Sustainability | Society

Efforts as a Buyer (Consider the work environment of suppliers)

Our Approach (Purchasing Policy and Purchasing Principles)

TDK engages in global production with production bases in Japan and other Asian countries, the Americas, and Europe. Within the procurement activities that support production, the development of global procurement structures are crucial, and we strive to use those systems to develop products rapidly to remain competitive in the race to be first to market in the electronics industry.
Production bases engage in local procurement, but in today’s society with ubiquitous IT networks, materials procurement activities require close collaboration with suppliers in ways that overcome time and distance. In addition, measures to fulfill corporate social responsibilities such as compliance with applicable laws and regulations, observance of social norms, and preservation of the global environment are promoted actively through partnerships between TDK and its suppliers.
TDK puts these principles into practice by engaging in purchasing activities that adhere to our Purchasing Policies.

TDK Group Supply Chain

On a global basis, the TDK Group does business with 4,539 suppliers, with a purchase value of more than 400 billion yen (as of January 2020).

Process of identifying critical suppliers

The TDK Group identifies critical suppliers for our business sustainability by business unit, considering the following elements.

  • (1) High-volume: suppliers that supply large quantities of materials or parts
  • (2) Critical component: suppliers that supply important materials or parts
  • (3) Non-substitutable: suppliers that supply materials or parts that are difficult to find alternatives

Critical suppliers are reviewed on an annual basis.

Structure

The Headquarter Procurement Function supervises and promotes activities in Group companies.
Each business group undertakes measures relating to sub-contractors.
The Headquarter Human Resources Function supervises and promotes activities relating to dispatch companies.

Fiscal 2018 Goals and Achievements

Goal

  • CSR-compliant supplier ratio: over 95%
  • Build a setup to conduct CSR efforts to sub-contractors
  • Perform 100% CSR self-checks at dispatch companies used by manufacturing sites in the High-risk countries of Asia including China

Achievement

  • CSR-compliant supplier ratio: 94.4%
  • Build a setup to conduct CSR efforts to sub-contractors
  • Achievement

Main activities and measures

  • Requested CSR check sheet returns or implemented CSR audits in response to conditions at Group companies based on Group-wide shared KPIs
  • Conducted training in each business group concerning approaches to sub-contractors
  • rveyed dispatch companies using CSR check sheets

Future Activities

TDK will promote efforts by the Group as a whole, continuing CSR procurement activities and, in fiscal 2019, TDK set a CSR-compliant supplier ratio of over 95% as a key performance indicator for suppliers throughout the Group. We will continue to promote supplier compliance to raise the level of compliance by the Group as a whole.
We also confirmed conditions sub-contractors using CSR check sheets.
We continue to conduct survey at dispatch companies using CSR check sheets.

Concrete Activities

Promotion of CSR Procurement

TDK treats CSR as a key component of its purchasing policy, while striving to earn understanding of the importance of CSR from suppliers and encourage increased awareness in that area. We adopted the TDK Supplier Code of Conduct and incorporate provisions into contractual agreements keyed to the specific conditions at each of our Group companies, while industriously advancing evaluations based on CSR check sheets, CSR audits, and other efforts. When problems are found in the details, individual requests for improvements are issued.
In fiscal 2018, the results of self-assessments confirmed that 94.4% of suppliers of our Group companies were CSR compliant, a 3.2% improvement over fiscal 2017, but still short of the 95% target. We will continue to strengthen our efforts with regard to Group companies and suppliers.

CSR check sheet through the Supplier Partnership System* (TDK Corporation)

TDK requires its suppliers to reply to a CSR check sheet through the Supplier Partnership System. This check sheet contains 56 questions considered particularly vital by TDK, primarily covering “Human rights and labor,” “Environment,” “Occupational health and safety,” “Fair trade and ethics” and “Information security.” The questions are based on CSR compliance items in the Responsible Business Alliance (RBA), and assist in accurate assessments of the actual conditions at suppliers. To raise both supplier awareness and motivation to make improvements, the check sheet is designed to immediately display the results on-screen when answering questions. If problems occur with responses, individual requests are issued for improvements.

  • * Supplier Partnership System: A web-based technology providing integrated management of business information, distribution of procurement specifications, sharing of written agreements and other information conventionally handled as paper documents or on magnetic storage media. The system supports greater operational speed and efficiency for both TDK and its suppliers

Supplier Partnership System

CSR audits of major sub-contractors

Since fiscal 2015, TDK has been conducting biennial CSR audits of major sub-contractors upon whom TDK has high dependence in China, a country in which there is high risk in the labor environment.
In fiscal 2017, three CSR audits were conducted, and 21 issues were identified in total. One important item was a deficiency in protective equipment for workers, and requests were made for improvements in this area. In fiscal 2018, there were no sub-contractors subjected to CSR audit.

CSR audits of major sub-contractors

CSR self check of labor dispatch companies

The high-risk countries of Asia including China, where human rights and recruitment risks are considered to be high, improper management practices by labor dispatch companies are frequently discovered.
In fiscal 2018, we conducted CSR self-assessments that included labor dispatch companies used by manufacturing sites in the high-risk countries of Asia including China.

Purchasing Activities (TDK Corporation)

Supplier evaluations

With the aim of ensuring sound business conduct, TDK implements regular supplier examinations. An examination is always conducted when newly registering a company as a supplier, and at regular intervals thereafter to decide whether to continue the relationship. The main categories covered by the examination are quality management, chemical substances* management, environmental management, and corporate social responsibility (CSR) including strict observation of human rights and other legal obligations as well as compliance with social norms. Any problems that come to light through the examination are disclosed to the supplier with a request for corrections or improvements.

  • *Survey items for chemical substances are based on the “TDK Green Procurement Standards.”

Green procurement

In order to promote green procurement aimed at the priority purchase of products that contribute to reducing the environmental load and fulfill social responsibility, TDK established the TDK Green Procurement Standards in April 1999. These standards are revised as necessary to take account of laws and regulations in Japan and other countries, changes in social requirements, and other factors. They can be viewed on the TDK website.
In April 2018 TDK issued version 9 of the TDK Green Procurement Standards and distributed copies to all suppliers. The main revisions involve reviews of modifications to laws and regulations related to the regulation of chemical substances, as well as our response to conflict minerals. The survey format was also brought into line with chemSHERPA,* a new tool that facilitates sharing information on chemical substances in products being developed by the Ministry of Economy, Trade and Industry.
TDK’s procurement master provides links to data consistent with TDK’s green procurement standards, firmly controls the content of prohibited substances and chemical substances requiring content management, and discloses and provides information as necessary.

  • * A scheme for communicating information on chemical substances contained in products that can be used throughout a supply chain.

Strengthening of BCP/BCM in the supply chain

In unforeseen circumstances, such as the outbreak of a large-scale natural disaster, TDK, as a member of the supply chain, has a duty to share social responsibility with suppliers and meet demands so as to ensure the stable supply of products required by customers. Recognizing that the securing of stable supplies is an important responsibility, TDK addresses this issue in three main ways:

  1. BCP/BCM surveys of suppliers
  2. Advance collection and arrangement of information to use in an emergency
  3. Prompt initial responses using a BCP Confirmation System

Especially with regard to BCP/BCM surveys of suppliers, as per item 1, initiatives based on industry-wide consultations have begun to emerge. A subcommittee tasked with examining the issue was formed in 2013 under the umbrella of the JEITA Materials Committee, and a "Supply Chain Business Plan Survey" has been formulated. A total of 17 set manufacturers and parts manufacturers are participating in the subcommittee, which has identified a number of risk management items from the procurement viewpoint for dealing with various disaster and accident possibilities. TDK is an active participant in this endeavor, and we intend to make full use of the survey that was published by the JEITA Materials Committee in September 2014, and carry out BCP/BCM surveys.

  • *BCP: Business Continuity Plan
  • *BCM: Business Continuity Management

Strengthening of compliance

TDK has clarified a group-wide policy regarding offers of gifts and entertainment from suppliers, publicized that policy throughout the Group, and requested the understanding and cooperation of suppliers.
Furthermore, regarding the exclusion of antisocial forces, TDK conducts preliminary surveys of suppliers when starting or restarting business with them.

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