Supply Chain

Why SUMCO Addresses the Supply Chain

Year after year, stakeholders have been exhibiting a growing interest in companies' social responsibility through the supply chain in the course of their business activities.
In light of these growing concerns, the SUMCO Group believes it is important to share CSR-related societal demands with suppliers and to collaborate with them on issues including human rights, labor, safety, the environment and ethics in the supply chain.

Procurement Policy

In our procurement activities, SUMCO strives to engage in fair and rational trade with all suppliers, both domestic and overseas *1, based on mutual trust.
With the cooperation of all suppliers, we also actively promote initiatives to fulfill our corporate social responsibilities, including compliance with related laws, ordinances and social norms, and efforts to support global environmental conservation.

<Procurement Policy>

  1. Transactions based on partnership
    We will develop favorable partnerships with our suppliers based on mutual trust.
  2. Fair transactions
    We will ensure that our procurement is clean, open and fair.
  3. Promotion of value analysis (VA) activities
    We will encourage our suppliers to conduct value analysis (VA) activities in order to propose cost improvement methods, new materials, new technologies and others, and will actively adopt such proposals.
  4. Compliance in procurement activities
    We will comply with laws, ordinances and social norms in the course of our procurement activities.
  5. Fulfillment of corporate social responsibilities
    We will fulfill our social responsibilities when conducting procurement activities across our entire supply chain, including our suppliers.
  6. Green procurement
    We promote the procurement of materials with minimum environmental impact.
  • *1[Reference] Procurement amount ratio by area in 2023

[Reference] Procurement amount ratio by area in 2021

Management System

In addition to procurement departments, the departments at SUMCO responsible for quality assurance, CSR, environmental management and safety and health coordinate on the selection of new suppliers, evaluation of existing suppliers, establishment of procurement plans and other supply chain management efforts. Specifically, we issue various questionnaire forms (described later) and collect the responses, conduct written or on-site audits and due diligences on quality, CSR and the environment respectively and reflect the results obtained from these efforts in our assessment of suppliers in an effort to develop a more robust supply chain.

CSR Procurement Activities

Basic Stance on CSR Procurement

SUMCO has established the SUMCO CSR Procurement Policy and it promotes responsible procurement activities to fulfill its social responsibilities across the supply chain. We share various issues related to the supply chain with all suppliers, both domestic and overseas, and tackle procurement activities while keeping those issues in mind to ensure that customers can use our products confidently and to satisfy our stakeholders.

Through periodic briefings to suppliers and procurement activities such as those described below, we request our suppliers to make voluntary efforts to promote CSR management. We also call for their efforts to respect human rights, protect the environment, comply with corporate ethics, etc. when contracting with new suppliers.

(1) Briefings on CSR Procurement

We share the SUMCO CSR Procurement Policy with our suppliers at regularly held briefing sessions, and through separate briefing sessions and CSR audits, we explain the SUMCO CSR Procurement Policy, SUMCO Environmental Policies and RBA (Responsible Business Alliance) Code of Conduct and provide advice on compliance with these standards. In this way, SUMCO continues to deepen suppliers' understanding of the Company's labor, safety/health, environment and ethics-focused efforts towards CSR procurement.

Briefing Sessions for Suppliers

Briefing Sessions for Suppliers (In 2022, same as 2021, we held the session by web-based meeting due to COVID-19.)

  • June 3, 2022 (461 people from 241 companies)
  • November 18, 2022 (463 people from 241 companies)

(2) Supplier Handbook

To help suppliers understand our approach to procurement activities, we distribute Supplier Handbook, which includes a section on our procurement policy and requests to suppliers including items relating to CSR. The Supplier Handbook is posted on our dedicated procurement website used in SUMCO's daily procurement activities for easy reference at any time by suppliers.
In this handbook, we ask suppliers that comprise our supply chain to promote CSR. As guideline to be followed in implementing CSR management, we ask suppliers to utilize the RBA Code of Conduct, and also encourage subcontractors and sub-subcontractors to implement CSR management in a similar fashion. Furthermore, we request them to develop an environmental management system that complies with ISO 14001 by distributing this handbook.

(3) Green Procurement Guidelines

To promote the procurement of products with a minimal environmental impact (green procurement), we have also posted Green Procurement Guidelines on the dedicated procurement website. The guidelines summarize relevant laws and ordinances, the RoHS Directive, REACH regulations, prohibited or controlled substances designated in customer requests and other pertinent information.

(4) Raw Material Surveys

SUMCO's procurement and environmental management departments work together to promote green procurement by asking suppliers to submit certificates of non-use of prohibited substances as well as issuing and collecting various questionnaires, in order to confirm that substances specified in the Green Procurement Guidelines are not being used.

(5) CSR Questionnaires and Audits

We distribute and collect CSR questionnaires based on the RBA Code of Conduct to our main suppliers to review the status of CSR initiatives at each company. The questionnaires are issued to the suppliers we regard as important because we purchase large amounts from them and they are essential or irreplaceable to our production activities. There are more than 200 such companies, and SUMCO has managed to secure responses from almost all of them. Based on the results of these questionnaires, we conduct regular CSR audits that include field audits of a given number of suppliers. Along with providing explanations of our CSR procurement policy and environmental policy and asking for understanding and cooperation, we verify the state of compliance with each of the items on the CSR questionnaire such as human rights, safety, environment, ethics, information security, and management systems, as well as confirming the status of improvements.
The CSR Audit found suppliers who had failed to sufficiently protect whistleblowers in internal reporting, suppliers who had not conducted training on how to prevent insider trading for several years, suppliers who had not adequately managed expiration dates for legally stipulated safety and environmental qualifications and suppliers who had failed to secure emergency exits and escape routes for employees. SUMCO requested the understanding of suppliers and asked them to correct these issues, leading suppliers to improve their operations. SUMCO Group will continue to promote CSR management in our supply chain.

Major Items in the CSR Questionnaire

  1. Human Rights and Labor
    1. (1) Freely chosen employment
      Examples: Prohibition of forced and bonded labor
    2. (2) No use of child labor
      Example: Prohibition on child labor, not having young workers engage in dangerous work
    3. (3) Limitation on Working Hours
      Example: Compliance with laws and ordinances on working hours and holidays
    4. (4) Lawful Wages
      Examples: Compliance with laws and ordinances on minimum wages
    5. (5) Humane Treatment
      Examples: Respect for human rights, prohibiting harassment and establishing disciplinary mechanisms
    6. (6) Non-Discrimination
      Examples: Prohibiting discrimination on the basis of race, nationality, gender, age, sexual orientation, religion, disabilities or other traits
    7. (7) Freedom of Association
  2. Safety and Health
    1. (1) Occupational Safety
      Examples: Obtaining and renewing permits and licenses, providing personal protective equipment
    2. (2) Preparedness for Emergency
      Examples: Setting up appropriate emergency evacuation doors and evacuation routes, conducting drills
    3. (3) Prevention of Occupational Injury and Illness
  3. Environment
    1. (1) Compliance with Environmental Laws and Ordinances
      Examples: Obtaining the necessary licenses and other permits, compliance with environmental standards
    2. (2) Pollution Prevention and Waste Reduction
      Examples: Reducing waste and greenhouse gases, controlling wastewater
    3. (3) Reduction in Energy Consumption and Greenhouse Gas Emissions
  4. Ethics
    1. (1) Compliance with Laws
      Examples: Prohibiting bribery and corruption, establishing internal reporting systems
    2. (2) Fair Business Activities
      Examples: Compliance with laws and ordinances on fair trade, competition and advertising
    3. (3) Information Management
      Examples: Appropriate management of customer information and protection of intellectual property rights
  5. Information Security
    1. (1) Defense Against Threats on the Network.
    2. (2) Management of Electronic Data and Access Rights, and Establishment of On-site Entry Rules
  6. Management Systems

(6) Training for Procurement Staff

SUMCO's procurement staff also need sophisticated expertise and a compliance-oriented mindset to conduct the CSR procurement activities listed above. By training staff about the SUMCO Charter of Corporate Conduct and providing departments in charge of procurement with opportunities to train themselves regarding laws and regulations every year, the Company aims to increase employee understanding and awareness regarding the background and meaning of the SUMCO CSR Procurement Policy, legal compliance, unfair competition and improper transactions, anti-corruption and respect for human rights.

Risk Management within Procurement Activities

We work to identify the many risks facing the company in its procurement activities, including risk of instability in procurement of raw materials, risk of corruption, risk of legal violation and risk of use of controlled or prohibited substances. We assess the extent of impact should any of these risks materialize, assign priorities to them, and implement management measures according to the level of each risk. (Refer to the section titled "Risk Management" for details.)
When selecting new suppliers or evaluating existing suppliers, we conduct risk assessment on various risks such as disruptions to raw material procurement, comprehensive corruption risk, violation of laws and risk of using regulated/prohibited substances, asking suppliers with high-risk items to improve their operations to prevent risks.

Strengthening of Business Continuity Plans for Material Procurement

SUMCO promotes optimum inventory control and multiple sources for procured materials according to the level of risk involved.
If a disaster or accident should occur, we will immediately launch an investigation into its impact, while we take all possible steps for emergency procurement, including finding alternative suppliers and adopting alternative products, thus ensuring the necessary framework to do all we can to minimize the impact on production. As part of this initiative, we distribute a self-check sheet on Business Continuity Plan (BCP) and risk countermeasures to main suppliers along with the aforementioned CSR questionnaires to confirm their BCP and risk management status. Based on the responses, we conduct checks on the efforts and status of BCP and risk countermeasures for the relevant suppliers during supplier audits.

  1. Continuing optimum inventory control based on the characteristics of each procured material
    We will review inventory quantities, storage sites, transportation methods and other aspects for each type of material whenever necessary.
  2. Source investigation and risk response
    We will investigate and confirm production sites and sources of major items and respond according to the level of risk involved.
  3. Maintenance, enhancement and review of business continuity plan for each item procured
    We will develop business continuity plans for each major item so that we can properly respond to the occurrence of any risk.
  4. Risk assessment of suppliers
    We will periodically conduct checks on our main suppliers with respect to their financial condition, production systems, business continuity plans and other aspects, and respond appropriately based on the results.

Initiatives to Reduce Environmental Impact

Through the aforementioned CSR questionnaires and CSR audits, SUMCO strives to reduce environmental impact across the entire supply chain by incorporating items designed to review initiatives aimed at reducing the amount of waste generated, curbing greenhouse gas emissions and reducing the use of electricity, water and energy, and by recognizing suppliers implementing continually concrete reduction activities by setting numerical targets or taking other measures.
Besides getting suppliers to understand the SUMCO Basic Environmental Policy, education and training are provided in such areas as environmental accident prevention and legal compliance.

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