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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

  1. Create an ethical, clear, and open corporate culture and establish ourselves as a company that can be trusted by society.
  2. Promote socially responsible procurement activities throughout the supply chain, including not only the Yokogawa Group, but also the suppliers of Yokogawa.
  3. Comprehensively evaluate and select suppliers, giving priority to our commitment to being a good corporate citizen.

Yokogawa Group Supply Chain CSR Guideline

Strengthening of Partnerships with the Suppliers

Supplier Policy Presentation Meeting

Supplier Policy
Presentation Meeting

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.

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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.

Yokogawa Group Green Procurement Guidelines

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

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