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Sustainable Procurement Activities

Working Together with Suppliers

Overall Initiatives

By implementing the PDCA improvement management cycle together with suppliers, OMRON is committed to enhancing sustainability performance in its supply chain.
OMRON also asks main suppliers to join with OMRON in efforts to conform to EICC standards.

Main activities Details of activities Control standards
Self-assessment OMRON and a supplier together check the supplier’s compliance with CSR Procurement Guidelines, having the supplier make improvements if necessary Survey once every 3 years minimum for targeting all suppliers
Workplace assessment Implemented for about 50 suppliers with top transactions in China and ASIA
Assessment based on third-party standards Third-party organization's audit of a supplier's compliance with EICC Code of Conduct, having the supplier make improvements if necessary EICC-ON survey once every year for priority suppliers
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 the Issue of 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 holds a Global Partner Conference targeting representatives of its main global suppliers, to brief suppliers on OMRON’s purchasing policies. The conference is intended to share and align OMRON’s management policies, business strategies, purchasing policies, and sustainable procurement policies with suppliers. The conference also provides an opportunity to exchange views with suppliers, with the possibility of reflecting their views in future OMRON purchasing measures to enhance their effectiveness.

May 17, 2016

This year’s conference was attended by representatives of 90 suppliers. In a questionnaire survey conducted with suppliers, 98.8% of respondents answered that the conference was useful and that they would also like to participate in the next conference. 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.

July 20 and 21, 2016

OMRON also held a briefing session on OMRON’ s policy on strengthening ESG compliance and measures to comply with the EICC Code of Conduct for suppliers and asked them to implement a self-assessment by EICC - ON.

May 31, 2017

The Global Partner Conference was attended by representatives of 93 suppliers. The results of the questionnaire survey showed that 97.7% of all participants gave favorable responses. Some people remarked that the conference allowed them to visualize the direction of activities they should be working on together with OMRON. In the conference, OMRON staff also explained the OMRON Group’s new medium-term management plan, VG2.0. There, all participants reaffirmed the need for OMRON and its suppliers to continue working together to contribute to a sustainable society through its supply chain.


Global Partner Conference for briefing purchasing policies

Self-assessment

In addition to requesting that suppliers conform to OMRON Group CSR Procurement Guidelines, the OMRON Group also conducts a questionnaire survey, distributing self-assessment sheets to suppliers and asking them to check their implementation and compliance regarding the guidelines on their own initiative, so as to improve their practices.

Initiatives

In fiscal 2016, OMRON conducted a questionnaire survey targeting suppliers in Japan that were not subject to the fiscal 2015 survey, as well as all suppliers in Greater China. As with suppliers in Europe and the Americas, efforts were concentrated on collecting basic supplier data, in preparation for the surveys to be conducted from next fiscal year onward.

Suppliers Subject to Survey

Unit : Number of companies
Region FY2015 FY2016
Japan*1
840 185
Greater China
665 490
Asia Pacific
110 0
  • *1 In Japan, OMRON asked 8 suppliers to submit improvement plans, after they failed to satisfy OMRON’s criteria.

Workplace assessment

At OMRON assessment staff is trained in-house to visit the workplaces of suppliers and conduct on-site assessment.

Initiatives

In fiscal 2016, OMRON conducted a survey for 49 suppliers selected for each industry in China.

Assessment based on third-party standards

OMRON asks main suppliers to conduct self-assessment and self-improvement by using EICC-ON, EICC’s online self-assessment tool.

Initiatives

In fiscal 2016, self-assessment was performed by 41 main 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" of materials, we are proactively adopting materials that do not contain hazardous chemical substances and contributes to reducing environmental impact.

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 2016, 642 suppliers were certified as green suppliers. OMRON plans to complete certification for all of its 2,300 suppliers by 2019.

Suppliers Certified as Green Suppliers

Unit : Number of companies
Region FY2015 FY2016
Japan
97 301
Greater China
130 227
Asia Pacific
104
Americas
7
Europe
3
total
227 642
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.

The act does not apply to the OMRON Group. However, from the above-mentioned concerns, OMRON set forth on the conflict mineral investigation since FY 2013 without using conflict minerals that are the source of the armed forces.

Through its surveys conducted up to fiscal 2016, 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 CMRT*2 developed by EICC and GeSI*3.

  • *2 CMRT: Conflict Minerals Reporting Template.
    *3 GeSI: Global e-Sustainability Initiative, a partnership of the information and communication technology sector.

Initiatives

In fiscal 2016, OMRON examined materials purchased by the OMRON Group over the past two years.

  • Survey targets: 490 suppliers
  • Respondents: 462 suppliers (response rate: 94.3%)
  • Identified smelters: 231 (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.


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. Since fiscal 2015, OMRON participated in the planning and management of conflict mineral investigation conference meeting hosted by the "Responsible Mineral Procurement Review Committee" to promote dissemination of conflict minerals efforts across supply chains of the industry as a whole.


Global Partner Conference for briefing purchasing policies

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

OMRON manages potential procurement risks for parts and materials by classifying them into three ranks. Efforts are now focused on minimizing procurement risks by taking measures such as keeping certain parts/materials in stock. The goal is to build a system to resume procurement of all parts within a month in the event of a disaster. In fiscal 2016, OMRON launched an initiative to strengthen its inventory management system so that OMRON can control the stock of high-risk parts in a unified manner, with efforts still ongoing.

  • * 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 2016, OMRON conducted audits for purchasing departments at 18 sites (four sites in Japan, one site in South Korea, three sites in Greater China, two sites in Asia Pacific, six sites in the Americas, and two sites in Europe).

Sites Audited for Purchasing Operations

Units : Number of sites
Region FY2015 FY2016
Japan
4
Korea
1
Greater China
3 3
Asia Pacific
1 2
Americas
2 6
Europe
2
total
6 18

In response to a news report on excessive entertainment involving purchasing departments of other companies, OMRON revised “Requests to Suppliers” posted on the OMRON Group website and “Training Materials for Supplier Code of Conduct,” making the information known to all suppliers. These revisions reflect OMRON's commitment to building and maintaining sound transactions with suppliers on a fair and equal basis.

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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