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 Process Management Code" has been defined based on its Corporate Philosophy and Yokogawa Group Code of 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 and human rights. In order to efficiently and effectively implement supply chain management of environmental and social issues, we are participating in committees of industry groups such as the Materials Committee of JEITA* and working with other companies.

*JEITA: Japan Electronics and Information Technology Industries Association

Yokogawa has drawn guidelines for Sustainable Procurement based on the RBA Code of Conduct, Version 6.0 and disclosed it to suppliers at home and abroad. It has also put together Basic Procurement Policy as precepts for daily works. Sustainable Procurement Guidelines are explained to major suppliers, and Yokogawa has ask to compliance these.

Yokogawa Group Sustainable Procurement Guidelines

Supply Chain KPIs

We have established the following KPIs to promote procurement activities based on CSR throughout the supply chain.

KPI Target Target year
Employee attendance at CSR procurement program Over three-quarters attendance 2019
Conducting explanatory meetings for suppliers More than 70 companies 2020
Implementation of SAQ to major suppliers More than 200 companies 2021

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 are involved in widely informed activities such as the revision of the guidance for outsource and acceptance of dispatched workers prepared by industry group for prevention of disguise contracting.

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.

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 is promoting out the following efforts:

  • Since 2011, we have organized our internal structure and have taken continuously 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.
  • We have been cooperating with our suppliers to investigate the use of conflict minerals in certain products based on customer's requests etc.
  • If it has been found out as a result of an investigation that Yokogawa’s activities are used as a source of funds for armed insurgents, measures to avoid the use will be immediately taken.

The Yokogawa Group will continue its utmost efforts to ensure the responsible procurement of minerals.

Slavery and Human Trafficking

Yokogawa Electric 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 110 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 Procurement Process Management Code based on its Corporate Philosophy and Yokogawa Group Code of Conduct. Its Basic Procurement Policy 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 Sustainable Procurement Guidelines 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 Sustainable Procurement Guidelines 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.