Overview

To enable the company to quickly respond to unexpected events that may impact the supply chain, UMC has built a comprehensive platform to monitor information related to critical materials used in production as well as to their sourcing regions. Through this platform, UMC can assess inventory status and impact of events on its supply chain within seconds, enabling the company to quickly take action to mitigate any negative impact.

In today’s globalized business environment, supply chain risk management has become one of the key factors for a company’s sustainable development and success. With changes in market demands, rising geopolitical tensions, and the increasing frequency of natural disasters caused by climate change, supply chain risks faced by businesses are growing. Effective supply chain risk management not only protects a company’s resources but also enhances its competitiveness and market position.

For example, when China announced export controls on antimony, UMC’s risk monitoring platform was able to rapidly identify materials containing antimony and which fabs utilize these materials, as well as check inventory levels. This enabled UMC to promptly assess whether our operations would be affected and to what extent. Thanks to this system, an assessment that would have originally taken 3 weeks to complete was accomplished in just 2 seconds.

In response to the increasing complexity of supply chains and the growing need for risk management, UMC began in 2020 to develop a database of information on supplier sites, integrating data covering weather, earthquakes, tsunamis, public health, and travel for those locations.

The platform was initially designed to monitor the locations of suppliers’ production facilities. However, in today’s rapidly business environment, shaped by climate change and geopolitical uncertainties, events such as earthquakes or political incidents frequently cause supply chain disruptions. Although the system automatically sends notifications and follow-up requests to vendors, suppliers often experience significant delays in reporting impacts, as they must verify conditions within their own supply chains. Amid frequent events in recent times, this approach was not only labor-intensive but also resulted in longer response times in addressing supply risks.

Therefore, UMC decided to further enhance the platform to also include information on sourcing regions of critical raw materials within the supply chain. A “Risk Identification System” was also established to provide a more comprehensive understanding of material-related risks and facilitate the timely proposal of contingency plans.

Building on the existing supply chain risk monitoring system, the enhanced platform 3.0 integrates data collection, event detection/triggering, and supplier notifications. It generates necessary early warning management reports through the Material Management (MP) Dashboard. The dashboard provides historical risk event information, as well as information on sourcing regions of affected materials and upstream raw materials, giving an almost real-time overview of impacted materials and allowing UMC to quickly form risk mitigation strategies.

Also integrated into the Risk Monitoring Platform 3.0 is the Risk Identification System, which consolidates information on critical raw materials and their sourcing regions, enabling UMC to quickly identify materials affected by risks and swiftly respond to geopolitical threats. For example, amid the ongoing Israel-Hamas war, UMC’s Risk Identification System was able to promptly identify that the raw material for hydrogen bromide gas used in wafer production is sourced from bromine-rich brine deposits in the Mediterranean region, which is vulnerable to supply risks due to the war’s impact on transportation security. By referencing the system’s records of each supplier’s raw material sources, UMC can quickly determine which suppliers and materials are affected, allowing for immediate adjustments to procurement and inventory strategies, thereby avoiding disruptions caused by trade and regional conflicts.

As global supply chains evolve, companies must constantly update and enhance their risk management systems to address emerging challenges. To build resilience in the face of supply chain risks, UMC takes a comprehensive approach that integrates various factors such as material lead times, production capacity readiness, business continuity planning, market supply and demand data, and quality stability. With the introduction of an early warning system to flag potential supply risks, UMC is adopting a proactive risk mitigation strategy to stay ahead of potential supply chain challenges.

Supply chain risk management is not only a part of business operations, but also a crucial safeguard that enables companies to remain resilient in a competitive environment. Through an effective risk management system, businesses can maintain their competitiveness and ensure their sustainable development.