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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 critical suppliers to join OMRON in efforts to conform to the RBA Code of Conduct. (RBA: Responsible Business Alliance)

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 targeting all suppliers
Workplace assessment Once a year targeting 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 RBA Code of Conduct, having the supplier make improvements if necessary RBA Corporate Level SAQ (Self-Assessment Questionnaire) 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 assesses a supplier's implementation of environmental management and regulated chemicals management and certifies as a green supplier based on its criteria Renew certification once every 3 years, targeting all suppliers
Responsible minerals procurement Survey of materials containing 3TG (tantalum, tin, tungsten and gold) and identifying smelters. Should the use of conflict minerals, financial sources of armed militant groups be found, corrective action will be taken immediately

Survey of materials containing cobalt to promote procurement in a manner not to drive environmental destruction and human rights violation.
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 18, 2018

Representatives of 100 suppliers participated in the Global Partner Conference. All of the participants who answered the feedback questionnaire commented that OMRON's policies and vision were made clear and they shared the view.
At the conference, OMRON presented its sustainability policy in the mid-term management plan of VG2.0 (value generation), asking partners again to work with OMRON to realize 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 questionnaire surveys, 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 2017, OMRON conducted a questionnaire survey targeting all suppliers in Greater China. In Europe and the Americas, OMRON is scheduled to start the survey in fiscal 2018, now giving priority to the collection of basic suppliers' data.

Suppliers Subject to Survey

Unit : Number of companies
Region FY2016 FY2017
Japan
185 0
Greater China
490 425
Asia Pacific
0 0

Assessment based on Third-party Standards

OMRON asks critical suppliers to conduct self-assessment and self-improvement by using RBA Corporate Level SAQ (Responsible Business Alliance Self-Assessment Questionnaire), a RBA evaluation tool.

Initiatives

In fiscal 2017, 43 critical suppliers conducted the self-assessment.

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 2017, 417 suppliers were certified as green suppliers. OMRON plans to complete certification for all of its about 3,000 suppliers by 2019.

Suppliers Certified as Green Suppliers

Unit : Number of companies
Region FY2016 FY2017
Japan
301 214
Greater China
227 79
Asia Pacific
104 103
Americas
7 15
Europe
3 6
total
642 417
Green Procurement (Criteria and Documents/Forms)

Responsible Minerals Procurement

Addressing 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 2017, 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 to address conflict minerals

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 as RMI, Responsible Material Initiative. Should the use of any conflict minerals in OMRON Group products be discovered, OMRON will take corrective action as quickly as possible.

Framework to address conflict minerals

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 to address conflict minerals

Survey of conflict mineral use

OMRON has been conducting surveys by using CMRT (Conflict Minerals Reporting Template), the industry standard developed by RMI (Responsible Minerals Initiatives), tracking upstream supply chain.

Initiatives

In fiscal 2017, OMRON examined materials purchased by the OMRON Group over the past two years.

  • Survey targets: 470 suppliers
  • Respondents: 365 suppliers (response rate: 78%)
  • Identified smelters: 309, all minerals (of which 249 certified as RMI conflict free smelters)
  • * Response rate was down year on year due to the introduction of new registration system. OMRON will continue the survey to non-respondents in fiscal 2018.

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. Since fiscal 2015, OMRON holds one-on-one briefings with suppliers whom OMRON newly asks for the cooperation in 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 participates in the planning and management of conflict mineral investigation conference meeting hosted by the Working Group to promote dissemination of conflict minerals efforts across supply chains of the industry as a whole.


Conference hosted by Responsible Minerals Trade Working Group

Cobalt procurement

Cobalt is used in lithium-ion batteries that are indispensable for electronic vehicles, mobile phones among other products. The Democratic Republic of Congo is the largest cobalt producer in the world, and there is a concern pointed out about manual mining in the country with poor working conditions and child labor.
OMRON has a basic CSR policy in its CSR Procurement Guidelines that bans any forms of forced and child labor, and promotes cobalt procurement in a manner not to drive environment destruction and human rights violation.

OMRON will start a survey in fiscal 2018 using the Cobalt Reporting Template by RMI, Responsible Minerals Initiative.

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 2017, OMRON designed and introduced a central inventory control system to manage the stock of highest-risk parts in a unified manner at OMRON. Starting fiscal 2018, OMRON has been working on early-stage, stable procurement by forecasting demand-supply gap to select parts and materials and to ensure inventory.

  • * 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, OMRON set the OMRON Group Rules in fiscal 2015, 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 2017, OMRON conducted audits for purchasing departments at 12 sites worldwide (3 in Japan, 5 in Greater China, 1 in Asia Pacific, and 3 in the Americas), making sure that its group purchasing rules are strictly complied with.

Sites Audited for Purchasing Operations

Units : Number of sites
Region FY2016 FY2017
Japan
4 3
Korea
1 0
Greater China
3 5
Asia Pacific
2 1
Americas
6 3
Europe
2 0
total
18 12

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, and in Greater China since fiscal 2015.

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