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Supply Chain Management

Working Together with Suppliers

Working Together with Suppliers

Overall Initiatives

By implementing the PDCA improvement management cycle together with suppliers, OMRON is committed to enhancing sustainability performance in its supply chain.
OMRON also asks critical suppliers to join OMRON in efforts to conform to the RBA Code of Conduct. (RBA: Responsible Business Alliance)

Main activities Details of activities Control standards
Self-assessment OMRON and a supplier together check the supplier’s compliance with CSR Procurement Guidelines, having the supplier make improvements if necessary Survey once every 3 years minimum targeting all suppliers
Workplace assessment Once a year targeting about 50 suppliers with top transactions in China and Asia
Assessment based on third-party standards Third-party organization's audit of a supplier's compliance with RBA*1 Code of Conduct, having the supplier make improvements if necessary Conduct RBA Corporate Level SAQ*2 surveys for critical suppliers once per year
Procurement BCP Thorough management of the latest information on sources of all parts Survey newly procured parts from all suppliers and renew data once every year
Minimizing procurement risk for individual parts toward the goal of restoring procurement of all parts within a month in case of an emergency.
Green procurement To help reduce negative environmental impact across the supply chain by avoiding the use of hazardous substances, OMRON assesses a supplier's implementation of environmental management and regulated chemicals management and certifies as a green supplier based on its criteria Renew certification once every 3 years, targeting all suppliers
Responsible minerals procurement Survey of materials containing 3TG (tantalum, tin, tungsten and gold) and identifying smelters. Should the use of conflict minerals, financial sources of armed militant groups be found, corrective action will be taken immediately

Survey of materials containing cobalt to promote procurement in a manner not to drive environmental destruction and human rights violation.
Survey once a year
Financial evaluation Evaluating a supplier's financial standing to ensure continuous and stable transactions with the supplier. Mutual deliberation and implementation of improvement measures as necessary At least once per year
  • *1RBA: Responsible Business Alliance
  • *2RBA Corporate Level SAQ: RBA Corporate Level Self-Assessment Questionnaire

Communication with Suppliers

The OMRON Group annually holds a Global Partner Conference targeting representatives of its main global suppliers, to brief suppliers on OMRON’s purchasing policies. The conference is intended to share and align OMRON’s management policies, business strategies, purchasing policies, and sustainable procurement policies, which include environmental policies, with suppliers. The conference also provides an opportunity to exchange views with suppliers, with the possibility of reflecting their views in future OMRON purchasing measures to enhance their effectiveness.

May 17, 2019

Representatives of 110 suppliers participated in the Global Partner Conference. All of the participants who answered the feedback questionnaire commented that OMRON's policies and vision were made clear and they shared the view.
During the briefing, OMRON reported that sustainable procurement is advancing favorably. We asked attendees to continue working with OMRON toward a sustainable society throughout the supply chain.
(In fiscal 2020, we suspended briefing conferences to prevent the spread of COVID-19. We continue initiatives through daily dialogues with suppliers.)


Fiscal 2019 Purchasing Policy Conference

Self-assessment

In addition to requesting that suppliers conform to OMRON Group Sustainable Procurement Guidelines, the OMRON Group also conducts questionnaire surveys, distributing self-assessment sheets to all suppliers and asking them to check their implementation and compliance regarding the guidelines on their own initiative at least once every three years, so as to improve their practices. Our target is to have all suppliers to conduct the assessment.

Initiatives

During fiscal 2019, 666 suppliers in Japan, 472 suppliers in China, and 61 suppliers in Asia/Pacific conducted self-checks. We conducted on-site confirmations for 17 suppliers in China based on our annual plan, confirming compliance at these locations.

Suppliers Subject to Survey

Unit : Number of companies
Region FY2016 FY2017 FY2018 FY2019
Japan
185 0 0 666
Greater China
490 425 462 472
Asia Pacific
0 0 0 61
Americas
0 0 103 0
Europe
0 0 41 0

Assessment based on Third-party Standards

OMRON asks critical suppliers to conduct annual self-assessments and self-improvement by using RBA Corporate Level SAQ (Responsible Business Alliance Self-Assessment Questionnaire), a RBA evaluation tool.

Initiatives

In fiscal 2019, 51 critical suppliers conducted the self-assessment.

Corrective Actions

For suppliers deemed to have sustainability risks as a result of our surveys/audits, we requested drafts of improvement plans and implementation of corrective actions.

Initiatives

During fiscal 2019, we received submissions of corrective actions from 105 suppliers deemed sustainability risks. These suppliers are making improvements based on corrective action plans.

Suppliers With Identified Sustainability Risks
Risk Category Contents Number of companies Number of companies
that implemented improvement
Economic Risk
Suppliers assessed a grade of 4 or 5 (1-5 scale) as a result of initial financial evaluation (secondary evaluation (local audit) deemed necessary)
26 26
(100%)
Environmental
/Quality Risk
Suppliers given failing result according to CMS audit
60 60
(100%)
Suppliers given a failing result according to PRIMP (line quality audit)
19 19
(100%)
Social Risk
None
0 0

Procurement BCP

Developing fine-quality products to contribute to society through business is one of the most important social responsibilities of a manufacturer. At the OMRON Group, we believe that it is equally important to provide a stable supply of products, even in the case of a contingency. Based on the awareness that a disaster can happen at any moment, OMRON has been promoting procurement BCP* since fiscal 2011. Specifically, OMRON checks with customers regarding products that need to be supplied preferentially in the case of an emergency, taking BCP measures for the parts/materials that make up such high-priority products. Further, we are engaged in risk-response initiatives that include area-based risks, assuming major disasters such as an earthquake under the Nankai Trough.

Initiatives

OMRON manages potential procurement risks for parts and materials by classifying them into three ranks. Efforts are now focused on minimizing procurement risks by taking measures such as keeping certain parts/materials in stock. The goal is to build a system to resume procurement of all parts within a month in the event of a disaster. In fiscal 2017, OMRON designed and introduced a central inventory control system to manage the stock of highest-risk parts in a unified manner at OMRON. Starting fiscal 2018, OMRON has been working on early-stage, stable procurement by forecasting demand-supply gap to select parts and materials and to ensure inventory.
Although the recent spread of COVID-19 has affected numerous suppliers, we have quickly identified risks based on local production area information for components we manage, promptly holding meetings participated by procurement staff from across our company. We also held discussions about, and implemented measures with, our suppliers. In this way, we have prevented significant supply problems to date.

  • * BCP refers to Business Continuity Plan. It is a proactive planning process to ensure that business operations will continue without interruption even in the case of natural disasters or other contingencies. BCP also covers strategic preparation in normal times, with the ability to restore important functions within a target time period even in the event of an interruption so as to minimize interruption-associated risks.
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