Trust developed as a good business partner

As part of its manufacturing activities, AISIN Group procures a wide variety of items, including parts and materials, from numerous suppliers around the world. In undertaking these transactions, the Group will work to increase its collaboration and establish trusting relationships with its suppliers based on its basic philosophy of seeking growth and prosperity as good business partners.

Fiscal 2019 Group Procurement Policy

[The vision]

Achieving optimal procurement for AISIN Group to coexist and prosper together with its suppliers, based on the prerequisite of long-term stable transactions

Policy

AISIN Group’s procurement policy consists of the following three points, working under the prerequisite of transactions based on thorough prioritization of safety and compliance and putting quality first.

  1. Enhancing the foundation that underpins the Group’s corporate activities:
    Promoting fair and open CSR procurement
  2. Improving competitiveness of existing business operations through unified efforts between the Group and its suppliers:
    Providing support for activities to enhance the character of suppliers, to enable them to respond to technological innovations and changes in procurement volume
  3. Formulation and implementation of survival strategies for the Group and its suppliers, with a focus on next-generation products:
    Proactive participation as strategic partners to have suppliers develop next-generation products together with the Group

The AISIN Group's Procurement Principles

We place great importance on making sure that our procurement work is mutually beneficial to the AISIN Group and our suppliers, and carry out a variety of mutual development activities. We have translated the AISIN Group Principles of Corporate Behavior into various languages and distributed it to our suppliers to ensure that Aisin's policies and the relevant laws and regulations are followed throughout our supply chain. We also require our suppliers to ensure that their own suppliers follow our charter. The charter stipulates policies on matters such as human rights, working conditions, the environment and compliance, and requires compliance from a social perspective (prohibition of child labor, forced labor and discrimination; equal opportunities; freedom of association, collective bargaining; reduction of excessive working hours; minimum wage; health and safety, etc.) and an environmental perspective (water usage, biodiversity, etc.). The revised version of the AISIN Green Procurement Guidelines covers environmental matters even more comprehensively, requiring suppliers to reduce GHG emissions, recycle waste and other resources, decrease water usage and preserve biodiversity.

All of our suppliers are ISO9001 and ISO14001 certified, and perform safety, environmental and earthquake-proofing inspections. A particularly noteworthy measure is our policy for inspection of environmental risks at our suppliers' sites. Implemented in FY2006, inspections are carried out according to the AISIN Group Green Procurement Guidelines as a proactive measure to prevent environmental issues at our suppliers' sites. The 56 core suppliers that receive the lion's share of our purchasing budget are inspected particularly stringently, with checks on their compliance with environmental laws and regulations and activities to identify and fix hazards.

In FY2017, 20 companies carried out independent inspections, and 100% of our planned visits for inspections were carried out. Our focus for the near future is to work with our health, safety and environment department to visit more of our suppliers and provide them with more direction.

When selecting new suppliers, we carry out inspections based on ISO9001 and ISO14001, along with credit checks, quality audits and reviews of accounts.

Involvement with Relevant Organizations and Initiatives

One Director and Vice President and one Managing Officer from AISIN Seiki belong to the general affairs committee and procurement and production department of the Japan Auto Parts Industries Association. The relevant staff in our Procurement Planning Department are also part of a working group in our Procurement and Production Divisions to handle regulations about conflict minerals. Through these activities, the AISIN Group is working to gather information on conflict minerals and ensure that the minerals used in our supply chain are conflict-free.

Jointly undertaking CSR initiatives with suppliers

AISIN Group is promoting CSR procurement activities jointly with suppliers, beginning with primary suppliers and going as far up the supply chain as possible. With its suppliers, the Group promotes fair procurement activities based on the spirit of openness and fairness, and mutually concludes basic transaction agreements with suppliers placing greater emphasis on CSR-related clauses.

In fiscal 2018, AISIN Group enhanced its management of substances that have an environmental impact, based on the Green Procurement Guidelines that the Group has worked to implement until now to ensure a reliable response to environmental laws and regulations, which are becoming more stringent increasingly year by year in countries around the world. In order to accomplish this, AISIN Group requested surveys of chemicals contained in items purchased from its suppliers and had them disclose and register relevant information in a shared system for recording data on chemical substances. In fiscal 2019, the Group will consider the deployment of this system on a Group-wide, global scale.

Presentation outlining our procurement policy for fiscal 2019
Presentation outlining our procurement policy for fiscal 2019

AISIN Group is also engaged in initiatives as a Group with a view to achieving future-oriented trade practices with its suppliers, such as by making payments to all domestic small-to-medium-sized suppliers in cash. Additionally, AISIN Group has established a contact point for suppliers to make inquiries and seek advice on matters related to business ethics.

TOPICS

Promoting minority procurement in North America

In the United States, there are demands to increase volumes of goods purchased from businesses owned by social minorities (minority-owned businesses), with the aims of promoting the growth and improving the competitiveness of these companies. Since expanding its operations into North America, AISIN Group has worked proactively to further procurement from minority-owned businesses.

Risk Assessment and Monitoring of Suppliers

We check our suppliers' quality systems so that we can deliver higher and higher levels of quality. We give feedback to our 181 suppliers about their compliance with the standards in our prescripts, and provide support where necessary.

Specific issues are listed during our audits and an improvement plan is created. The causes of the issues are identified, a resolution schedule is created and the matter is followed up regularly with checks and advice until the issue is resolved.

Improving the Skills of Our Suppliers

The AISIN Group provides support with our main suppliers' staff training to improve their employees' skills and strengthen their businesses.

Aisin Seiki provides apprenticeships for the next generation of employees in its main supplier companies. Employees from those companies spend time (generally two years) working in the department where they would like to work in their company. A total of 67 employees have participated in the program so far.

We also allow our main suppliers to loan employees to us based on those suppliers' needs. As of FY2018, 31 employees from 16 companies are working for us.

Aisin Seiki has formed a cooperative with its main suppliers so that the companies can learn from each other, boost their productivity and quality and horizontally expand on their success stories. They also provide their suppliers with lateral support in work such as safety and environmental activities. Training, safety instructions and other initiatives concerning the Industrial Safety and Health Act were carried out throughout FY2017.

Establishing a supply chain that is resilient to risks

In recent years, amid the occurrence of numerous natural disasters and fires, etc., that have a significant impact on stable production and procurement activities, AISIN Group has worked during peaceful times to ready itself for the occurrence of such disasters, and to enable itself to implement initial response and recovery protocols swiftly and reliably in the event of such incidents.

For many years, Aisin Seiki has worked to develop a supply chain data management system that enables it to receive data regarding parts and raw materials purchase from suppliers tracing back as far as details of individual manufacturing processes. The system makes it possible to utilize this information in conjunction with map data and disaster information, 24 hours a day, 365 days a year.

In fiscal 2018, Aisin Seiki made use of this information in considering countermeasures for each individual product that it produces, envisaging the occurrence of various incidents. In particular, the Company considered the level of impact on customers and formulated specific countermeasures for particularly high-priority products with a view to early-stage recovery, based on considerations of the distinct characteristics of manufacturing processes and raw materials used.

We are also working to expand these activities to other Group companies, and working as a Group to bolster and increase the stability of our production and supply structure.

In fiscal 2018, AISIN Group also engaged in activities to promote greater mutual understanding with suppliers’ top-level management, with a focus on fire prevention. Through these activities, it identified problematic issues in the workplace and linked this to various improvements. Looking ahead, the Group will continue to engage in fire-prevention activities with suppliers, with the aim of creating a positive upward spiral.

Activities to promote greater mutual understanding with suppliers
Activities to promote greater mutual understanding with suppliers

Response to conflict minerals

Automakers listed on the U.S. stock exchange, which are our end customers, are required to report to the U.S. Securities and Exchange Commission (SEC) regarding conflict minerals. In fiscal 2018, AISIN Group once again worked with business partners and industry groups to conduct surveys to confirm the origin and history of minerals used in products and to ensure the avoidance of use of conflict minerals. The Group has since provided customers with feedback on its findings, and its customers can use its products with confidence.

Learning the importance of safety, quality and the voices of customers at Aisin

Densho-kan

Aisin Densho-kan (Educational Center) is a place for all AISIN Group employees to learn about workplace safety and fire-prevention initiatives, the importance of safety and raw unfiltered feedback received from customers. For example, the Kumamoto Earthquakes Learning Zone is an educational space for ensuring that realizations and lessons learned from the Group’s responses to the 2016 Kumamoto Earthquakes are properly passed on its employees. This zone features easy-to-understand exhibits designed to increase awareness with regard to disaster prevention and readiness by presenting efforts made from directly after the occurrence of the disaster up until recovery and the importance of initiatives to reduce earthquake damage.

*Aisin Densho-kan is not open to the general public.

Aisin Densho-kan
Newly constructed Kumamoto Earthquakes Learning Zone at Aisin Densho-kan
Newly constructed Kumamoto Earthquakes Learning Zone at Aisin Densho-kan