Ensuring Legal Compliance in the Entire Supply Chain

Helping Suppliers Achieve Compliance

The Daikin Group strives to achieve legal compliance throughout the supply chain by helping suppliers abide by laws.

In the air conditioning business, we raise supplier awareness through written requests for legal compliance and meetings five times a year at which we introduce case studies. When renewing agreements with suppliers, those that fail to meet our standards are asked to write up plans for improvement, which we follow up on. We believe it is important to constantly assess suppliers throughout the year to ensure that they are making improvements.

We also provide environmental support information on a special website for suppliers.

In the chemicals business, we carry out surprise spot audits. We know that we must continue to work with suppliers in order to further eliminate excessive and unfair labor and to ensure human rights are respected.

Ensuring Compliance with the Subcontract Act

Japan's Subcontract Act covers about 3,000 Daikin Industries' suppliers and subcontractors.

Our Subcontract Act Compliance Guidelines ensure that all Daikin divisions are in compliance with the Act in respect to matters such as prompt payment. All divisions are made constantly aware of the importance of compliance through both in-house and third-party seminars.

Comprehensive compliance inspections ensure that appropriate payment methods are being followed.

We also constantly check the financial situation of subcontractor suppliers and production outsource suppliers and, if necessary, implement assistance measures such as relaxation of payment methods.

Helping Suppliers Build Quality Management Systems

Helping Suppliers Obtain ISO Certification

Daikin Industries' Green Procurement Guidelines state that suppliers must be ISO 14001 certified. And to promote more complete quality management systems, we provide the latest information on environment-related laws, and we request our primary suppliers, as well as their suppliers, to conduct green procurement and build a chemical management system.

The Chemicals Division requests that its suppliers obtain ISO 14001 certification, and it offers a range of advice on building quality management systems, improving production processes, and streamlining the organization so that suppliers can also obtain ISO 9001 certification.

See Green Procurement (Low-Impact Production)

See Green Procurement Guidelines

Raising Product Quality and Ensuring Safety Together with Suppliers

Suppliers Take Part in Quality Improvement Conferences, Receive Quality Guidance

Suppliers are indispensable to our goal of providing customers with reliable products. Daikin strives to raise quality by working closely with its suppliers.

In our air conditioning business, we hold briefings to enlist the help of suppliers in improving quality and achieving zero defects. To this end, the Air Conditioning Manufacturing Division and the Global Procurement Division hold the monthly Supplier Quality Conference, where we assess and analyze the quality of parts we purchase and, when necessary, request that suppliers report on improvement efforts at quality improvement announcement meetings and quality improvement proposal meetings. We even go so far as to visit their factories to offer assistance.

In our chemicals business, we hold an annual quality forum for sharing Daikin quality policies and giving suppliers a chance to report on their quality improvement activities. We also conduct quality audits at suppliers to ensure they are conducting measures to maintain and improve quality. And we hold technical exchange meetings, where Daikin and engineers at our suppliers work to jointly solve quality issues.

We will continue to strengthen communication with suppliers to ensure our products are of the highest quality.

Helping Suppliers Improve Quality

Air Conditioning Division

Chemicals Division

Aiming for Zero Defects through ZD Activities

Since fiscal 2007, the Air Conditioning Division has been working with suppliers taking part in the Supplier Quality Conference in an initiative called ZD (zero defect) activities. The goal is to achieve zero defects through 3S (visual checks), preventative measures (look for potential problems in production processes), and prevention of reoccurring problems (through regular maintenance). In fiscal 2010, we expanded the ZD initiative to include overseas companies.

As of fiscal 2010, 18 suppliers were taking part in ZD activities, which, combined with the Supplier Quality Conference, contributed to an approximately 60% drop in defects between fiscal 2005 and 2010.

ZD Activities with Suppliers

Business Partners Contribute to Plant Safety

Providing Business Partners Working in Daikin Plants with Safety Information and Conducting On-Site Patrols

Daikin Industries asks for business partners' cooperation in making plants safer.

There are many employees of business partners working in Daikin plants, so it is essential we provide them with information and guidance on safe work practices and conduct safety patrols of the plants.

With so many vehicles entering and exiting plants, safe driving is crucial. At the Yodogawa Plant and Kashima Plant, for example, an accident with the chemicals produced there could mean disaster. That's why we hold regular driving safety seminars for delivery vehicle drivers to teach them traffic rules and promote safe driving.

In fiscal 2010, the Air Conditioning Division held two supplier meetings for raising awareness of safety. In the Chemicals Division, we held safety workshops attended by approximately 400 drivers.

See Occupational Safety and Health (Responsibility to Employees)

Building a Relationship of Growth

Communication is Key to Building Understanding and Trust

The Daikin Group takes every possible opportunity to communicate with suppliers and promote mutual understanding and trust.

In the Air Conditioning Division, global purchasing officers, the head of the Global Procurement Division, and managers regularly visit suppliers for exchanges with their counterparts. Other ways we promote communication include supplier meetings, goodwill gatherings, and award ceremonies to recognize supplier achievements.

The Chemicals Division fosters good relations through the Quality Forum. It also has employees in charge of dealing with suppliers in five areas: main raw materials and auxiliary materials, packaging materials, equipment, outsourcing, and general purchasing. These employees work regularly and closely with suppliers to gather information and exchange opinions on issues including technology, quality, and price. As a result of this dialog, we have succeeded in achieving stable procurement of key material such as hydrogen fluoride, and solved the problem of defects occurring during polyethylene molding.