To expedite supplier-related processes, YOKE has introduced its supplier information platform and planned to introduce new functions over the years to strengthen our two-way information transmission and exchange. In 2019, the file-sharing mechanism for outsourced processing drawings was completed. We were able to share process drawing files through our PLM system for suppliers to download said files directly through our supplier information platform. Currently, 95% of our suppliers have completed the implementation. In 2020, the Company upgraded its SAP ERP, re-examined the procurement process, and further integrated with related systems, commenced the development of new functions for the supplier platform system in 2021, completed supplier data application, procurement order delivery management, and shipment and inventory applications, and had 23% of the procurement order volume of suppliers online. The target is to achieve 85.00% of raw material purchase orders online in Q2 2022, and to complete the invoice payment process in Q3 2022.

In 2020, we launched our primary supplier quality management counseling program in which our QA supervisors served as the heads of the program while designated engineers helped by being the liaisons. We engaged our suppliers in quality management practices through the weekly quality meetings and improved their depth of execution. Participating suppliers benefited from the program as their average monthly complaint fell by 70.38%, their average IQC rejection fell by 68.08% and average production line anomalies fell by 77.78%. These improvements helped them to lower their costs incurred by internal failures in different areas. In 2021, the Company continued to track the improvement of our existing suppliers, and we expect to add two new suppliers in 2022.

For raw materials that have to be tested with salt spray, although some manufacturers have acquired salt spray test machines, due to the inconsistency in their test methods, we had to redo the tests and that led to repeated work and wasted time. And as such, we introduced improved testing techniques for suppliers in 2019. For suppliers that pass our audit, YOKE would simply accept the test data they provide during IQC so as to spare the suppliers from having to provide samples and the time investment required for both parties. The techniques also helped suppliers detect anomalies prior to shipping to rectify the issue in time. In 2021, we continued to track the delivery irregularities of our suppliers, and counted 746 salt spray tests conducted by our suppliers, and there were no quality abnormalities that required returns, effectively improving the follow-up process and delivery quality (reducing returns). In 2021, we continued to track the delivery irregularities of our suppliers, and no abnormalities in quality required return after the sampling inspection of incoming shipments throughout the year.

In 2020, we also encouraged our suppliers to make improvements in their quality management system. In light of the fact that most of our suppliers fall in the category of small enterprises, it would be a tall order to ask them to be accredited to ISO 9001 quality management system as they might lack the resource/manpower to achieve the required management and maintenance. And as such, YOKE has developed its assessment tool by simplifying its quality management system and conducted periodic quality management system assessment for suppliers involved in key procurements with large transaction amounts, supplemented with counseling and assistance to help them achieve continuous improvement on their operating procedures. In 2021, 5 companies signed ISO counseling contract, 2 of them are revalidated, and the remaining 3 are the first time to implement quality management system validation. By the end of 2021, 1 company has obtained the certificate, and the other 2 companies have scheduled the validation schedule.

In 2019, the EPA revised the standard of water discharge, the control limit of ammonia nitrogen concentration in electroplating wastewater from 300~500 mg/L to below 150 mg/L from 2021, resulting in lower dissociation speed, lower quality of electroplating and lower yield rate by more than 10%. After discussing with the electroplating supplier, we used potassium as the dissociation solution by changing the medium, and re-examine the risk of abnormal appearance deterioration to effectively reduce the defective rate back to less than 1% to comply with the government regulations. Since the discharge water standard is gradually lowering the concentration limit of ammonia nitrogen in the discharge water, YOKE will continue to cooperate and improve with suppliers to avoid the problem of lower yield rate due to the wastewater factor in the future.