Supply Chain Management

Procurement BCP

As part of our business continuity plans (BCP), we collaborate with suppliers for disaster preparation. We maintain a database of suppliers’ production sites so that if a crisis arises, we can promptly identify impacted suppliers and quickly collaborate in recovery efforts. During fiscal year 2021, about 22,000 supplier sites were registered, and post-disaster impact surveys were conducted five times.

In addition, we conduct BCP assessments*1 on our suppliers, analyze their responses and provide them feedback to promote further improvement. In the fiscal year 2021 assessment, improvements in the overall rating level were observed at 20% of suppliers, and improvements in the overall raw score were seen at 43%.

*1 BCP assessment: A survey that has continuously been conducted to key suppliers accounting for more than 80% of our procurement spend since FY2013.

CSR Operations

To keep track of its suppliers’ engagement in CSR activities, we have conducted a CSR assessment in areas such as labor, health and safety, the environment and ethics since fiscal year 2014. We analyze the results of the assessments, provide feedback and work together with our suppliers to remediate any issues. In fiscal year 2019, we completely revised the content of the survey based on audit standards stipulated by the RBA and have since conducted surveys on materials*1, staffing*2 and logistics*3 suppliers.

In fiscal year 2021, with the help and understanding of our suppliers, steps were taken to repay workers with respect to cases of employment-related expense burden for forced labor and bonded labor, which had been identified in the previous fiscal year and which have been given particular emphasis in the RBA Code of Conduct. In addition, with respect to cases of false reporting, changes were made in business processes and audits were introduced.

Regarding the human rights issue of “freely chosen employment”, we have expressly stipulated our zero-tolerance policy for forced labor and bonded labor, and by communicating this to our major suppliers, we are promoting initiatives to ensure that all people in our supply chain can work of their own free will.

*1 Material suppliers: Surveys have been conducted since fiscal year 2014 for suppliers accounting for more than 80% of our procurement spend.
*2 Staffing suppliers: Surveys have been conducted since fiscal year 2019 on 100% of employment agencies and contracting companies (internal contractors).
*3 Logistics suppliers: Surveys have been conducted since fiscal year 2019 on 100% of customs-related operators.

Responsible Procurement of Minerals (Conflict Minerals)

We regards taking action against conflict minerals (3TG*1) obtained through illegal exploitation, including sources with human rights violations or poor working conditions, as an important part of corporate social responsibility. Our resolute goal is to eliminate the use of raw materials made from these conflict minerals, as well as any parts or components containing them. We conduct surveys on conflict materials using the CMRT*2 and referring to the OECD*3 Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In fiscal year 2021, we conducted our seventh annual survey on potential conflict minerals, and as a result, we were able to identify 236 RMAP*4 conformant smelters, providing us confidence that 3TG sourced from these smelters were conflict-free. In addition, none of the materials we procured were found to contain 3TG involved in conflict.

*1 3TG: Tantalum, tin, tungsten, and gold
*2 CMRT: Conflict Minerals Reporting Template. Survey format for reporting conflict materials, provided by the Responsible Minerals Initiative (RMI), which has established international guidelines on conflict minerals.
*3 OECD: Organization for Economic Co-operation and Development
*4 RMAP: Responsible Minerals Assurance Process. A program promoted and led by the RMI for auditing smelters/refiners that do not use conflict minerals