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Supply Chain Management

Working Closely with Suppliers

Ensuring Legal Compliance in the Entire Supply Chain

Doing Everything Possible to Help Suppliers Achieve Compliance

Daikin strives to achieve legal compliance throughout the supply chain by doing everything possible to help suppliers abide by laws.

In the air conditioning divisions, we raise supplier awareness through written requests for legal compliance and meetings four 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 are looking into conducting such follow-ups throughout the year, not just once a year, so that we can help suppliers raise their standards.
We also provide information on compliance with environment-related laws on a special website for suppliers.

In the Chemicals Division, we carry out unscheduled audits. During on-going assessments, we also have suppliers fill out questionnaires to diagnose their own compliance and that of their external providers. So that we can judge their progress, these sheets contain check items related to eliminating excessive and unfair labor, and the respect of human rights at supplier companies.

Ensuring Compliance with the Subcontract Act

There are several thousand Daikin suppliers and subcontractors covered by the Subcontract Act. Our Subcontract Act Compliance Guidelines ensure that all Daikin divisions are in compliance with the Act in respect to matters such as prompt payment. We constantly strive to raise awareness among employees in relevant divisions 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 Environmental Management Systems

Daikin Industries, Ltd. requires that its suppliers abide by the Green Procurement Guidelines and that they establish and operate their own environmental management systems.
Amidst increasingly strict chemical control laws, in January 2017 we published a revised edition (9th edition) of our Green Procurement Guidelines, which adds banned chemical substances (BNST and PHAs) to the list of designated chemical substances.

We require suppliers to have an environment- and quality-based supply chain under which they strictly execute environmental management systems they have established themselves. Using a green procurement survey, Daikin Industries, Ltd. determines the effectiveness of suppliers' environmental management systems. In fiscal 2017, we added an item about water resources protection to the survey in order to gather information on the amounts of water that suppliers use and dispose of.

In fiscal 2016, as a new part of our CSR procurement efforts, we again surveyed suppliers on their use of conflict minerals (the four minerals of gold, tantalum, tin, and tungsten, which are mined in the Democratic Republic of the Congo and surrounding countries and are used by rebel groups to purchase weapons). In fiscal 2017 as well, we used the latest conflict minerals guide to conduct a survey designating the latest conflict mineral mines.

Raising Product Quality and Ensuring Safety Together with Suppliers

Suppliers Take Part in Quality Improvement Conferences, Receive Quality Guidance

In our air conditioning divisions, we hold supplier briefings to enlist the help of suppliers in improving quality and achieving zero defects. We also hold the monthly Supplier Quality Conference as a focus on quality for specific Daikin suppliers. If a supplier delivers defective parts, we assess and analyze the quality of the parts we purchase and, in serious cases, request that suppliers report on improvement efforts at quality improvement announcement meetings and quality improvement proposal meetings. We also conduct a range of other activities in support of quality improvement at our suppliers; for example, we visit suppliers' factories to offer assistance, we dispatch our "Takumi," who have been certified as outstanding engineers in Daikin Industries, Ltd., and we encourage suppliers to take part in Daikin skills competitions.
Our annual technical exchange meetings provide an opportunity to share information with suppliers. At the fiscal 2017 meeting, representatives from 60 companies touched on 102 topics.

In our Chemicals Division, 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.

Besides conducting periodic quality surveys at the production sites of suppliers to our worldwide bases, we hold meetings where we engage in dialogue with suppliers on ways to improve their quality.

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

Quality improvement announcement meeting

Quality improvement announcement meeting

Helping Suppliers Improve Quality

Air Conditioning Divisions

Supplier meetings Daikin Industries, Ltd.'s policy and progress are explained and legal compliance is stressed through model examples. (4 times/year, 128 companies took part in fiscal 2017)
Supplier Quality Conference Parts we purchased are inspected each month for defects and quality improvement measures carried out. (Each month)
Quality improvement announcement meetings, quality improvement proposal meetings Suppliers with quality problems must report on improvement measures. (In fiscal 2017, five quality improvement announcement meetings were held for a total of 20 companies and 215 quality improvement proposal meetings were held for 35 companies.)
Quality audits Auditing institution conducts regular external audit, and internal audit are conducted jointly in the Air Conditioning Manufacturing Division and at suppliers. (Audits were conducted at 117 companies in fiscal 2017.)
Visits to suppliers Managers visit suppliers.

Chemicals Division

Quality Forum Introduction of Daikin Industries, Ltd.'s quality policy, defect rate and quality cost of purchased goods, quality differences among companies, and activities aimed at improving quality. (Once a year; 69 companies took part in fiscal 2017.)
Quality audits Suppliers who provided defective products underwent audits based on ISO 9001. (Conducted at 9 companies in fiscal 2017.)

Aiming for Zero Defects through ZD Activities at Bases Worldwide

Since fiscal 2007, the air conditioning divisions have 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 2017, one ZD announcement meeting was held and 32 individual announcement meetings for 20 companies were held. These meetings contributed to preventing the occurrence of defects when new parts are introduced or when suppliers alter their production processes.

ZD Activities with Suppliers

ZD Activities with Suppliers

TOPICS

Quality Control Training in Thailand

Quality control training session for suppliers

Quality control training session for suppliers

In fiscal 2017, Daikin Industries (Thailand) Ltd. hosted a training session, where representatives of 170 suppliers could acquire the knowledge and techniques necessary to improve quality.

Also in fiscal 2017, executive management members visited suppliers to conduct quality patrols to inspect progress in quality improvement efforts.

Business Partners Contribute to Plant Safety

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

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

There are many employees of business partners working in Daikin plants. Safety patrols of the plants are conducted to help keep these people safe. We hold bi-monthly plant safety liaison meetings and weekly meetings for managers of human resource dispatch companies, all part of our efforts to provide awareness and information on safety in the plants.
With so many vehicles entering and exiting plants, safe driving is crucial. That's why we hold regular driving safety seminars for delivery vehicle drivers to teach them traffic rules and promote safe driving.

In the Chemicals Division, where the majority of the plants are staffed by partner companies, major safety inspection and maintenance work is conducted once a year. We have numerous measures to ensure the safety of all workers; for example, we hold safety workshops for subcontractor employees, installation practice sessions, and other advance preparation, and we provide workers with information on chemical substance toxicity with SDS (safety data sheets). In fiscal 2016, we began distributing a pocket-sized "Safety Booklet" with the goal of preventing accidents and calamities. This guide is aimed at helping workers who are unfamiliar with rules and their jobs confirm things they are not sure of immediately and on the spot. Also in fiscal 2017, the Chemicals Division held safety workshops in June with participation by approximately 360 drivers and truck delivery managers.

Related information

Occupational Safety and Health

Building a Relationship of Growth

Communication is Key to Building Understanding and Trust

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

In the air conditioning divisions, the head and officers of the Global Procurement Division, and executives regularly visit suppliers, where they lead briefings, goodwill gatherings, and awards ceremonies as part of communication enhancement efforts.
In April 2014, we re-started our air conditioner cooperative. The aim of this association is to provide the impetus for innovation leading to new and better manufacturing; for example, counter the weakening of Japan's manufacturing amidst intensifying globalization by helping make Japanese suppliers more internationally competitive and by boosting our ability to quickly respond to sudden changes such as exchange rates and market conditions. Through this association we hold information exchange gatherings four times a year, where we promote information sharing among suppliers, as well as debate among those in different sectors, so that we can build among them a relationship of mutual benefit and growth.
In fiscal 2017, we focused on subcommittees in the air conditioner cooperative. Divided into the three categories of safety, delivery improvement, and rental assets, subcommittee meetings benefitted all participants by bringing together suppliers to share information and opinions on common concerns.

In the Chemicals Division, besides the ongoing Quality Forum meetings, purchasing managers keep in close contact with suppliers to gather and exchange information in areas such as technology, quality, and prices. Any problems that come up are solved through extraordinary or emergency support requests to relevant divisions.

Quality Forum sponsored by the Chemicals Division

Quality Forum sponsored by the Chemicals Division

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