Building trust as a good business partner

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

Aisin’s procurement principles

Aisin believes in coexisting and sharing prosperity with our suppliers, and strives to achieve mutual development. We have established the following group procurement policies for our procurement activities.

AISIN Group Basic Procurement Policy

  • Coexist harmoniously and share prosperity with suppliers with a view to stability in our trades in the long term
  • Carry out open and fair trades

FY2022 Group Procurement Policy

  1. Rigorous execution of priority initiatives that are fundamental to our business activities
  2. Building a procurement base to support growth strategies in areas that are crucial to our survival/li>
  3. Groundbreaking measures to make us more competitive in existing businesses
  4. Strengthening our procurement base to provide fundamental support for our corporate activities

In fiscal year 2022, we held an online presentation about out procurement policy for the primary suppliers that account for over 90% of the group’s ordering in Japan (around 740 companies) to share information on current trends in our recent business environment and roll out our Group Procurement Policy. We are also rolling it out at supplier companies overseas through regional sites in each area.

With communication methods diversifying, we have more opportunities for dialog with our stakeholders than ever before, and we are making use of these to strengthen our relationships even more.

Aisin’s supply chain

AISIN Group‘s domestic and overseas companies deal directly with 4,252 primary suppliers, 2,705 of which are parts suppliers.

(companies)

  Parts Raw materials/other Total
Japan 1,021 1,220 2,241
Overseas 1,684 327 2,011
Total 2,705 1,547 4,252

Jointly undertaking sustainability initiatives with suppliers

Before trading with a new supplier, we carry out verifications based on accreditation such as ISO9001, IATF16949 and ISO14001 along with a credit check and quality audit. While trading, we continue to work with the relevant departments to carry out inspections from perspectives such as quality, safety, environmental and earthquake-proofing inspections.

 With its suppliers, AISIN Group promotes fair procurement activities based on the spirit of openness and fairness, and mutually concludes basic transaction agreements focused on health, safety and pollution prevention in addition to complying with the Competition Law, bribery prevention and elimination of antisocial forces.

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

AISIN Group Supplier Sustainability Guidelines

To ensure that all of our procurement activities comply with AISIN Group‘s policies along with relevant laws and regulations, we have translated AISIN Group Principles of Corporate Behavior into our suppliers‘ languages, distributed the translations to our suppliers and asked them to ensure that both they and their trading partners comply with the principles. The principles include policies on points such as human rights, labor practices, the environment and compliance, covering both social issues, including corruption prevention, child labor, forced labor, equal opportunities and prohibition of discrimination, freedom of association, collective bargaining, reduction of long working hours, minimum wage and health and safety, and environmental issues such as water usage and biodiversity.

In fiscal year 2022, we plan to issue Supplier Sustainability Guidelines, which paraphrase these principles for our suppliers, to further implement measures against ESG issues with the aim of building a sustainable society. In future, we will set specific targets based on these guidelines and incorporate them into our activities.

Activities under AISIN Group Green Procurement Guidelines

Aisin asks its suppliers to reduce GHG emissions, recycle waste materials and resources, reduce water usage and preserve biodiversity according to AISIN Group Green Procurement Guidelines.

As an initiative under these guidelines, AISIN Group manages substances that have an environmental impact to ensure a reliable response to environmental laws and regulations, which are becoming more stringent every year in countries around the world. In order to accomplish this, AISIN Group requests surveys of chemicals contained in items purchased from our suppliers and had them disclose and register relevant information in a shared system for recording data on chemical substances.

Representatives from the procurement functions in 11 domestic group companies* meet at AISIN Group Suppliers‘ Environmental Inspection Liaison Meeting. These representatives conduct environmental risk inspections to prevent environmental issues at our suppliers‘ companies. 198 companies with processes and/or facilities that place a particular burden on the environment have been identified as high-risk suppliers, and our representatives check that these companies are complying with laws and regulations, identify hazards and encourage the companies to improve on these points. In fiscal year 2021, we inspected 86 companies and confirmed that their improvements were completed (100% of planned work).

Our management will continue to work with our Environment Dept. to instruct our suppliers on improvements.

*All of the 12 group companies except Aisin Development, a non-manufacturing company.

AISIN Group Green Procurement Guidelines
AISIN Group Green Procurement Guidelines

Risk assessment and monitoring of suppliers

We conduct quality audits to improve the quality provided by our suppliers. In Japan, we conduct audits every three years for 245 suppliers identified in a risk analysis, including suppliers of safety parts and other parts requiring a high level of quality, suppliers that do not have IATF16949 and companies where quality issues have occurred in the past, to investigate their creation of and compliance with quality management frameworks. 107 suppliers were audited in fiscal year 2021. In the event of an issue, we identify the cause of each issue, make an improvement plan, set a schedule for corrective action and then provide advice and check the supplier‘s progress until the issue is resolved.。

We also have a system in place to handle risks that threaten the stability of our supply chain posed by natural disasters, fires and other situations. Information on the production processes of the materials and parts we purchase from our suppliers is registered in a dedicated system and used to respond to disasters and carry out recovery measures quickly. When a disaster occurs, the supply chain information held by each of our group companies is used to quickly identify the impact on the group as a whole, enabling us to take the necessary measures early to ensure the continuity of our supply chains.

Mutual improvement with suppliers

Aisin provides its main suppliers with training support to improve their technical skills and strengthen their corporate framework. Aisin has established an apprenticeship program in Japan where future management from our main suppliers work in the division of their choice at Aisin Seiki, usually for two years. Employees are accepted based on their needs. Aisin provides its suppliers with advice on various safety activities, environmental activities and activities aiming to improve productivity and quality by supporting the work of Aisin Suppliers Network, an organization formed to enable Aisin Seiki‘s suppliers to learn from each other‘s best practices and help each other to improve. In fiscal year 2021, we carried out initiatives such as mutual-study workshops on preventing occupational accidents and strengthening cybersecurity.

Affiliated groups and involvement in initiatives

Makoto Mitsuya, a director of Aisin, belongs to the organizational affairs committee of Japan Auto Parts Industries Association (JAPIA) and the representative of the group‘s purchasing division belongs to JAPIA‘s procurement & production subcommittee. By belonging to this committee, Aisin is involved in establishing industry policies to promote fair trade through regulations such as the Guidelines for Fair Trade in the Automotive Industry, and is carrying out initiatives to gather information for the purpose of compliance with conflict mineral regulations and responsible procurement of minerals in our supply chain.

Aisin’s procurement framework

To strengthen our procurement functions, we began structural reform of Aisin Seiki and Aisin AW ahead of the companies‘ merger and formed a Aisin Group Purchasing Division. We are working to create a single point of contact for suppliers, which will further strengthen communication between us and our suppliers and enable faster decision-making and more efficient operations by eliminating duplications between the two companies. From April 2020, we have progressively moved the procurement functions of all group companies in Japan into this Department.

Aisin’s procurement framework
Aisin’s procurement framework

Employee training

To ensure that each employee involved in our procurement activities is able to carry out fair, good-faith procurement activities, we have outlined specific actions to ensure compliance with various laws and regulations, such as prohibitions of bribery, in AISIN Group Principles of Purchasing Behavior and Guidelines for Purchasing Practices and are providing all procurement employees with training to provide the necessary understanding and advise employees about relevant laws and regulations, along with elements such as confidentiality.