CSR Procurement Activities

Working Together with Suppliers

Working Together with Suppliers

By implementing the PDCA improvement management cycle together with suppliers, OMRON is committed to raising the level of CSR practices in its supply chain.

Main activities Details of activities Control standards
Self-check OMRON and a supplier together check the supplier’s compliance with CSR Procurement Guidelines, having the supplier make improvements if necessary. Once every 3 years minimum, targeting all suppliers
On-site assessment Supplier conducts on-site inspection for its compliance with CSR Procurement Guidelines along with OMRON and makes improvements if necessary. Specify target suppliers according to the industry and conduct in a well-planned manner(Third-party audit is scheduled for fiscal 2016)
Third-party audit Third-party organization’s audit of a supplier’s compliance with CSR Procurement Guidelines, having the supplier make improvements if necessary.
Green procurement To help reduce negative environmental impact across the supply chain by avoiding the use of hazardous substances, OMRON inspects a supplier’s implementation of environmental management and regulated chemicals management and certifies a green supplier based on its criteria. Renew certification once every 3 years, targeting all suppliers
Addressing conflict minerals Survey of materials containing target minerals and identifying smelters. If conflict minerals are used, corrective action will be taken immediately. Survey once a year
Procurement BCP Thorough management of the latest information on sources of all parts. Survey newly procured parts from all suppliers and renew data once every year
Minimizing procurement risk for individual parts toward the goal of restoring procurement of all parts within a month in case of an emergency.
Financial evaluation Evaluating a supplier’s financial standing to ensure continuous and stable transactions with the supplier. Mutual deliberation and implementation of improvement measures as necessary. At least once per year

Communication with Suppliers

The OMRON Group annually meets with representatives of its main suppliers with whom the Group conducts global transactions, to brief the suppliers on its purchasing policies. This meeting is intended to share and align OMRON’s management policies, business strategies, purchasing policies, and CSR procurement policies with suppliers. The meeting is followed by an exchange of views with suppliers, with the possibility of reflecting their views in future OMRON purchasing measures.

FY2015 (May 15, 2015)

113 people from 101 suppliers participated in the meeting.
In a questionnaire survey conducted with suppliers, 96.3% of respondents answered that the meeting was useful and they would also like to participate in the next meeting. To further enhance unification of strategies between OMRON and its suppliers, the meeting was renamed the “OMRON Group Global Partner Conference,” in which the suppliers were introduced to the newly defined OMRON Principles.

FY2016 (May 17, 2016)

108 people from 90 suppliers participated in the meeting.
In a questionnaire survey conducted with suppliers, 98.8% of respondents answered that the meeting was useful and they would also like to participate in the next meeting. OMRON requested suppliers to cooperate with the company in reinforcing ESG (environmental, social, and governance) aspects of activities for which demand from stakeholders has recently been increasing.

FY2016 Purchasing Policies Briefing Meeting (Global Partner Conference)

FY2016 Purchasing Policies Briefing Meeting (Global Partner Conference)

CSR Self-check

The OMRON Group conducts a questionnaire survey by distributing self-check sheets to suppliers to help them check their implementation of, and compliance with, the CSR Procurement Guidelines on their own, and improve and upgrade their practices.

Initiatives

In fiscal 2015, the initial year of the CSR self-check program, OMRON conducted a questionnaire survey targeting its main suppliers in Japan, Greater China, and Asia Pacific by distributing self-check sheets. Based on the results of the survey, OMRON requested that suppliers make improvements as necessary. In fiscal 2016, OMRON plans to expand the targets for the questionnaire survey to include suppliers in Europe and the Americas as well.

Region Number of target suppliers (Number of companies)
Japan*1
840
Greater China*2
665
Asia Pacific
110
  • *1 In Japan, OMRON asked 21 suppliers to submit improvement plans, after they failed to satisfy OMRON’s criteria.
  • *2 In Greater China, assessment staff has been trained to conduct on-site assessment, so this is now being conducted by OMRON. In fiscal 2015, OMRON conducted a survey for 46 suppliers selected for each industry. In fiscal 2016, OMRON plans to trace implementation of corrective actions by suppliers who required improvements, while also expanding the target group of suppliers.

Green Procurement

In accordance with the OMRON Principles, the OMRON Group strives to help create a sustainable society throughout the world by taking dual approaches. One is to supply products and services that contribute positively to the global environment, and the other is to maximize effective use of all management resources. Moreover, OMRON promotes green procurement that is intended to proactively employ parts and materials that are free from hazardous chemical substances, in order to help reduce any negative impact on the environment.

In green procurement, OMRON specified ecology (reduction of environmental impact) and compliance (observance of laws, regulations, and social norms) as key programs that should be promoted across its supply chain. As such, OMRON certifies green suppliers from dual perspectives—establishment of an EMS for environmental management and a CMS for management of chemical substances contained in products.

Initiatives

At present, OMRON awards or renews certification to suppliers who meet the criteria for green supplier certification revised in 2014. In fiscal 2015, 227 suppliers (97 in Japan and 130 in Greater China) were certified as green suppliers. Going forward, OMRON plans to complete certification for all of its 2,300 suppliers by 2019.

Green Procurement (Criteria and Documents/Forms)

Addressing the Issue of Conflict Minerals

Today there is a concern that profits from the trading of minerals mined in the Democratic Republic of Congo and nine neighboring nations have been used to finance armed rebel groups, allowing them to continue fighting and encouraging ongoing inhumane acts and environmental destruction. For this reason, such minerals are called “conflict minerals” and include tantalum, tin, tungsten, and gold. To deal with this problem, Section 1502 of U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law in 2010.

This act does not apply to the OMRON Group. Even so, based on the awareness that these conflict minerals are used as a source of funds for armed groups, encouraging violations of human rights and environmental destruction, OMRON set forth a policy of avoiding the use of conflict minerals with which involvement of armed groups is suspected. Based on this policy, OMRON has been surveying the use of conflict minerals since fiscal 2013.

Through its surveys conducted up to fiscal 2015, there has been no discovery of the use of conflict minerals for which any association with armed rebel groups is suspected. Should the use of any conflict minerals in OMRON Group products be discovered, OMRON will take corrective action as quickly as possible.

Policy

Four conflict minerals (tantalum, tin, tungsten, and gold) mined in the Democratic Republic of Congo and adjoining countries have become a source of income for armed rebel groups, which supports their violations of human rights and environmental destruction. With this in mind, the OMRON Group will declare non-use of such conflict minerals. The OMRON Group will also procure these minerals from conflict-free smelters, such CFSI*1. Should the use of any conflict minerals in OMRON Group products be discovered, OMRON will take corrective action as quickly as possible.

  • *1  CFSI: Conflict-Free Sourcing Initiative.

Framework

Since fiscal 2013, the issue of conflict minerals has been specified as one of main themes to be deliberated upon and addressed by the Corporate Ethics and Risk Management Committee, which is in charge of devising and promoting counteraction against the OMRON Group’s significant risks. As such, the Committee reports the status of conflict mineral use to the Board of Directors and Executive Council every half year.

In fiscal 2013, ORMON set up the Anti-Conflict Minerals Project to formulate an annual action plan based on the review of results of the previous year’s activities, managing the progress of plan implementations for each supplier and each parts/material category on a monthly basis.

Framework

Survey of conflict mineral use

Since fiscal 2013, OMRON has been conducting a survey regarding the use of conflict minerals by means of the CFSI*1 CMRT*2 developed by EICC*3 and GeSI*4. In fiscal 2015, OMRON examined materials purchased by the OMRON Group over the past two years.

  • Survey targets: 496 suppliers
  • Respondents: 492 suppliers (response rate: 99.2%)
  • Identified smelters: 214 (all were CFSI*1-compliant conflict-free smelters)

Through monthly management of survey responses, OMRON checked with suppliers who hadn’t responded yet, asking for their progress in order to help raise the response rate. The responses were examined thoroughly, and in any case of missing or inadequate answers, OMRON communicated with such suppliers to improve the reliability of responses.

To date, there has been no discovery of usage of conflict minerals for which any association with armed rebel groups is suspected. Should the use of any conflict minerals in OMRON Group products be discovered, OMRON will take corrective action as quickly as possible.

  • *2  CMRT: Conflict Minerals Reporting Template.
  • *3  EICC: Electronic Industry Citizenship Coalition, a CSR alliance of the world’s leading electronics companies.
  • *4  GeSI: Global e-Sustainability Initiative, a partnership of the information and communication technology sector.

Briefing surveys on conflict minerals use to suppliers

Since fiscal 2013, OMRON has been organizing a meeting with its suppliers to brief them on the surveys on use of conflict minerals. In fiscal 2014, OMRON held a meeting with suppliers seven times in Kyoto and Kyushu, drawing some 240 suppliers. In fiscal 2015, OMRON individually met with representatives of suppliers to which OMRON requested their cooperation in a survey for the first time, and explained the survey.

Partnerships with industry organizations

In April 2011, OMRON joined the Responsible Minerals Trade Working Group organized by the Japan Electronics and Information Technology Industries Association (JEITA), actively collecting information and promoting partnerships with industry organizations. In fiscal 2015, OMRON took part in planning and operating a Working Group meeting to explain the conflict minerals survey, in order to widen efforts to eliminate the use of conflict minerals across supply chains of the industry as a whole.

Procurement BCP

Developing fine-quality products to contribute to society through business is one of the most important social responsibilities of a manufacturer. At the OMRON Group, we believe that it is equally important to provide a stable supply of products, even in the case of a contingency. Based on the awareness that a disaster can happen at any moment, OMRON has been promoting procurement BCP* since fiscal 2011. Specifically, OMRON checks with customers regarding products that need to be supplied preferentially in the case of an emergency, taking BCP measures for the parts/materials that make up such high-priority products.

Initiatives

In fiscal 2015, potential procurement risks for parts and materials were classified into three ranks, and efforts were focused on minimizing procurement risks by taking measures such as keeping certain parts/materials in stock. OMRON will continue implementing risk reduction efforts toward the goal of building a system that can resume procurement of all parts within a month in the event of a disaster. When the Kumamoto Earthquake struck in April 2016, OMRON’s BCP measures contributed significantly to ensuring the continued supply of products.

  • *  BCP refers to Business Continuity Plan. It is a proactive planning process to ensure that business operations will continue without interruption even in the case of natural disasters or other contingencies. BCP also covers strategic preparation in normal times, with the ability to restore important functions within a target time period even in the event of an interruption so as to minimize interruption-associated risks.

In-house Activities

Instillation of OMRON Group Rules

Toward the goal of putting the OMRON Principles into full practice, since fiscal 2015 the OMRON Group has been working to establish the OMRON Group Rules, which comprise all regulations and standards that employees must comply with in their business.

As for procurement, OMRON Group purchasing policies were specified as follows: “The OMRON Group strives to fulfill its social responsibilities by complying with all applicable laws and regulations. OMRON will do so by globally promoting comprehensive-scale CSR procurement, which also requires meeting environmental conservation and other CSR-related requirements.” In conformance with these policies, OMRON Group Purchasing Rules were established to define necessary procedures. Presently, efforts are concentrated on instilling these rules across the OMRON Group by sharing information with purchasing officers of all Group companies during their meetings or individually giving explanations to factory purchasing staff. The auditing department also conducts business audits periodically to maintain and enhance compliance with the OMRON Group Rules.

Initiatives

In fiscal 2015, OMRON conducted audits for purchasing departments at six sites (two sites in the Americas, three in Greater China, and one in Asia Pacific).

Compliance Hotline

The OMRON Group has established a hotline to accept reports from suppliers on compliance-related problems involving OMRON purchasing departments, as well as their opinions, in order to ensure the strict maintenance of compliance in-house.The hotline is set up at an external law firm, so the identities of the hotline contacts will never be disclosed or leaked to third parties.

Initiatives

The compliance hotline has been in operation in Japan since fiscal 2013. In fiscal 2015, the same hotline was launched in Greater China as well.

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