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
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.
|Category||Description||Number of companies||Amount of purchase|
|Tier 1||Total Part Suppliers||1,880||100%|
|Tier 2||Critical Suppliers||10||-|
Supply Chain Management System
(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|
|Safety||Safety management manual, safety management organization/personnel, safety management training, safety accidents, risk management|
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.
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
|Acquired OHSAS 18001 and ISO 45001
Occupational Health and Safety Management
System Certificates for Tier 1 suppliers
|Acquired ISO 14001 Environmental Management
System Certificates for Tier 1 suppliers
Assessment Results and Measures Taken
|Classification||Indicator||Number of companies
|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%)|
Status of Supplier Support (2020)
Kia continuously supports its suppliers through technology coaching, management consulting, training, and seminars.
|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
|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|