Supply Chain Management

SDGs:

  • GOOD HEALTH AND WELL-BEING

    3

  • DECENT WORK AND ECONOMIC GROWTH

    8

  • RESPONSIBLE CONSUMPTION AND PRODUCTION

    12

  • PARTNERSHIPS FOR THE GOALS

    17

There are four categories of SKM suppliers - counter vendors, general affairs, building construction and interior design, and service providers. To fulfill ESG responsibilities, SKM requires counter vendors to comply with relevant regulations on ethical conduct, labor rights, occupational safety, public safety, and environmental protection when signing contracts.

SKM Supplier Categories

(Unit: number of suppliers)

Supplier Category Description                    2024
Counter vendors General counters, F&B counters, and SKM supermarkets 2,021
General affairs Procurement of office and administrative suppliers & procurement of IT software and hardware 93
Service providers Contracted service providers for cleaning, marketing, etc. 136
Construction & Design Contractors commissioned with building construction and interior design of the department stores 78
Total 2,328
100%

Management of Counter Vendors

SKM works with over 1,500 counter vendors, including general counters and supermarkets, offering premium and safe shopping and lifestyle experiences for all consumers. SKM conducts rigorous reviews on the vendors before the partnership begins, while the vendors must comply with SKM management guidelines and terms after signing the contracts. During the partnership, SKM also continues providing all sorts of training for counter vendors.

SKM Counter Vendor Detailed Categories

  • Note 1: Compared to 1,575 counter vendors in 2023, the number of vendors increased in 2024 due to the opening of Diamond Towers. Additionally,each year during the spring and fall seasons, store adjustments across Taiwan are made in response to market trends and consumer demand, resulting in an increase in partner vendors.
  • Note 2: The reporting boundary in 2024 was expanded to include SKM Park and Fayaque. Fayaque maintains 200 direct vendors (for Fayaque distribution) and 18 counter vendors (in computers, communications, consumer electronics, cultural, and F&B categories).

Review Mechanism for Counter Vendors

When SKM discusses entering a contract with a counter vendor, it requires the vendor to provide business registration with the Department of Commerce, MOEA, trademark registration, and other company information. For short-term food and beverage (F&B) counters, the vendor must also provide test reports on raw materials. SKM examines the documents stated above to ensure the legitimacy of the vendor and its operations.

Counter vendors training and communication

Training Program                              Targets                               Number of Attendees Total Training Hours
Onboarding Training Counter Staff 237 839.0
Cash Register Training Counter Staff 1,597 3,047.0
In-service Training: Scheduling Counter Staff, Security & Cleaning Staff 5,459 5,326.0
Service Quality Counter Staff, Security & Cleaning Staff 2,608 2,849.0
Food Hygiene and Safety Counter Staff 1,362 4,053.0
Labor Occupational Safety and Health Counter Staff, Security & Cleaning Staff 153 226.0
Sexual Harassment Prevention Training Counter Staff, Security & Cleaning Staff 859 438.0
Total 12,275 167,777.0
Note: Cumulative training hours = Number of trainees from all department stores * course duration in hours; i.e., the sum of training hours from all department stores

Response to Negative Incidents Involving Counter Vendors

In 2023, there were no major incidents with negative environmental or social impacts involving SKM's owned and distributed brands. However, SKM's counter vendors experienced three major incidents, one having negative environmental impacts and two having negative social impact. Details of the major incidents with negative social impacts are outlined below.
 

Summary of Major Incidents with Negative Social Impacts


   Incident 1                                              
  1. Incident：On 2023/04/30, Guang Cheng Furniture on the eighth floor of our Kaohsiung Sanduo Store closed unexpectedly, resulting in a vacant counter and multiple customer disputes regarding fulfillment. This incident attracted negative media coverage.
  2. Response and Remediation：We promptly communicated with affected customers, and all issues have been resolved. To prevent similar occurrences, SKM will conduct thorough background checks on new brands to avoid onboarding brands with questionable credibility. Additionally, we will conduct periodic reviews of sales and order statuses for similar brands to minimize customer disputes.
   Incident 2       
  1.  Incident：On 2023/12/02, while renovating the north facade and roof of our A8 Store at Taipei Xinyi Place, an accident caused glass canopies to shatter, scattering fragments onto customers on the first floor and resulting in a safety incident.
  2. Response and Remediation：To prevent recurrence, we immediately halted the contractor's work and required them to submit a revised safety plan before resuming. We mandated that the contractor’s safety and health personnel enforce on-site safety supervision. Affected customers were appropriately compensated. To prevent recurrence, we immediately halted the contractor's work and required them to submit a revised safety plan before resuming. We mandated that the contractor’s safety and health personnel enforce on-site safety supervision. Affected customers were appropriately compensate. In 2024, SKM plans to invite general affairs suppliers to sign a Sustainability Commitment to promote sustainable operations collaboratively.


Supplier Evaluation

SKM evaluates a new supplier's company background, products, services, and previous work records. Meanwhile, SKM requires each department to complete contract renewal evaluations for existing suppliers according to department needs and the status of the contracts. The assessment includes product quality and consistency, timeliness of service completion, appropriateness of service completion, knowledge or technology proficiency, ability to cater to unexpected situations or emergencies, compliance, and service attitude, to ensure the suppliers' product and service quality. The assessment results are categorized into Excellent - premium suppliers, Fair - qualified suppliers, and Poor - unqualified suppliers, based on evaluation scores to determine whether to continue working with a supplier.
 

Management of Building Construction and Interior Design Contractors

SKM allocates budgets for store decorations, specific projects, and asset repair according to the operations, positioning, services, safety, and management of the department stores while taking other needs, public safety, and customer engagement of the stores into account. And then, SKM commissions contractors with professional skills and consistent performance to implement such plans.

SKM values the following characteristics when selecting contractors:

 

The contractor has professional knowledge, quality, and past experience working on department stores.

The contractor is familiar with and complies with relevant building codes and administrative procedures.

The contractor can cater to SKM's needs, provide consistent services, and complete the contracted work within the timeframe specified by SKM while ensuring construction quality and safety. Meanwhile, the contractor can catch up with macro trends and advanced technologies.

Construction and Occupational Safety Management

SKM complies with government regulations in all stages of construction, from planning, construction, and completion to inspection and acceptance, including the building codes and rules governing construction and fire safety equipment stipulated by the Construction and Planning Agency and National Fire Agency, Ministry of the Interior.

The Company also compiled Contractor Occupational Safety and Health Management Guidelines and rules governing inspection and acceptance, which are the basis for SKM management measures.