier selection committee.
Conducting selection: High-quality suppliers are selected in a fair, just and open manner according to the “5 major selection indicators for suppliers”
Providing the list: The procurement unit provides the list of high-quality suppliers to relevant units as reference.

供應商評選面向與數量

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	Health and Safety	Labor and human rights	Environment	Ethics
Total number of suppliers screened	184	184	184	184
Number of suppliers that (may) have negative impact identified	0	0	0	0
Number of improved suppliers	0	0	0	0
Number of terminated suppliers	0	0	0	0

Note: The evaluation scope in the above table includes new suppliers and suppliers that have no dealing with FEDS in the previous year so as to be considered as new suppliers for reevaluation.

FEDS has formulated the “Supplier CSR Commitment Letter” since 2017, stipulating that all cooperating suppliers who undertake the business with FEDS with procurement amount up to NT$1 million must sign the “Supplier CSR Commitment Letter”. After 5 years of uninterrupted promotion, by 2023, all suppliers have been required to sign the “Supplier CSR Commitment Letter” when signing the contract, and they work together with FEDS to make a total of 32 sustainability commitments in four categories, including labor and human rights, health and safety, environment, and ethics.

FEDS uses the “Supplier CSR Commitment Letter” as one of the supplier selection criteria, and integrates the four procurement phases of “request, purchase, inspection, and payment” using the BPM system to achieve real-time, collaborative and effective procurement management through digitization. If a supplier fails to fulfill its social responsibility commitments, it will be disposed of according to the agreement (such as suspension of rights, termination of contracts, etc.) to establish sustainable supply chain management.

FEDS has effectively obtained 263 cases of suppliers signing the Supplier Social Responsibility Commitment Letter in 2023, with a procurement amount of approximately NT $1.02 billion and a growth rate of 12% for the supplier signing commitment letters.