Sustainable Supply Chain

Telecom Industry Value Chain

Issue Date:2022/06/30

Value Chain of Telecom Industry

In the face of the age of 5G and digital convergence and in terms of forming of a new kind of “digital ecosphere,” Chunghwa Telecom adopts the strategy of “extensive alliance” to transform the conventional linear ecological chain into an interdisciplinary digital ecosphere. Actively collaborating with suppliers from upstream to downstream, Chunghwa Telecom upholds its spirit of Always Ahead, offering more quality digital application services and assisting in the digital upgrade and transformation for the industries in Taiwan.

 

CHT Supply Chain

The CHT supplier partners can be divided into types of property, service, and construction. Now that its scope of operation is mainly of Taiwan, aside from professional network communication equipment to be procured internationally, we substantially put the philosophy of “local procurement” into action to facilitate the development of local economy.

The ratio of local procurement at Chunghwa Telecom was 89% in 2021 because of the larger amount of equipment procured from abroad for the 5G infrastructure, increased by 9% compared to last year.

Chunghwa Telecom is the first telecom service provider that implements “sustainable supply chain management” in Taiwan, stipulating the selection criteria for criticality both in quantity and quality, including procurement quantity (amount), supplier significance (key components), and irreplaceability (e.g. exclusivity, limited qualification, etc.) to determine the criticality of a supplier for the management and auditing of the supplier’s sustainability management in the future.

 
Criteria for Chunghwa Telecom Critical Suppliers
Category Description Number of Suppliers Ratio in Total Procurement Amount (%)
Tier-1 Suppliers Enterprise that directly supplies products or services to Chunghwa Telecom with an annual procurement amount ≥ NT$100,000 2,020 99.07
Critical Tier-1 Suppliers Quantitative Criteria Enterprise that directly supplies products or services to Chunghwa Telecom with an annual procurement amount ≥ NT$50 million 192 84.66
Qualitative Criteria
  1. Irreplaceability, limited qualification, or specific and exclusive equipment binding as the criteria
  2. A “Critical Component Supplier” is the “upstream” supplier to a Critical Supplier that impacts the Critical Supplier’s delivery of products/services to Chunghwa Telecom if it is unable to ship normally.
  3. Irreplaceability:
    1. Exclusive right owner, manufacturer, or supplier
    2. Original supplier designated out of the concern of compatibility or interoperability for the following maintenance, provision of parts/components, replacement, or expansion of equipment
    3. Supplier of research, experiment, or development of subject matter that is a prototype, made or supplied for the first time
    4. Brand or supplier of commercial resale, lease or designated by proprietor out of business needs
Critical Non-Tier-1 Suppliers Qualitative Criteria The upstream/downstream supplier for a Critical Tier-1 Supplier that supplies product/service to CHT tracked to determine if the products/services it directly supply are specific, exclusive, limited in qualification, or important equipment binding 27 -
Critical Component Suppliers Qualitative Criteria The “upstream” supplier to a Critical Supplier that impacts the Critical Supplier’s delivery of products/services to Chunghwa Telecom if it is unable to ship normally 20 -
Supply Chain Spend Analysis
Category Spend Value (% of total spend) Number of Suppliers
Engineering
Total 27.78% 765
Domestic 27.77% 764
Foreign 0.01% 1
Marketing/consulting services/general affairs
Total 11.11% 1,687
Domestic 11.08% 1,681
Foreign 0.03% 6
Consumer Electronics
Total 20.70% 42
Domestic 20.70% 42
Furnishing
Total 1.06% 437
Domestic 1.06% 437
Information Services and Equipment
Total 9.00% 488
Domestic 7.66% 473
Foreign 1.34% 15
Telecommunication Equipment
Total 30.35% 1,111
Domestic 20.94% 1,106
Foreign 9.42% 5
Total
100.00% 4,530