Sustainability | SocietySustainable Procurement

Our Approach

As an enterprise with a global range of manufacturing sites, the TDK Group stipulates the TDK Purchasing Policies 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 manufacturing sites 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.
Manufacturing sites engage in local procurement, but in today's society with ubiquitous IT networks, 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.

The TDK Group has established a TDK Supplier Code of Conduct grounded in the Group's TDK Purchasing Policies. The Code of Conduct specifies the Group's expectations for compliance in how suppliers conduct their operations, under several categories: labor, health and safety, environment, ethics, management systems, and information security. Furthermore, we expect our suppliers to recognize the risks associated with CSR and to take human rights and safety into consideration in their activities, as well as to reduce the environmental load of their operations.

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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 690 billion yen (as of March 2022).

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 2022, 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 world’s largest industrial coalition dedicated to 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, health and safety, and the environment in the TDK Group and primary suppliers.

In accordance with the RBA standards, the TDK Group will endeavor to make continuous improvements in two stages, self-assessment and audit, depending on the transaction status with suppliers (primary production materials, sub-contractors, and worker dispatch and labor agencies) and the nature of their business.

  • RBA : The Responsible Business Alliance (RBA) is a global industrial coalition embracing about 200 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 coalition of companies driving sustainable value for workers, the environment and business throughout the global supply chain.
  • Mission: Members, suppliers and stakeholders collaborate to improve working and environmental conditions and business performance through leading standards and practices.

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Structure

The headquarters procurement function, business groups, the headquarters human resources function, and the CSR function cooperate in promoting activities.

Fiscal 2022 Goals and Achievements / Evaluations and Future Activities

Fiscal 2022 Goals Achievements
Achieve CSR compliant supplier rate of 99% 99.0%
Achieve 100% implementation of CSR self-checks at sub-contractors 98.0%
Achieve 100% implementation of CSR self-checks at labor agencies used by manufacturing sites in the high-risk countries in Asia 100%

Evaluations and Future Activities

In fiscal 2022 TDK’s CSR compliant supplier rate, including newly affiliated Group companies, exceeded our target to reach 99%.
In fiscal 2023 TDK plans to conduct on-site audits of ten suppliers.
In following up with individual sub-contractors, TDK was able to collect a greater proportion of completed CSR self-checks than in previous years. The goal continues to be a 100 percent return rate.

Fiscal 2023 Goals
Achieve CSR compliant supplier rate of 99.5%
Achieve 100% implementation of CSR self-checks at sub-contractors
Achieve 100% implementation of CSR self-checks at labor agencies used by manufacturing sites in the high-risk countries in Asia

Efforts in Sustainable Procurement

Supplier evaluations

With the aim of ensuring sound business conduct, TDK performs regular supplier evaluations. An evaluation is always conducted when newly registering a company as a supplier, and at regular intervals thereafter to decide whether to continue the relationship. Each group company adopts an appropriate method and, with reference to supplier evaluation results, only begins business with suppliers having no problems.
The main categories covered by the evaluation 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 evaluation are disclosed to the supplier with a request for corrections or improvements.

  • The chemical substances in the evaluation are based on the “TDK Green Procurement Standards.”

CSR self-checks for suppliers

Supplier Frequency Content
CSR
self-check
  • Material suppliers (excluding suppliers of nonproduction materials, such as office equipment)
  • Sub-contractors
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 receiving responses, improvements are requested for necessary items.
Worker dispatch and labor agencies (high-risk countries in Asia) 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 receiving responses, improvements are requested for necessary items.

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 of suppliers.
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. Through this process, we request suppliers to report the status of their management systems and efforts in each category. In fiscal 2022 it was confirmed that 4,403 material suppliers (excluding suppliers of nonproduction materials, such as office equipment) were CSR-compliant suppliers.

As for sub-contractors, 98.0% of 250 targeted companies were confirmed to be CSR-compliant suppliers.

Regarding worker dispatch and labor agencies, it was recognized that inappropriate responses in such agencies were an issue in certain countries in Asia where risks relating to human rights and recruitment are thought to be high. For this reason, the CSR self-check is implemented for labor agencies used by manufacturing sites in high-risk countries in Asia. 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 2022 self-checks were conducted at all 68 targeted labor agencies (100%). Regarding agencies that failed to achieve a certain level of results in the survey, the manufacturing sites using those agencies carry 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 system 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 for sub-contractors

Based on the RBA auditing standards, the TDK Group conducts periodic CSR audits in China on sub-contractors heavily dependent on TDK. Two such audits were scheduled for fiscal 2022 but had to be postponed until fiscal 2023 due to the impact of COVID-19. However, we did conduct preliminary surveys, with the aim of expanding the scope of coverage going forward.
In fiscal 2023, in addition to conducting the postponed audits, we plan to conduct a new trial CSR audit at a selection of Japanese sub-contractors, as preparation for future global development.

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.
We issued version 9.1 of the TDK Green Procurement Standards in April 2020 and distributed them to all of our suppliers. Version 9.1 incorporates the TDK Environmental Vision 2035 as well as a review for compliance with relevant laws and regulations. It urges suppliers to cooperate with environmental measures to ensure a uniformly compliant supply chain.
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.

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.

Sustainable-procurement education

TDK has created a "Sustainability and CSR" e-learning course for its procurement departments, to ensure that personnel in these departments understand the importance of sustainable procurement.

Course: "Sustainability and CSR"

  1. What sustainability means
    The role of sustainability, procurement, and purchasing
  2. What CSR (corporate social responsibility) means
    The positioning of CSR and the role of procurement and purchasing
    Establishing purchasing ethics—CSR in procurement and purchasing
  3. Risk management in procurement and purchasing
    The causes of procurement risk
    Assumptions associated with risk—Assumptions regarding frequency of occurrence, nature of impact, scale of impact
    Preparation during normal times—Prevention; preparation for emergency response

Declaration of Partnership Building

In May 2021 TDK issued its "Declaration of Partnership Building" as a means of building relationships of coexistence and co-prosperity with its suppliers. "Declaration of Partnership Building," used as a general term, is an initiative launched by the Council on Promoting Partnership Building for Cultivating the Future, whose membership consists of the chairman of the Japan Business Federation (Keidanren); the chairman of the Japan Chamber of Commerce and Industry; the president of the Japanese Trade Union Confederation; the Minister of State for Economic and Fiscal Policy ; the Minister of Economy, Trade and Industry; the Minister of Health, Labour and Welfare; the Minister of Agriculture, Forestry and Fisheries; and the Minister of Land, Infrastructure, Transport and Tourism. Each participating company issues its own declaration under the name of a corporate representative, the aim of each declaration being to build new partnerships by promoting cooperation, co-existence, and co-prosperity between the issuing company and its suppliers and other business partners seeking to create added value. A company issuing a declaration states that it will seek coexistence and co-prosperity across its supply chain, promote new forms of cooperation irrespective of such factors as size or relationship to the supply chain, and observe appropriate transaction practices between main subcontracting entrepreneurs and subcontractors, all in an effort to boost the added value of the entire supply chain.

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