Relationships with Business Partners

In April 2021, we formulated a Procurement Policy corresponding to each SDGs. Based on the perspectives of "Fairness/impartiality," "Compliance with Laws and Regulations," "Green Procurement," and "Coexistence and Co-prosperity," purchasing departments at our head office play a central role in building a relationship of trust with business partners and we are conducting purchasing activities. Based on the "NTN Group Green Procurement Standards," we are promoting green procurement, which prioritizes environmental preservation efforts and procurement from business partners with superior environmental quality. We have also established "NTN CSR Procurement Guidelines" and are requesting active promotion of CSR activities. We are also working to achieve local procurement at all of our manufacturing sites, including those outside Japan, and to procure materials from optimal locations globally.

Green Procurement Standards

Failure to comply with environmental laws and environmentally-hazardous substance regulations in the supply chain is a management risk that leads to shut-down of operations and compensation for damages to customers. We are promoting environmental control throughout the supply chain by establishing green procurement standards that require our business partners to establish an environmental control system and define the standards of environmentally-hazardous substances, which constitute the important quality characteristics of delivered products.

CSR Procurement Guidelines

We have established NTN CSR Procurement Guidelines to promote activities throughout the entire supply chain in response to social issues such as human rights, labor, the environment and anti-corruption. We request our business partners to promote CSR activities in areas such as compliance and anti-corruption, human rights and labor, the environment, quality and safety, information-security, business continuity, and social contribution. We promote procurement activities that respond to social demands under a fair and free environment.

In order to comply with environmentally-hazardous substance regulations in Japan and overseas and customer standards, we, as a general rule, actively switch regulated substances regardless of applications, destinations, or manufacturing locations. To comply with the RoHS Directive which was revised in July 2019 and prohibits phthalates (DEHP, BBP, DBP and DIBP), we have established a system for incoming inspection according to the risks involved. We are promoting the switching from lead-containing procured products that are currently used for applications exempted from the RoHS Directive, assuming future tightening of regulations.

We conduct annual survey of business partners to further raise awareness of "NTN CSR Procurement Guidelines" and to confirm compliance.
In the current situation of business partners, the ratios of human rights, labor, quality and safety are more than 80% each, indicating that business partners are also highly conscious. However, the ratios of business continuity management (BCM), social contribution and CSR procurement are still around 60%, and at this stage, their awareness is not high.
In recent years, companies have been required to not only achieve corporate performance (economic value), but also to be an entity that is needed by society (social value). To help business partners understand that social value is important, we will continue to engage in awareness-raising activities.

■CSR questionnaire for suppliers

We conduct self-audits of subcontract transactions with the aim of optimizing subcontract transactions. In order to voluntarily audit the status of compliance with the Subcontracting Act, each business site in Japan has been responsible for implementing a certification system for "subcontract transaction self-auditors" since 2017. In 2020, when the first certified auditors finished their 3-year term, an e-learning course was held and 34 employees renewed their term, bringing the total number of self-auditors to 100.
In the fiscal year ended March 31, 2021, self-audits were conducted at our 23 business sites in Japan, with the self-auditors playing a leading role in such audits.
At the same time, 2,311 employees (including those from affiliated companies) completed the e-learning basic course on the Subcontracting Act in order to widely disseminate the contents of the Subcontracting Act within the company. Even after the completion of the training period, we have opened and operated a new e-learning course for self-development.
We will continue to conduct activities aimed at understanding and complying with the Subcontracting Act and at ensuring proper subcontracting practices.

From the viewpoint of risk management, we begin transactions with our business partners after checking their management structure, quality, and environmental management.
We also conduct annual survey for business partners, which we have already conducted transactions with, to continuously monitor their business conditions. If we determine that a transaction involves a high risk, we strive to minimize our procurement risk and ensure stable procurement by implementing risk reduction measures commensurate with the magnitude of the impact, taking into consideration procurement parts, transaction amounts, etc.
With regard to a natural disaster or an infectious disease, we have established a risk management database, and in the event of an emergency, we immediately confirm the safety of business partners and manage the risk associated with ensuring a stable supply of our products throughout the supply chain.
In the fiscal year ended March 2021, a survey of business partners was conducted to check whether there is any issue associated with the supply chain, etc. Regarding business partners who answered that there was an issue and for whom we judged that a follow-up survey needs to be conducted, we are currently carrying out those checks.

We are promoting supply chain BCP activities involving logistics companies and business partners in order to ensure stable procurement.
We are strengthening crisis-management in preparation for natural disasters such as earthquakes and typhoons at our business partners and logistics sites. In addition, in the event of a widespread crisis such as a pandemic, we will cooperate with our business partners to ensure business continuity, and promote infrastructure development such as on-line business operations with our business partners, and sharing of safety information and the code of conduct.
As a future initiative, we aim to further stabilize procurement by eliminating concentration in specific regions and promoting the use of double-track procurement.

■Supplier questionnaire results