- Labor/human rights, Environment/management
- Ethics/compliance, Health/safety
현대제철 통합보고서
Performance
Society
Supply Chain Management3.3.4
Hyundai Steel is implementing a supply chain strategy aimed at building an integrated management system and forming solid partnerships with suppliers. We are building a stable supply chain system by strengthening the competitiveness of our purchasing costs and improving our transparent ethical management, supporting a smart working environment and managing ESG. Through these measures, we are managing potential risks related to supplier human rights, safety, the environment and regulatory compliance. Furthermore, we are improving the risk response capabilities of our suppliers by implementing a diverse range of win-win growth programs and striving to build sustainable partnerships.
Supply Chain Management Processes
Every year, Hyundai Steel conducts supply chain ESG assessments to identify potential risks within our supply chain. To this end, we inspect our suppliers in terms of labor/human rights, environment/management, ethics/compliance and health/safety. Further, based on the results of the ESG assessment, we identify high-risk suppliers, establish improvement plans for them, and conduct monitoring on the outcomes of these improvements.
Supply Chain ESG Assessments
As part of efforts to maintain a sustainable supply chain, in 2020, Hyundai Steel conducted supply chain ESG assessments for 350 suppliers to identify potential risks. The assessment consisted of 43 items across 4 areas, including labor and human rights(14), ethics(9), safety (10), and the environment(10). Of these, suppliers scoring in the bottom 5% were categorized as high-risk, and on-site due diligence for these suppliers was conducted.
Among 20 suppliers where a due diligence was conducted, 19 suppliers submitted improvement plans and successfully resolved these risks In particular, prompt actions were taken to address significant risks, such as the development of a safety work manual and an emergency response system. Improvement was also made at a system level, including the establishment of an internal risk communication channel. With the supply chain ESG assessment, Hyundai Steel requires our suppliers to meet a certain score threshold in such areas as health/safety and labor/human rights. Those that fail to meet these thresholds are placed at a disadvantage in bidding or supplier evaluation.
Supply Chain ESG Assessment Process
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1. Select indicators for supply chain ESG assessment
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2. Conduct supply chain ESG assessment
- Frequency: Once a year(self-assessment)
- Scope: Tier 1 suppliers
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3. Review assessment results
- Identify high-risk suppliers
- Determine direction for risk response
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4. Conduct on-site due diligence
- On-site visits to high-risk suppliers
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5. Establish and implement improvement plans
- Establish plan for improving sustainability
- Monitor improvement performance
Integrated Supply Chain Management
Code of Conduct
Partners supplying products and services to Hyundai Steel are required to adhere to our Supplier Code of Conduct. Our suppliers must create safe workplaces, respect the human rights of workers, and continuously strive to protect the environment. They must also operate their businesses in an ethical manner, source their raw materials lawfully and maintain their management systems. Each of these rules being equally important, we require our suppliers to comply with all related laws and regulations.
Win-Win Growth Policy
Hyundai Steel operates a range of programs on finance, technology and management in order to achieve mutual growth with our suppliers and provide them with effective support in the areas they need. We have also concluded a fair trade agreement with the Fair Trade Commission, which evaluates our implementation results. We are thus making clear to internal and external parties our commitment to win-win growth. To do this, we are continuously developing mutually beneficial partnerships with our suppliers under the three key principles of fair trade compliance, continuous strengthening of partnership fundamentals, and supplier communication.
Communication Channels for Suppliers
Hyundai Steel is building a business model for win-win growth with our suppliers through a range of programs. We have always held a New Year's meeting with our suppliers, but as this was not possible in 2020 because of the COVID-19 pandemic. we held the event virtually through the '2021 New Year Greeting Homepage.’ Furthermore, our subcommittees for each purchasing area, which inform suppliers of our purchasing policies and product management plans, held 36 meetings in 2020 through videoconferencing, reaching 246 suppliers. In addition, based on supplier feedback – received through our online communication channel regarding systems and work-related difficulties - we were able to resolve 32 items. Moving forward, we will continue working through various communication channels to achieve win-win growth with our suppliers.
Hyundai Steel Tech Show
The Hyundai Steel Tech Show aims to promote the outstanding technologies of Hyundai Steel suppliers and to help expand their sales channels. In 2020, this event was held online to comply with the government's guidelines on the COVID-19 pandemic. In 2020, 80 domestic and overseas suppliers took part in the Show and showcased, in an online exhibition hall, a variety of production processes and products on the themes of localization, quality and productivity, the energy, safety and environment. We also held a videoconference seminar on our purchasing system for 244 suppliers to enhance their understanding of our procurement policies, and to reinforce communication. We also presented 'Eco-Partnership' certifications to suppliers that have contributed excellent ideas and have been certified as eco-friendly. The Hyundai Steel Eco-Partnership is a certification for small and mid-sized suppliers that have contributed to eco-friendly procurement. We launched this program in 2020 as a way to take part in the government's environmental policies and encourage suppliers to practice sustainability management.
Through many additional sideline events, such as the 'Online Technology Seminar,' the Hyundai Steel Tech Show serves as a venue of practical business exchanges. Moving forward, we plan to enhance the technological competitiveness of our suppliers, and further strengthen mutually beneficial cooperation, through the Hyundai Steel Tech Show.
Supporting Win-Win Growth
Win-Win Growth Fund
Hyundai Steel has raised, through financial institutions, a Win-Win Growth Fund worth KRW 40 billion to help pay the interest expenses of our suppliers’ operational loans. This enables our suppliers to reduce their financial expenses and obtain the funds they need for their business, helping to ensure a stable supply chain.
Energy Saving and Facility Support Project
To fundamentally address environmental risks at our suppliers, Hyundai Steel provides consulting on all aspects of energy consumption, including the provision of energy-saving equipment and energy management systems to ensure efficient facility operation - all free of charge. We have provided support not only in terms of facilities, but have also contributed. The expert consulting we provide on environment and energy assists our suppliers in identifying optimal energy saving solutions, and concurrent training for relevant managers enables them to strengthen their environmental risk management capabilities. In 2020, approximately KRW 300 million was spent across seven suppliers, which enabled them to save KRW 80 million in energy costs. Hyundai Steel began this project in 2014 and so far has provided support to a total of 31 suppliers, with facilities and systems worth approximately KRW 1.5 billion. Through this, the suppliers saved approximately KRW 440 million in annual electricity costs. Going forward, we will continue to help our suppliers save electricity, thereby enhancing our business competitiveness and ability to respond to environmental risk across the supply chain.
Performance Sharing System
Hyundai Steel operates a system where suppliers submit proposals on domestic production and the functional improvement of parts, etc., and share the outcome of their contributions. We help suppliers to implement the proposals they make and provide incentives, such as long-term procurement contracts, for those who successfully implement their proposals. This way, our suppliers can ensure a stable supply network and enhance technological competitiveness, and we can improve efficiency through cost savings and higher productivity. Thus far, 117 proposals have been adopted and are undergoing implementation, including 51 new development projects in 2020 . Long-term procurement contracts were also signed with 18 suppliers.
The COVID-19 Pandemic Crisis Support
In 2020, Hyundai Steel implemented a range of programs together with its business partners to overcome the crisis caused by the COVID-19 pandemic. First, we provided funding and supplies for our partners, which is continued in 2021.
While operating the KRW 40 billion won Win-Win Growth Fund, we increased the capital available to each supplier from the existing KRW 500 million to KRW 1 billion for suppliers impacted by the pandemic.
Furthermore, we have expanded financial benefits for our suppliers with the establishment of a new initiative called the 'Steel Win-Win Fund', worth KRW 20 billion. We also provided KRW 7.2 billion in emergency funding to our partners having difficulties raising funds. Reflecting the on-going business challenges, we will defer repayment of funds provided prior to 2020. Early in the COVID-19 pandemic, when masks were scarce in Korea, we mobilized our existing supply channels to provide our suppliers with 8,300 KF94 masks(nationwide 4,700 + Dangjin 1,100 + Suncheon 2,500) and 940 containers of hand sanitizer, free of charge. Hyundai Steel will spare no effort to support our suppliers until we have overcome the global pandemic.
Win-Win Growth Program
| Three Basic Principles | Category | Win-Win Growth Program | |
|---|---|---|---|
| Fair Trade Compliance | Fair trade and ethical management |
• Four key practices required by Fair Trade Commission • Procurement ethics regulations |
• Fair trade compliance program |
| Fair procurement policy |
• Transparent procurement process • E-procurement System |
• Payment conditions for supply of goods | |
| Continuous Reinforcement of Cooperation | Financial support |
• Win-Win Growth Fund • Win-Win payment system |
• Network loans(based on transaction history, loan provision) • Win-Win investment project |
| Technical support |
• Performance sharing system • Non-exclusive licensing • Support for new product development with option to purchase • Technical Data Bailment System |
• Seminars on improving technology protection • Joint R&D • Joint patent applications |
|
| Business management support |
• Exclusive online recruiting center for suppliers • Education and training programs |
• Support suppliers in expanding sales channels domestically and overseas • Support for employee benefits |
|
| Communication with Suppliers | OOperate wide-ranging communication channels |
• Procurement cooperation • New Year's meeting with procurement partners • On-site visits to suppliers by management • Meetings among departments related to win-win growth |
• Ethical management pledge • Supplier inquiries (communication bulletin) • Supplier VOC activities • Online platform for win-win growth 'Sangsaeng-Nuri' |
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서울시 서초구 헌릉로 12 TEL 02) 3464-6114 FAX 02) 3464-6060
COPYRIGHT(C) HYUNDAI STEEL. ALL RIGHT RESERVED