Sustainability | SocietySustainable Procurement

Our Approach

As an enterprise with a global range of production sites, the TDK Group stipulates the TDK Purchasing Policy to realize its Purchasing Principles and conducts purchasing activities in accordance with these principles.

"Global Partnership Purchasing" --- Purchasing Principles

TDK engages in global production with production bases in Japan, Asia, Europe and the Americas. Within the procurement activities that support production, the development of global procurement structures is 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.

Purchasing Policies

Compliance

All applicable laws and regulations are followed in purchasing activities. Moreover, TDK strives not only to follow the letter of the law, but its spirit as well.

Respect for Human Dignity

TDK respects the human dignity of workers who are active in all stages of the supply chain.

CSR

The procurement divisions of the TDK Group implement CSR activities on a continuous basis, while performing evaluations of suppliers at regular intervals using the CSR Check Sheet, to promote understanding of our CSR concept and raise recognition of our initiatives. In addition, as part of the common understanding of social issues, we have established the TDK Supplier Code of Conduct.

Green Procurement

As one aspect of its companywide environmental protection activities and in the pursuit of harmony with the global environment, TDK engages in green procurement, i.e., the purchase of environment-conscious products.

Fair and Open Business

TDK conducts fair business regardless of company size or nationality. TDK bases its purchasing decisions on comprehensive evaluations of quality, price, delivery time, ability to provide a stable supply, and other factors.
TDK does not accept gifts of any kind from business partners.
As a general rule, TDK does not accept dining or other forms of entertainment from business partners.

Partnership

TDK seeks to build mutually beneficial relationships with suppliers based on shared goals.

VA*Activities

TDK values suppliers that can lower costs and provide new materials and technologies through VA activities.

IT Utilization

Information exchanges with suppliers using IT and networks are essential for accelerating the pace of business and reinforcing ties.

Quality, Delivery Time and Stable Supply

TDK always considers quality, delivery time and stable supply by establishing solid partnerships with its suppliers.

  • VA (Value Analysis) is a concept developed by the GE Company in 1947. VA provides a method to increase the value of a product or service, specifically by analyzing various factors associated with the value relative to the minimum resources necessary to produce said product or service (its cost). TDK uses the terms VE (Value Engineering) and VA synonymously.

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TDK Group Supply Chain

On a global basis, the TDK Group does business with approximately 4,500 suppliers, with a purchase value of more than 420 billion yen (as of March 2021).

Process of identifying critical suppliers

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

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

As of March 2021, a global total of approximately 1,000 companies have been identified as critical suppliers. Critical suppliers are reviewed on an annual basis.

Membership of the RBA

In February 2020, the TDK Group joined the Responsible Business Alliance (RBA),* the largest industrial coalition in the world aiming to promote CSR in the global supply chain. Accordingly, the TDK Group made a commitment to society that it fully supports the RBA’s vision and mission and, in accordance with the RBA’s code of conduct (labor, health and safety, environment, ethics, management systems), will continuously improve the human rights of workers in the TDK Group and primary suppliers, their health and safety, and the environment.

From now on also, complying with the RBA’s standards, the TDK Group will endeavor to make continuous improvements through the two stages of self-assessment and auditing in accordance with the contents of transactions and the business of suppliers (primary production materials, sub-contractors, and worker dispatch and job-placement agencies).

  • RBA : The Responsible Business Alliance (RBA) is a global industrial coalition embracing about 150 companies dealing in electronics, retail, automobiles, and toys. It stipulates standards of conduct related to the improvement of industrial health and safety, the protection of human rights, consideration of the environment, and fulfillment of ethical responsibilities in the supply chain and calls on affiliated companies and their suppliers to practice these standards.
  • Vision : A global electronics industry that creates sustainable value for workers, the environment, and business.
  • Mission : Members, suppliers and stakeholders collaborate to improve working and environmental conditions through leading standards and practices.

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Structure

The head office materials function, business groups, the head office human resources education function, and the CSR function cooperate in promoting activities.

Fiscal 2020 Goals and Achievements / Evaluations and Future Activities

Fiscal 2020 Goals Achievements
To achieve CSR compliant supplier rate of 97% 98.0%
To achieve 100% implementation of CSR self-checks at sub-contractors 88.5%
To achieve 100% implementation of CSR self-checks at worker dispatch agencies used by manufacturing sites in the high-risk countries of Asia including China 100%

Evaluations and Future Activities

In fiscal 2020 TDK’s CSR compliant supplier ratio, including newly affiliated Group companies, exceeded our target to reach 98%. Going forward, TDK is considering the on-the-spot auditing of Chinese suppliers. Regarding sub-contractors, TDK will implement even more prudent follow-up to raise the CSR self-check retrieval ratio.

Fiscal 2021 Goals
To achieve CSR compliant supplier rate of 99%
To achieve 100% implementation of CSR self-checks at sub-contractors
To achieve 100% implementation of CSR self-checks at worker dispatch agencies used by manufacturing sites in the high-risk countries of Asia including China

Concrete Activities of Sustainable Procurement

CSR self-checking by suppliers, etc.

Implementing supplier Frequency Content
CSR
self-check
  • Material suppliers (excluding suppliers of nonproduction materials, such as office equipment)
  • Sub-contractors
Implemented at the time of starting business and regularly in principle once every two years thereafter.
  • Compiled on the basis of the RBA’s checklist.
  • After replies have been received, improvements are requested if necessary.
Worker dispatch and job-placement agencies (high-risk countries in Asia, including China) Every year
  • Compiled on the basis of the RBA’s checklist (specific content related to the prevention of forced labor, illegal exploitation, and child labor; prevention of corruption and ethical violations; prevention of information leakage and risk avoidance; etc.)
  • After replies have been received, improvements are requested if necessary.

The TDK Group includes items relating to CSR, such as legal compliance, environmental protection, respect for human rights, and product safety, in basic business contracts and regularly implements CSR self-checks to confirm the status of CSR efforts.
The CSR self-check list, which is based on items required by the RBA, consists of a total of 60 items considered especially important by TDK, including the categories of human rights and labor, the environment, health and safety, fair trade and ethics, and information security. In fiscal 2020 it was confirmed that 4,382 material suppliers (excluding suppliers of nonproduction materials, such as office equipment) were CSR-compliant suppliers.

Self-checking was implemented at 88.5% of the targeted 226 sub-contractors.

Regarding worker dispatch and job-placement agencies, it was recognized that inappropriate responses in such agencies were an issue in certain countries in Asia, including China, where risks relating to human rights and recruitment are thought to be high. For this reason, the CSR self-check is implemented for worker dispatch agencies used by manufacturing sites in high-risk countries in Asia, including China. With the aim of confirming management control relating to human rights and ethics, the self-check list consists of specified content related to the prevention of forced labor, illegal exploitation, and child labor; prevention of corruption and ethical violations; prevention of information leakage and risk avoidance; etc. In fiscal 2020 self-checks were conducted at all 78 targeted worker dispatch agencies (100%). Regarding agencies that failed to achieve a certain level of results in the survey, the manufacturing sites using those agencies are carrying out improvements.


Supplier Partnership System

TDK requires its suppliers to reply to a CSR check sheet through the Supplier Partnership System. This Supplier Partnership System is a mechanism by which the management of company information, distribution of purchase specification forms, sharing of agreement documents, and so on, which previously was conducted by paper or magnetic recording media, are managed uniformly online. It benefits both sides by speeding up and boosting the efficiency of work. 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

CSR audits of sub-contractors

Since fiscal 2015 TDK has been conducting biennial CSR audits, based on the fundamental items of the RBA, of sub-contractors with a high degree of dependence on TDK in China, where there are often said to be high risks in the labor environment. There were no targeted companies in fiscal 2020. Going forward, TDK is considering expanding the targeted scope. A global advance survey is scheduled to be implemented in fiscal 2021 for that purpose.

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. Each company adopts an appropriate method and, with reference to supplier examination results, only begins business with suppliers having no problems.
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.”

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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 has been implementing Green procurement, and each group company has been taking their own appropriate measures. In April 1999, TDK established the TDK Green Procurement Standards. 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

In particular, regarding BCP/BCM surveys of suppliers, a joint industrial initiative has begun, and TDK implements the supplier BCP/BCM surveys utilizing the Supply-Chain Business Continuity Questionnaire of the Japan Electronics and Information Technology Industries Association (JEITA). Furthermore, TDK endeavors to strengthen supply chain BCP/BCM by, among other activities, holding BCP/BCM seminars for business partners.

Strengthening of compliance (TDK Corporation)

TDK has clarified a company-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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