Procurement Information

Basic Philosophy

1. Principles of procurement activities
   We of the Yokogawa Group are establishing a clean, clear, and open corporate culture based on our Corporate Philosophy and Standards of Business Conduct. We are committed to making our company more trusted by society, upholding the motto of "The sun is always watching us."
   
   We conduct procurement activities based on the following principles:
   1. Engage in fair dealings as an equal partner
      We do not unduly discriminate against any supplier by abusing our superior position or imposing unilateral conditions on the supplier. We engage in honest dealings with all suppliers by striving to maintain fair and just relationships and abiding by all applicable laws and contracts. We promote fair and open competition. To that end, we provide an equal business opportunity to and make a fair evaluation of all suppliers.
   2. Conduct business dealings with high integrity
      We do not pursue personal benefits by receiving improper personal benefits or any other gain from suppliers. We respect the ideal of mutual benefit and are committed to the highest standards of business integrity. We strive to create a better partnership and to grow and develop together with our suppliers by building mutual understanding and trust.
   3. Keep confidential information
      We protect both personal and confidential information obtained in our dealings with suppliers. We never disclose this information, even to our own employees, unless there is a legitimate reason for knowing it.
2. Our Procurement Policy is based on sustainability
   With the rising interest of stakeholders in the topic of EGS(Environment, Social, governance), sustainable promotion activities by enterprises and industry associations have gained significant momentum in recent years.Yokogawa Group has been working proactively to set up sustainability promotion departments and published sustainability reports/Three goals. Our Sustainable Procurement Guidelines were made to promote procurement activities based on sustainability throughout the supply chain, including not only the Yokogawa Group but also Yokogawa suppliers.
3. Evaluation and selection policy of suppliers
   We evaluate and select our suppliers in a comprehensive manner by giving priority to the following criteria:
   1. Agreement to comply with our Sustainable Procurement Guidelines.
   2. Compliance with business ethics, laws, and regulations and maintenance of a healthy business operation allowing the establishment of a steady and cooperative relationship.
   3. Ability to offer a world-class level of performance in terms of quality, delivery, cost, technology, response, and service.
   4. Ability to supply the required amount at the required time in order to adapt to changes in our customers' delivery and quantity requirements.
   5. Have leading-edge technology for our supply of safe and outstanding products that meet our customers' requirements.
   6. Have an information security system for the strict control of confidential information obtained through dealings with Yokogawa Group companies.

Expectation for Suppliers

1. Compliance with Sustainable Procurement Guidelines

   We have revised Sustainable Procurement Guidelines. We share these guidelines with our suppliers and strive to resolve social issues throughout the entire supply chain. These guidelines include codes of conduct regarding “Human rights and labor”, “Health and safety”, “Environment”, “ethics”  etc. to be complied by suppliers.
   For details, please click on the following link:
   Yokogawa Group Sustainable Procurement Guidelines (PDF: 450KB)

2. Assure high quality
   Suppliers are expected to provide high quality products and materials that meet Yokogawa's high standards and allow us to offer products that satisfy our customers' requirements.
3. Provide assured delivery and stable supply
   Suppliers are expected to establish an assured delivery and flexible supply system that enables us to provide a stable and flexible supply of products to our customers.
4. Provide competitive pricing
   Suppliers are expected to always be competitive on pricing by continuously and aggressively cutting costs, thereby making it possible for us to supply products that meet our customers' requirements.
5. Improve technical capabilities
   Suppliers are expected to constantly improve their technical capabilities, enabling us to supply safe and excellent products that meet our customers' requirements.

 Commitment of Responsible Mineral Procurement

1) Basic Policy

Conflicts in the Democratic Republic of the Congo and its neighboring countries, as well as accompanying grave human rights violations and environmental destruction, are major international issues. It is feared that the mining of conflict minerals in the region has become a source of funds for armed groups and has contributed to conflict.
We have established a Group-wide promotion system with the sales, product design, procurement, and other departments to keep from using conflict minerals to avoid problems throughout the supply chain to meet the regulatory requirements of the concerned agencies.

2) Our framework

As shown in the diagram below, we have established our framework for addressing conflict minerals by assuming roles that meet the functions of each department.

Product Compliance department.:

(Function) Based on product design information, investigate the suppliers of parts used in products.
(Role) This department standardized investigation procedures and deployed them to Yokogawa Group. It is also the duty of this department to confirm and store received CMRT sheets.

Product responsibility department:

(Function) Receive for customer requests for investigation of Dodd-Frank Act,  organize investigation requests, and request investigation to Product Law and Regulation Management Department.
(Role) Responds to customer requests for surveys, responses to survey results, etc.

Manufacturing responsibility department:

(Function) Inquire of suppliers to conduct  CMRT survey and collect responses.
(Role) In conducting surveys, they convey the expectations of Yokogawa Group in other communications and strengthening relationships with suppliers.

Procurement Control Department:

(Function) Coordinate procurement activities and Yokogawa human rights due diligence activities and disclose information.
(Role) Responsible for disclosing activities through sustainability reports, websites, etc.

Based on this system, we conduct surveys on the use of conflict minerals in cooperation with suppliers based on customer requests.
As a result of the investigation, if it is found that it is a source of funds for armed groups, we will immediately proceed with efforts to prevent its use.
In addition, as a member of the JEITA Responsible Mineral Procurement Study Group, an industry organization, we are working to promote cooperation among companies and to obtain the latest information (OECD DD Guidance※1, CMRT/CRT※2, etc.).
OECD DD Guidance※1: " OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas s" by the Organisation for Economic Co-operation and Development (OECD)
CMRT/CRT※2: Conflict Minerals Reporting Template/Cobalt Reporting Template

Yokogawa Group will continue to make every effort to ensure responsible mineral procurement.