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