Sustainable Supply Chain Management

Sustainable Supply Chain Management

Modernform believes that sustainable success must be rooted in a strong and transparent value chain. In 2025, the Company elevated its supply chain management from a focus on cost and quality efficiency to building a resilient and responsible supply chain, by integrating environmental, social, and governance factors as an integral part of procurement processes and supplier relationship management, to reduce operational risks and create shared long-term value.

Sustainable Procurement Practices

To align procurement operations across the entire group of companies in a unified direction, the Board of Directors approved and announced an updated Sustainable Procurement Policy and Supplier and Contractor Engagement Policy as a decision-making framework that considers total cost of ownership alongside ESG risks. All suppliers are required to sign and acknowledge the Business Code of Conduct for Suppliers and comply with 4 key standards:

1. Business Ethics: Uphold transparency, accountability, and opposition to corruption in all forms, consistent with CAC standards.
2. Human Rights and Labor: Treat workers fairly, prohibit child labor and forced labor, and respect international human rights principles (HRDD).
3. Occupational Health and Safety: Maintain a safe working environment in accordance with ISO 45001 standards to reduce work-related accidents to zero.
4. Environmental Management: Focus on efficient resource utilization, effective waste management (ISO 14001), and support for environmentally friendly materials.

Highlights in 2025

The Company elevated its supplier selection process by integrating ESG criteria as one of the key performance indicators for evaluating new suppliers under the latest Sustainable Procurement Policy, to ensure that business partners operate at standards consistent with the organization's sustainability principles.

Sustainable Supplier Management

Modernform adheres to business operations under the principles of good corporate governance, while considering all stakeholder groups, including responsibility to society, communities, and the environment. These are integrated as part of business operations throughout the supply chain, which helps increase opportunities, reduce risks, strengthen resilience, and elevate the Company's competitive capabilities. The sustainable supply chain management framework follows the international guidelines of the UN Global Compact as follows:

1. Commitment

Modernform manages its supply chain to help reduce risks that may arise from supplier operations, which could impact business operations, and to enhance the efficiency of suppliers' product and service delivery, demonstrating transparency and fairness in procurement processes, while promoting suppliers' compliance with the Company's Business Code of Conduct for Suppliers (Code of Conduct for Supplier) to achieve shared sustainable growth.

Modernform has set clear sustainable business objectives and recognizes the importance of sustainable supply chain management, which is one of the key issues in sustainable development. Therefore, the Company has established a comprehensive Supplier Code of Conduct covering:

To demonstrate the Company's commitment to supporting suppliers in ethical and socially responsible operations together, and to create production continuity, fostering organizational development and cooperation, enabling close monitoring of work processes, effective inventory management, and creating mutual business benefits based on fairness, transparency, and shared long-term growth.

Performance Results in 2025

2. Scope Assessment

Modernform has studied various activities throughout the supply chain and assessed the scope of project implementation for sustainable supply chain management, covering the types of supplier groups that are significant in the Company's business processes. Throughout the supply chain, the Company engages with suppliers of various types as follows:

Types of Suppliers in the Supply Chain

Sustainable Supply Chain Management Approach

• Procurement Policy Announcement

1. Committed to conducting procurement in a transparent, fair, and auditable manner, complying with relevant laws and regulations, while adhering to the principle of treating all suppliers equally and equitably.
2. Promote products and services with sustainability and safety certifications, which will be prioritized and emphasized in the selection process, alongside marketing potential.
3. Support the development of business partners' capabilities based on sustainability principles to elevate competitive capabilities and build long-term strategic partnerships.
4. Regularly monitor and evaluate suppliers' sustainability performance to ensure compliance with the Sustainable Procurement Policy, particularly sustainability risks within the supply chain system.
5. Build and maintain long-term relationships with suppliers in accordance with business sustainability development guidelines, to jointly achieve ethically sound business objectives with responsibility to society and communities, and to sustain good relationships with each other sustainably.

• Establishment of Business Code of Conduct for Suppliers (Supplier Code of Conduct)

3. Define Supplier Groups (Define)

      The Company has established guidelines for supplier management by integrating sustainable supply chain management principles. The Company has defined a sustainable supply chain management framework for supplier evaluation with the following processes:

     Supplier Sourcing and Selection

      The Company selects and screens suppliers through organizational sustainability assessment standards to ensure that suppliers can deliver raw materials and services that meet the Company's expected standards, categorized by supplier type as follows:

• New Vendor Evaluation

1. Preliminary Supplier Qualification Screening

Before commencing transactions, the purchasing officer will source potential suppliers capable of delivering the required goods or services. Suppliers to be considered must pass the preliminary screening criteria with the following basic qualifications:

- Must be an entity with a verifiable place of business.

- Must be an operator with a sound management system, possessing qualified personnel, machinery and equipment, products, services, financial standing, and/or an appropriate and reliable business history.

- Or must have previously engaged in purchase and sale transactions with the Company.

2. New Supplier Selection and Registration

- If there is potential to become a new supplier, the purchasing officer will evaluate and select the external service provider based on scoring criteria, considering the following:

- Qualified candidates must achieve an evaluation score of not less than 65 points.

- In cases where an external service provider has a high transaction value or high risk, an On-site Visit assessment must be conducted by the Purchasing and Quality Assurance departments.

- If selected, the supplier will be registered as a new vendor, with information recorded in the MOS system under the Vendor Global module, and transactions will be conducted in accordance with the procurement process.

- All new suppliers must receive the "Business Code of Conduct for Suppliers" for acknowledgment, signature, and compliance with the Company's sustainable business practice standards and guidelines.

• Current Suppliers

To categorize suppliers for risk management purposes, the Company classifies current suppliers as:

1. Critical Tier 1 Suppliers
2. Critical Non-Tier Suppliers

      Critical suppliers with active transactions are divided into 2 groups as follows:

1)  Group 1 – Critical Suppliers Providing Raw Materials and Component Parts must meet the following criteria:

-    Suppliers with high purchase volume (High Volume Suppliers) exceeding 5 million Baht.

-    Suppliers who are critical to the Company's production line.

-    Suppliers that are few in number or where no substitute products or services can be sourced.

Annual Supplier Evaluation Results in 2025

Summary of evaluation results on supplier performance, quality, and suitability against the organization's established criteria.

2)  Group 2 – Critical OEM Suppliers and Finished Product Suppliers

      Current suppliers must receive communication of, acknowledge, sign, and comply with policies, requirements, practices, and other relevant provisions in Modernform's "Business Code of Conduct for Suppliers."

Delivery Performance and Supplier Capability Development Evaluation

The Purchasing Department will evaluate suppliers every 3 months by summarizing scores from delivery performance assessments calculated from delivery data in the MOS system (Modernform's internal system) and quality performance from Non-Conformance Reports (NCR) in the MOS system, which counts the number of on-time deliveries per month compared to the total scheduled deliveries for that month, with the following evaluation criteria:

4. Risk Control and Supplier Audit

Supplier Assessment to Ensure Confidence in Production and Delivery Processes

Commitment and Goals

The organization is committed to developing and managing a sustainable supply chain, placing importance on service providers and suppliers at every stage of procurement, to ensure that the products and services received are environmentally, socially, and economically responsible, consistent with ESG principles and sustainable development goals.

Operational Guidelines

• Develop assessment plans and conduct site visits, focusing on key raw material groups or groups with recurring issues to inspect and jointly improve work processes.
• Conduct assessments and site visits.
• Summarize assessment and site visit results.
• Communication and service provider engagement.

On-site Visit – Key Suppliers
In 2025, the Company concretely controlled risks and monitored supplier performance as follows:

1. Standard Verification: Conducted On-site Audits of key suppliers to verify actual compliance with labor and environmental laws.
2. Continuity Management: Established a backup supplier list for key raw materials to reduce supply chain disruption risks.

Sustainable Raw Material and Product Sourcing

Modernform focuses on building a green supply chain through the selection of materials that meet both design and environmental requirements. Key performance results in 2025 are as follows:

• Selection of Recycled and Alternative Materials

The Company selected a total of 13 environmentally friendly material items as safe material options that are beneficial to consumers and the environment, to serve as standards for the production of new furniture models in the future. In particular, the ORBIX collection features acoustic panels produced from recycled plastic (rPET) at a proportion as high as 60 percent. The Company also initiated the introduction of sustainable furniture upholstery material options for environmentally conscious customers, particularly in pilot product groups and new collections such as ORBIX, which features fabric certified to the Global Recycled Standard (GRS). Every 10 yards of fabric contributes to the repurposing of up to 140 used plastic bottles.

• Safe Wood Raw Material Management

The Purchasing Department elevated wood supplier evaluation through On-site Visits to verify Boron-Free standards and the control of formaldehyde to European standards (E1/E0), in support of the Well-being strategy focused on user health.

• Supporting the Domestic Circular Economy

The Company places importance on procurement from domestic suppliers, with a domestic procurement proportion of 70 percent, to reduce greenhouse gas emissions from transportation (Scope 3) and support Thai entrepreneurs with eco-friendly innovations.

Future Goals

The Company targets material transparency elevation in the office chair product group to cover 100 percent by 2026 to meet the green procurement policies of leading corporate customers, while aiming to expand the sustainable materials portfolio through strategic cooperation with recycled material and internationally Eco-Certified fabric manufacturers. In addition, the Company prioritizes the exploration of new circular material innovations to support the design of new collections and elevate sustainability standards.