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Supply Chain Management

Kia is pursuing three strategies to promote shared growth: enhancing business partners’ global competitiveness, strengthening the foundation for sustainable growth, and establishing a shared growth culture. To manage the supply chain from an ESG perspective, we are implementing supply chain management policies in various fields such as quality, technology, safety, and environmental friendliness, to go beyond the support program to ensure the competitiveness of supplier.
We also encourage supplier to implement the "Supplier Code of Conduct", which includes behavioral standards such as ethics, environment, labor & human rights, safety & health, and management system to fulfill their social responsibilities. Kia will strive to operate with supplier to achieve sustainable shared growth

Supplier Code of Conduct (PDF)

Status of Supply Chain (2020)

We manage ESG level of all suppliers. Based on the transaction size, as well as the characteristics and technological level of the supplier, we select our critical suppliers and suppliers at risk. We are conducting written/on-site evaluation, monitoring, and measures for all our tier-1 partners to improve the sustainability of the supply chain.

Status of Supply Chain (2020) table
Category Description Number of companies Amount of purchase
Tier 1 Total Part Suppliers 1,880 100%
Korea* 780
Overseas 1,100
Critical Suppliers 40 40%**
Tier 2 Critical Suppliers 10 -

* Including about 400 import companies
** 40% of the amount purchased from 1,880 primary suppliers equals the purchase amount from 40 critical suppliers.

Supply Chain Management System

Supply Chain Management System table
Priority Category Contents
Managed items
(Annual Management Criteria)
Quality Quality management system, incoming defects ratio, claim cost reimbursement ratio, quality management
Delivery Operational failures of production lines, delivery rate for after-sales services, delivery rate for knockdown(KD)* parts
ESG perspective
(Frequently)
Safety Safety management manual, safety management organization/personnel, safety management training, safety accidents, risk management

* Exporting a knock-down (KD) kit containing the parts needed to assemble a product in the respective local market

To establish a systematic supply chain, Kia is implementing supply chain management policies such as quality, delivery, technology, win-win cooperation, safety management, quarantine, and eco-friendliness, and conducts supply chain evaluation to diagnose and respond to supply chain risks in advance. In particular, we are operating an evaluation process. Based on ESG issues, self-assessment(assessment done by suppliers themselves and pilot evaluation were conducted to establish an evaluation system.
The supply chain ESG management is operated for all suppliers, and we select critical suppliers and high-risk suppliers in consideration of the importance of technology and industry to promote prioritized improvement. Self-assessment is conducted for tier 1 suppliers, and written/on-site evaluations are conducted for high-risk suppliers to monitor and manage matters for improvement raised as a result of the evaluation.

Self-diagnosis for tier-1 suppliers
Written/on-site evaluation on critical suppliers and high-risk suppliers
Monitoring based on evaluation results
Analysis of result
Diagnosis of areas in need of improvement

Contingency Plans

For each emergency situation, Kia has a contingency system for supply, logistics, and production stages. Through supply chain diversification, Kia is prepared to mitigate or prevent production losses resulting from parts supply issues due to natural disasters and so on.
Generally, our parts procurement for each part is done from at least 3 or more suppliers, although it may vary according to the technical and physical characteristics of the parts.
In case imported parts are required urgently, Kia also has a flexible logistics systems that enables us to interchange between shipping and air transport at any time.
In all domestic manufacturing plants, there are buffer lines at each major sector so that a sudden stop in a production process will not affect other processes or to minimize its affect.
Each of the buffer lines have additional production capacity and storage space for at least half an hour's worth of production. Therefore, even if an accident occurs, the effect to the pre/post processes can be minimized.

Domestic 1st-tier parts suppliers certifications

Domestic 1st-tier parts suppliers certifications
Sustainability Goals Performance Goals
2018 2019 2020 Until 2022
Acquired OHSAS 18001 and ISO 45001
Occupational Health and Safety Management
System Certificates for Tier 1 suppliers
98% 99% 100% 100%
Acquired ISO 14001 Environmental Management
System Certificates for Tier 1 suppliers
87% 91% 92% 100%

Assessment Results and Measures Taken

Assessment Results and Measures Taken table
Classification Indicator Number of companies
(Evaluation percentage)
Supply Chain ESG* Tier-1 suppliers subject to sustainability risk assessment 380** (100%)
High-risk Tier-1 suppliers subject to sustainability risk assessment 38 (100%)
Monitoring key suppliers Key suppliers subject to supply chain monitoring 40*** (100%)
High-risk suppliers subject to supply chain monitoring -
Corrective actions Subject to completion of corrective action among high-risk suppliers of sustainability 38 (100%)

* Management status, working conditions/human rights, business ethics, and environment, safety and health assessment
** Subject to domestic tier-1 suppliers (excluding importers)
*** All tier-1 critical suppliers

Status of Supplier Support (2020)

Kia continuously supports its suppliers through technology coaching, management consulting, training, and seminars.

Status of Supplier Support (2020) table
Foundation of Korea Automotive Parts Industry Promotion, Suppliers support Category Tier 1 supplier Tier 2 supplier
On-site Technical Assistance 14 business types 14 79
Business Counseling 8 areas 21 25

Status of Payments for Goods & Services

Status of Payments for Goods and Services table
Classification Payment Method Pay Period
Parts for Domestic Use SME Cash Weekly
Medium Sized Company (with annual sales under KRW 500 billion) Cash Weekly
Medium Sized Company (with annual sales over KRW 500 billion) 60-day promissory notes Weekly
Large corporations 60-day promissory notes Weekly
Exportable parts Cash Monthly