Supply Chain Management
Improvement of the Management Structure as Part of Internal Control
As part of the Yokogawa Group's internal control, Yokogawa's management structure governs the overall business processes, including its relationship with customers and suppliers. For the procurement processes in the supply chain, Yokogawa Group's "Group Procurement Code" has been defined based on its Corporate Philosophy and Standards of Business Conduct, to ensure fair and equitable transactions. Yokogawa observes the local ordinances of the country and regions with whom we do business, began working on the issue of conflict minerals, and focuses on establishing a supply chain that considers environmental protection.
The Yokogawa Group Supply Chain CSR Guideline, which is compliant with JEITA*, was created and published. In addition, Yokogawa's basic procurement policy, which is summarized in three points, is used as a set of principles to guide its every day operations. A network of responsible parties of Yokogawa Group's sales and procurement processes was built as a foundation for all supply chain CSR activities.
Three Basic Procurement Principles
- Create an ethical, clear, and open corporate culture and establish ourselves as a company that can be trusted by society.
- Promote socially responsible procurement activities throughout the supply chain, including not only the Yokogawa Group, but also the suppliers of Yokogawa.
- Comprehensively evaluate and select suppliers, giving priority to our commitment to being a good corporate citizen.
Strengthening of Partnerships with the Suppliers
Yokogawa Electric, in order to reinforce its partnerships, is actively organizing events on a regular basis to promote discussion and deepen trust with key suppliers and their management teams.
For example, each year we host the "Supplier Policy Presentation Meeting", in which we explain our management policy, business plan, purchasing strategy, etc., to the suppliers.
Additionally, we organize "Component Exhibitions" and "Technical Seminars" through the Purchasing Department in order to introduce the products of suppliers, along with market trends, component trends and other relevant information, to the product development teams of companies within the Yokogawa Group.
Reinforcement of Compliant Procurement
Yokogawa regularly organizes education programs for group companies in Japan so that they can learn about the "Act Against Delay in Payment of Subcontract Proceeds, Etc., to Subcontractors" as it applies to purchasing processes. Furthermore, we have a chapter on compliance to the Master Transaction Agreement in order to reinforce compliant procurement. As part of this effort, we are working to build greater ties/partnerships with the suppliers and prevent the establishment of ties with antisocial forces in order to eliminate such forces from society.
We have set up a "help line" as a channel for reporting and inquiry that can be contacted by suppliers, should they find an actual or potential violation of compliance.
Promotion of Green Procurement
Under the philosophy to contribute to building a sustainable society in various areas of business activities, Yokogawa has created the "Green Procurement Guidelines" to promote green procurement activities. Specifically, we have established a system for promoting the control of chemical substances contained in our products and are also investigating/controlling chemical substances in materials/components.
Execution of Procurement BCP
We are executing the procurement BCP with the understanding that the stable supply of products that customers need is important social responsibility. We can provide support promptly in case of emergency because, with the cooperation of our business associates, we investigate and manage the information on the areas producing the components to be used for products. For the important parts of major products, we are making efforts to reduce the procurement risk by confirming that the BCP is executed in our business associates and securing the safety stock.
Initiatives on Conflict Minerals
Certain minerals (tin, tantalum, tungsten and gold) produced in the Democratic Republic of the Congo and nearby nations, and distributed via supply chains might be used to fund armed forces engaged in illicit activities involving human-rights violations, acts of violence, etc., and consequently such materials are referred to as conflict minerals.
Recognizing that cutting off these armed forces' money source is a challenge that the whole supply chain should tackle, the YOKOGAWA Group aims to become conflict-free by using no conflict minerals for our products. However, not all the minerals are prohibited from procurement even if they are produced from the above countries. We will continue procuring the minerals that are considered to have been traded after refined by the refinery recognized as unrelated to such armed forces by the independent organization, and the proper products derived from such minerals.
To meet the aforementioned challenge, the Yokogawa Group has carried out the following efforts:
- Dedicated structures were put in place in the relevant departments in 2011, through which we took appropriate action.
- As a member of the "Responsible Minerals Trade Working Group" run by the JEITA (Japan Electronics and Information Technology Industries Association) we coordinate our efforts with those of other corporations and obtain the latest information.
- From 2013, we have been cooperating with our suppliers to investigate the use of conflict minerals in certain products. Additionally, our procured gold and tantalum investigated after 2013 has been confirmed as conflict-free.
- We are promoting the sharing of information on conflict minerals and customer support in cooperation with the United States and the European affiliated companies.
The Yokogawa Group plans to implement the following initiatives as we move forward:
- Conduct individual investigations on the parts and processed components used in our products by reflecting the requests and other requirements of our customers.
- If the findings of an investigation raise a concern about the investigated mineral as a possible funding source for armed forces, we will immediately take steps to avoid using the mineral.
In July 2013 we added our requirements on conflict minerals to the "Yokogawa Group Supply Chain CSR Guidelines" and the guidelines are freely available and accessible to the public on our website.
The Yokogawa Group will continue its utmost efforts to ensure the responsible procurement of minerals.
*JEITA: Japan Electronics and Information Technology Industries Association
Slavery and Human Trafficking
Yokogawa Electric Corporation (Yokogawa) is the ultimate parent company of the Yokogawa Group, active in the businesses of industrial automation, control and test & measurement and related consultancy and solution providing. Yokogawa is active globally, through more than 85 subsidiaries and affiliates.
Our supply chains include the sourcing of raw materials, electronic parts, software development, engineering, installation, etc. related to the products and solutions in the above business fields.
Yokogawa’s supply chains are organized locally; each organization has its own. The largest group of suppliers is related to manufacturing activities in Japan; these suppliers are practically all located in Japan.
Yokogawa has established Supply Chain Management as part of its Fair Operation Practices. For the procurement processes in the supply chain, Yokogawa has defined its Group Purchasing Procurement Code based on its Corporate Philosophy and Standards of Business Conduct. Its three Basic Procurement Principles are the creation of an ethical, clear and open corporate culture, the promotion of socially responsible procurement activities both in- and outside Yokogawa and comprehensive evaluation and selection of suppliers giving priority to Yokogawa’s commitment to being a good corporate citizen.
Yokogawa has issued its Supply Chain CSR Guideline to which all its suppliers are expected to comply, touching upon subjects such as human rights and labor, occupational health and safety, environment, fair trading, product quality and safety, information security and contribution to society. Yokogawa evaluates and selects its suppliers by requesting their agreement with the Yokogawa Group Supply Chain CSR Guideline and business ethics, laws and regulations.
In addition, Yokogawa has specifically defined respect for human rights as part of the Group’s overall goals in its Corporate Philosophy, Standards of Business Conduct and Yokogawa Group Compliance Guidelines; Yokogawa Group Compliance Guidelines contain specific statements relating to respect for fundamental human rights, equal opportunity, prohibition of child labor and forced labor, ensuring health and safety and the prohibition of harassment.
We provide business ethics training including human slavery every year to all the employees working for our company.
Yokogawa plans to strengthen its procedures by including human rights risk investigation throughout the Yokogawa group in order to verify compliance.
Until then, Yokogawa will address non-compliances with the above policies whenever they are identified and will take appropriate remedial action on a case-by-case basis.