Sustainability | Sustainability Management | TDK Group's MaterialitySupply Chain Management

Background to Identification as Materiality

Significance for TDK

By facilitating the sharing of information about procurement conditions and issues throughout the Group, “enhance global procurement capabilities and mechanisms,” which is one of the themes, will lead to increased work efficiency and cost reduction. Promotion of the other two themes, “ensure responsible procurement” and “ensure societal and environmental consideration in the supply chain,” will enable the building of a competitive supply chain.
Specifically, the establishment of a pleasant working environment contributes to improving the health and productivity of employees and, moreover, leads to the attraction and retention of talented human resources. In addition, today, when consideration of social issues, such as human rights, and the environment has become an essential condition of business, such initiatives clearly have an influence on relations with business partners and investment decisions by shareholders and investors.
Since these activities generally improve quality, delivery, and cost throughout processes and exert a positive impact on the environment, human rights, and other issues, they can be expected to lead to the enhancement of customer satisfaction, the gaining of trust from employees and investors, and in turn the growth of the TDK Group.

Significance for Society

TDK has numerous manufacturing sites and about 4,500 suppliers around the world. The promotion of societal and environmental consideration at these sites and suppliers is highly significant not only for TDK but also for society at large.
Furthermore, we recognize that stakeholders have expectations for not only response and compliance with legislation and international industrial standards in the supply chain but also the execution of social responsibilities, such as support for suppliers, and the minimization of social impact caused by corporate (business) activities, such as the problem of conflict minerals.

Overview (Themes, responsible department, goals, KPIs, and progress)

Themes Responsible department Goals in 3 years Action items KPIs Medium-term target*
(Fiscal 2022-2024) 		Progress of Fiscal 2022 Progress of Fiscal 2023
Enhance global procurement capabilities and mechanisms Procurement & Logistics Group
  • Continuous cost reduction is achieved by sharing and utilizing the latest information of common critical suppliers of TDK Group.
  • Procurement risks are reduced including potential risks through supply chain optimization.
  • Compliance with GCR (Global Common Regulations) is achieved through regular monitoring and support for subsidiaries.
  • Analyze the Approved Supplier List (ASL), formulate cost reduction plans, negotiate with common suppliers, study information sharing platforms, and launch a Global Procurement Collaboration Committee (GPCC)
  • Analyze high-risk components and materials and consider countermeasures; restructure and optimize the supply chain through negotiations with suppliers
  • Consider monitoring mechanisms, collect feedback from subsidiaries, support formulation of individual regulations, and conduct regular monitoring
 Visualization and utilization of supplier information and purchasing data Build a platform to uniformly visualize the TDK Group’s supplier information and purchasing data and utilize it in procurement strategy Visualized supplier data of main subsidiaries Consolidated procurement data of subsidiaries within the group (in progress)
Reduction of procurement risks for high-risk parts and materials Conduct supply chain risk analysis and implement countermeasures Identified high-risk parts and materials Promoted risk mitigation of high-risk parts and materials
Conformity with global common rules 100% Built a monitoring mechanism and began checking the state of establishment of individual rules Confirmed and corrected individual regulations of subsidiaries
Ensure responsible procurement Procurement & Logistics Group Smelter information is regularly monitored across the TDK Group utilizing the framework of Responsible Minerals Initiative (RMI) and compliant smelters are prioritized in procurement.
  • Regularly monitor smelters and promote responsible mineral procurement
 Ratio of suppliers recognized as procuring the 3TG minerals (tin, tantalum, tungsten, and gold) from RMAP-conformant refineries (RMAP: Responsible Minerals Assurance Process) At least 92%
Disseminate and instill the idea of responsible mineral procurement among suppliers 		92% 86.5%
Ensure societal and environmental consideration in the supply chain Procurement & Logistics Group The working environment of suppliers is regularly monitored utilizing CSR check sheets and continuously improved through feedback or guidance to suppliers.
  • Appropriately manage the working environment of suppliers
 CSR compliant supplier rate 100% 99% 100%
CSR Group
  • Risk hedging against various kinds of risks such as societal, environmental and ethical risks at TDK manufacturing sites is ensured by capturing issues periodically and making continual improvements through a framework of self-assessment, audit, and training and dialogue.
  • Communication between CSR Group at the Global HQ and CSR members at Regional HQs is further strengthened and synergistic effects are exerted at the group level, such as accelerating improvements by sharing case studies.
  • Implement the results of CSR self-checks and the risk assessment for labor and business ethics aimed at helping each site to grasp their own conditions and identify issues
  • Implement either of RBA-authorized audit, customer CSR audit, or CSR assessment based on the RBA VAP Operations Manual at each of our manufacturing sites at least once every three years
  • Implement training at each manufacturing site aimed at acquisition of knowledge necessary for activities to reduce social and environmental risks
 Implementation rate of CSR self-checks at manufacturing sites 100% 100% 100%
Implementation rate of labor, and ethics risk assessments at manufacturing sites 100% 100% 100%
Ratio of manufacturing sites implementing RBA-authorized audits (RBA: Responsible Business Alliance) 25% 10% 34%
Ratio of manufacturing sites implementing RBA-authorized audits, customer CSR audits, or CSR assessment based on the RBA VAP Operations Manual at least once every three years 100% 24% 65%
Provision of opportunities for training through e-learning or on-site training, including dialogue Implement every year Provided necessary training opportunities globally Provided necessary training opportunities globally

*The targets run from fiscal 2022 through 2024 (ending March 31, 2024).

Department Head Messages

Procurement & Logistics Group, SCM & Management System HQ

Kenichiro Arimura

Responsible Themes

  • Enhance global procurement capabilities and mechanisms
  • Ensure responsible procurement
  • Ensure societal and environmental consideration in the supply chain

We will clarify our responsibilities, develop and retain professional human resources, and fulfill our responsibilities as the procurement division through cooperation among HQ divisions, business divisions, and Group companies, thereby contributing to the company and society.
For this purpose, we will make efforts on the visualization of information and data relating to supply chain management, the utilization of digital tools for information sharing, and the ensuring of human resources and establishment of an organizational setup to promote activities in the Group as a whole.
Furthermore, we will strive to achieve our goals in three years by promoting CSR on-site audits and other measures in addition to promoting procurement from smelters and refiners conforming with supply chain surveys and standards in line with the activities of the RMI, confirming supplies’ compliance with CSR using CSR check sheets and promoting procurement from compliant suppliers.

CSR Group, Sustainability Promotion HQ

Sachiko Nagahara

Responsible Theme

  • Ensure societal and environmental consideration in the supply chain

TDK, which aims to achieve both a sustainable society and corporate growth, has numerous manufacturing sites around the world, so efforts to reduce societal and environmental risks at sites are an important activity with significant impact. Utilizing RBA* standards, we regularly check by means of multiple methods, including third-party perspectives, whether manufacturing sites have a suitable working environment, whether workers are treated with respect, whether substances that are harmful to human beings and the environment are being managed and processed properly, and so on.
We started these activities about 10 years ago, and we have moved forward while making repeated improvements. At all times, the important thing is to identify what social issues will arise and attract attention going forward and to respond to those issues as quickly as possible. Manufacturing sites are required to steadily correct findings pointed out in audits and CSR assessments, to maintain these corrected conditions, and to predict risks that might occur due to the same reason and deal with them beforehand.
To realize the ideal that we are aiming for, we will promote activities based on the understanding and cooperation of everyone at manufacturing sites, the CSR and Safety and Environment Group at Regional HQs, business divisions, and the Global HQ divisions.

* RBA stands for the Responsible Business Alliance, the world’s largest coalition of companies in the electronics, retail, auto, and toy industries. The RBA stipulates a code of conduct for the improvement of occupational safety and health, the protection of human rights, consideration for the environment, and ethical responsibility in the supply chain and urges member companies and their suppliers to practice the code.