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Supply Chain Management

Basic Policies and Implementation Structure

Basic stance for promoting sustainability across supply chains

Basic Policies and Implementation Structure

Basic Policies

Promoting sustainability efforts in the supply chain

Living up to the OMRON Principles, the OMRON Group is committed to solving social issues through business, while also contributing to the sustainable development of society by promoting ESG (Environmental, Social, and Governance) activities. In response to growing social demand, OMRON is also working to enhance sustainable procurement through its supply chain in order to fulfill even wider social responsibilities.

Basic Policies

To achieve sustainable procurement, the OMRON Group pursues activities in two stages: Initiatives with all suppliers and initiatives with critical suppliers.

Under initiatives with all suppliers, we achieve stable procurement by defining minimum requirements across five areas: Environmental management, chemical substance management, quality management, contract management, and financial management. We conduct improvement activities to meet all of these requirements. Under initiatives with critical suppliers, we confirm RBA compliance policies at the top levels with each organization, continuing to raise compliance levels through mutual targets based on the requirements of RBA.

We strengthen business relationships with our critical suppliers over the medium and long term, increasing our purchasing ratios to enhance the level of sustainability in our supply chain more effectively.

Targets

Initiatives with all suppliers

We have established minimum requirements under the following five categories, working with our suppliers to improve these areas:

(1) Environmental management
Acquire ISO14001 certification or establish an equivalent management structure.
(2) Chemical substance management
Confirm the presence of a management structure that meets standards based on examination of documents related to Management of Chemical Substances in Products or as a result of on-site audit
(3) Quality management
Acquire ISO9001 certification or establish an equivalent management structure
(4) Contract management
Execution of a basic purchasing agreement including compliance with Sustainable Procurement Guidelines
(5) Financial management
Determine no risk of bankruptcy as a result of a financial assessment or credit review analysis

Initiatives with critical suppliers

In addition to meeting the minimum requirements above, we establish shared goals for RBA requirements, continuing to make improvements every year to achieve steady improvement.

Targets by Fiscal 2025

  • Commercial product suppliers: Achieve, maintain low risk level based on RBA Corporate Level SAQ assessment
  • Processed product suppliers: Achieve, maintain low risk level based on RBA-compliant self-check surveys

Progress of Major KPIs

The KPIs are under progress as follows.

  KPI Target Progress
FY2020 FY2017 FY2018 FY2019
All Suppliers Ratio of purchase from suppliers who meet the minimum requirements *1 95% and more 52% 74% 86%
Critical Suppliers Commercial products: Ratio of suppliers to implement RBA Corporate Level SAQ *1 100% 90% 100% 100%
Commercial products:Achieve LOW risk level (RBA Corporate Level SAQ score of 85 or more) *2 100% 42% 49% 76%
Processed products: Ratio of suppliers to implement RBA self-check *2 100% 43% 71% 69%
Processed products:Achieve LOW risk level (RBA compliant self-check score of 160 or more) *2 100% 26% 66% 58%

Ratio of purchase from critical suppliers was 40% in 2017, 42% in fiscal 2018 and 43% in fiscal 2019. *1

  • *1 Monetary value
  • *2 Number of suppliers

Identifying Critical Suppliers

The OMRON Group employs the following approach to identify critical suppliers.

Supply Chain Overview

Implementation Structure

The OMRON Group established a network consisting of HQ procurement departments, overseas HQs, business units, and manufacturing facilities, sharing and cascading group procurement policies and measures through regular procurement staff meetings. We are expanding initiatives related to procurement activities, including sustainable procurement, on a global basis, implementing these activities throughout the entire group.

Sustainable Procurement Codes

To ensure supply chain sustainability, OMRON has introduced specific action guidelines to be followed by in-house and suppliers, and promotes the observance of these guidelines.

Code of Conduct for CSR procurement

Sustainable Procurement Guidelines

OMRON has signed basic purchase transaction contracts with suppliers. These contracts include the guidelines that stipulate specific actions and behaviors that should be implemented and maintained by suppliers. The Supplier Code of Conduct set in the Sustainable Procurement Guidelines conforms to RBA standards, and also specifies the policy and procedure for dealing with violations of the guidelines. In fiscal 2019, all of the new suppliers agreed to comply with the guidelines. In November 2019, OMRON revised the guidelines in response to changes in social trends and the latest RBA Code of Conduct.

Sustainable Procurement Guidelines

Supplier Code of Conduct

A) LABOR
1) Freely Chosen Employment 2)Young Workers 3)Working Hours 4) Wages and Benefits 5) Humane Treatment 6) Non-Discrimination 7) Freedom of Association
B) HEALTH and SAFETY
1) Occupational Safety 2) Emergency Preparedness 3) Occupational Injury and Illness 4) Industrial Hygiene 5) Physically Demanding Work 6) Machine Safeguarding 7) Sanitation, Food, and Housing 8) Health and Safety Communication
C) ENVIRONMENTAL
1) Environmental Permits and Reporting 2) Pollution Prevention and Resource Reduction 3) Hazardous Substances 4) Solid Waste 5) Air Emissions 6) Materials Restrictions 7) Water Management 8) Energy Consumption and Greenhouse Gas Emissions
D) ETHICS
1) Business Integrity 2) No Improper Advantage 3) Disclosure of Information 4) Intellectual Property 5) Fair Business, Advertising and Competition 6) Protection of Identity and Non-Retaliation 7) Responsible Sourcing of Minerals 8) Privacy
E) MANAGEMENT SYSTEMS
1) Company Commitment 2) Management Accountability and Responsibility 3) Legal and Customer Requirements 4) Risk Assessment and Risk Management 5) Improvement Objectives 6) Training 7) Communication 8) Worker Feedback, Participation and Grievance 9) Audits and Assessments 10) Corrective Action Process 11) Documentation and Records 12) Supplier Responsibility
F) OTHERS
1) Securing product safety 2) Business Continuity Plan 3) Protection against information leaks 4) Prevention of network security threats 5) Export control management 6) Prohibition of providing improper benefits to antisocial forces (organized crime groups) 7) Employee health management system (EHMS)

For details, see:

Supply Chain Overview

The OMRON Group conducts global procurement activities, working with suppliers to improve sustainability across the supply chain.

Supply Chain Overview
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