Taking seriously the recent social and environmental issues related to our supply chain, we are promoting responsible procurement activities that not only comply with various laws and regulations, such as the Subcontracting Act, but also give due consideration to human rights and the environment. By responding to expectations from society in cooperation with our diverse suppliers across the supply chain, we contribute to the realization of a sustainable society.
Our Group promotes responsible procurement that meets the expectations of society and takes human rights and the environment into consideration throughout the entire supply chain, including suppliers. Based on the procurement policy, the procurement department takes the lead in activities in cooperation with each department and each related specialized committee. Progress and issues are reported to the Management Committee as necessary.
We carry out procurement activities on a global scale, and while utilizing the advantages of both centralized and decentralized purchasing, we also carry out local procurement for the purpose of optimal procurement at our overseas manufacturing plants.
Procurement amount composition ratio by country/regionAt our company, the procurement department mainly manages suppliers.
Our procurement department mainly manages suppliers. We check and investigate not only quality, technology, price, and delivery, but also sustainability, such as the environment, social, governance, and attitude toward improvement, etc. as conditions for doing business with us.
In particular, we identify suppliers who deliver materials, processing and equipment related to our product manufacturing as significant suppliers and conduct annual evaluations of them based on the above-mentioned perspective of our supplier management. We rank them from A to D, and encourage continuous improvement based on this feedback.
| Rank | Rank |
|---|---|
| A | Priority will be given to obtain quotations. Become a potential technical partner for joint development, etc. |
| B | Point out weaknesses and provide guidance to encourage improvement |
| C | Request for improvement based on the Improvement Request Form. Also, instruct them to aim for a rank of B or higher. |
| D | Confirm willingness to make improvements, follow up/confirm improvements periodically |
Purchasing ratio from important suppliers
Significant suppliers ratio by level（FY2023 annual evaluation results）In accordance with the "Guidelines Concerning Price Negotiations for Appropriate Shifting of Labor Costs" issued by the Japan Fair Trade Commission, our Group has established procurement guidelines to ensure fair transaction prices and has made these guidelines known to all employees. By making this a shared awareness throughout the company, we will continue to maintain fair transactions.
To foster CSR and sustainability measures across the supply chain, we issued our CSR and Sustainability Procurement Guidelines and have been distributing copies to suppliers.
When we revised this guidelines in FY2023, we held briefing sessions to help our suppliers better understand it, and many of them participated.
The CSR and Sustainability Procurement Guidelines set the rules that our suppliers are requested to comply with concerning the environment, human rights and labor, business continuity planning (BCP), business ethics, information security, occupational health and safety, and product quality and safety. We ask our suppliers comply with these as a prerequisite for business and to put them into practice together with the Niterra Group. We also ask our suppliers to distribute copies of the Guidelines to their own suppliers.
To monitor the status of implementation by the suppliers, we conduct surveys every two years using a checklist. For the survey we conducted in FY2023, we expanded the scope to include all suppliers, and received responses from 63% (based on number of companies, equivalent to 83% of all purchases) of them. For some suppliers, we held interviews with management and provided other follow-ups, thereby asking for improvement.
Our procurement department staff receive sustainability training for them to improve the sustainability knowledge.
In FY2023, more than 100 staff received that training.
In order to ensure thorough compliance with procurement compliance, we are conducting Niterra Group procurement compliance training and comprehension tests for Group employees.
In order to reduce our environmental impact throughout the supply chain, we issued the Green Procurement Guidelines to request that suppliers build environmental management systems and ensure the strict management of environmentally hazardous substances.
These guidelines explain the basic concepts of our green procurement based on our environmental policies. We reviewed the list of related chemical substances in July 2021 and released version 11.01 of the guidelines. We ask our suppliers to study the guidelines and cooperate with our green procurement.
We certify suppliers that meet our system and material standards prescribed in “Green Procurement Guidelines” as "green suppliers," and give priority to these in purchasing.
As of FY2022, we have certified 104 suppliers involved in facilities/jigs and tools, building/incidental facilities, and 153 suppliers involved in raw/subsidiary materials, parts, processing and outsourcing.
There are concerns that some mineral resources mined in the Democratic Republic of the Congo and surrounding countries provide a source of funding to local armed forces, thereby promoting conflicts and infringements of human rights. This issue of conflict minerals is recognized as a serious social issue in relation to the procurement of resources and materials.
Accordingly, we annually conduct surveys on the use of conflict minerals targeting the upstream section of our supply chain and avoid the use of any with related risks.
To ensure respect for human rights of all people who are related to our suppliers and their suppliers, we have specified prohibited actions regarding human rights in the CSR and Sustainability Procurement Guidelines.
In addition, we periodically conduct supplier surveys to monitor their implementation status of human rights efforts and provide feedback to encourage suppliers to make improvements in areas with insufficient efforts.
In order to promote carbon neutrality throughout our entire supply chain, including suppliers, we ask our suppliers for their cooperation in setting greenhouse gas reduction targets and answering surveys on CO2 emissions related to our products.
The CSR and Sustainability Procurement Guidelines, which have been distributed to all our suppliers, stipulate that suppliers should set greenhouse gas emission reduction targets and promote reduction efforts.
We have already set CO2 reduction targets for about 30% of our suppliers, and we will continue to encourage suppliers who have not yet done so to do so. (As of the fiscal 2022 survey)
In order to understand CO2 emissions related to our company at our suppliers, we have been conducting surveys of CO2 emissions related to products for our company since FY2022, and we will continue to conduct surveys in the future.
In addition, we not only provide seminars and materials on CO2 emission reduction to all suppliers but also provide support tailored to individual suppliers’ levels of activities and on-site support at the request of suppliers.
By conducting activities to help suppliers enhance their business foundation and engaging in follow-up activities after our regular evaluation of them, we make joint efforts for improvement with suppliers, thereby building greater trust.
We offer seven seminars for our suppliers, including seminars specialized in manufacturing (e.g. seminar on how to create drawings, why-why analysis seminar), and CSR & Sustainability support seminars aimed at strengthening the foundation of CSR and sustainability and increasing corporate value annually.
On-site practical courses (5S improvement activities, TPM activities) are activities which we go to the manufacturing sites of our suppliers and conduct improvement activities together.
We also provide follow-up assessments for suppliers who have completed an On-site practical courses. These activities are conducted to promote human resource development of our suppliers and to help them become more powerful companies. We are thus working in cooperation with our suppliers to ensure thorough implementation of our “Quality Product” policy and improve manufacturing capabilities throughout the supply chain.
We annually conduct evaluation on some suppliers and inform them of the results. For suppliers that require follow-up activities, we visit them to provide targeted advice and inspect their sites in order to work with them in thinking about how to rectify any weak points. We also award suppliers who have been evaluated as excellent.
In support of the Declaration of Partnership Building established by the Council on Promoting Partnership Building for Cultivating the Future*, we have released our own declaration. We are committed to promoting the coexistence and co-prosperity of the entire supply chain, building new partnerships regardless of the size of business and beyond the boundaries of business affiliations, and ensuring compliance with the “promotion standards.” At the same time, we implement proper purchasing transactions in accordance with the Procurement Policy.
* The members are the Chairman of the Japan Business Federation (KEIDANREN), the Chairman of the Japan Chamber of Commerce and Industry, the President of the Japanese Trade Union Confederation (RENGO), and relevant Ministers (Cabinet Office, Ministry of Economy, Trade and Industry, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries, and Ministry of Land, Infrastructure, Transport and Tourism).
We have opened a Helpline as the contact point for suppliers to report any violation by managers or employees of the Niterra Group.
Details are provided in the pamphlet distributed to the suppliers.
