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Sustainability > Supply Chain Management > Philosophy on Suppliers

Supply Chain Management

Philosophy on Suppliers

Philosophy on Fair Dealings

Dealings Based on Our Purchasing Policy

The Daikin Group formulated a Purchasing Policy in 1992 that is the basis for fair dealings with suppliers.

Purchasing Philosophy and Purchasing Policy

Purchasing Philosophy:

"Respect Independence" and "Cooperation and Competition"

Purchasing Policy:

  • Fair relations based on an open-door policy
    Provide open, equal, and fair opportunities for all companies, regardless of their locality, size, and sales results.
  • Mutual growth through mutual trust
    Create open conditions for business dealings and respect free competition.
  • Look for good partners
    In procuring from overseas, look for companies to share common profit and offer society useful products.
  • Observe laws, and maintain confidentiality
    Observe laws on business dealings and respect the spirit of these laws.

Formulation of Supply Chain CSR Promotion Guidelines

Throughout the supply chain, we tackle CSR issues like the environment, human rights, and labor. We place particular emphasis on determining our CO2 emissions, eliminating the use of designated chemical substances, and forbidding the use of conflict minerals.

In April 2017, we formulated our Supply Chain CSR Promotion Guidelines, which we encourage our suppliers to use as the fundamental concept in conducting their CSR activities.

Supply Chain CSR Promotion Guidelines

  1. Policy regarding social responsibility in business practices
    Have written rules to inform employees of their social responsibilities and ensure they strictly fulfill such social responsibilities in areas such as business policy and code of conduct in business practices.
  2. Provision of safe, high-quality products and services
    Always strive to ensure safety and quality of products for end users. If problems regarding safety arise, take action promptly and appropriately.
  3. Free competition and fair trading
    Conduct company business activities in a fair manner by being compliant with laws and regulations related to free competition and fair trading, including antitrust laws in each country and region.
  4. Compliance with trade-related laws and regulations
    Comply with trade-related laws and regulations of each country and region, and under no circumstances get involved in dealings that risk endangering world peace and safety and the maintenance of world order.
  5. Respect and protection of intellectual property rights
    Respect the intellectual property rights of other companies and ensure not to infringe upon them.
  6. Proper management and utilization of information
    Properly manage and efficiently utilize confidential information and personal information of your own and other companies, and always ensure that such information is obtained under lawful means.
  7. Prohibition of insider trading
    To maintain trust as company, do not take a part in the buying and selling of stockshares with the aid of non-disclosed information obtained from your own or other companies (insider trading).
  8. Timely and proper disclosure of corporate information
    When Daikin, based on appropriate reasons and situations, requests that you disclose information on your company, respond earnestly and in a timely manner, and strive for earnest two-way communication with Daikin.
  9. Preservation of the global environment
    Comply with environment-related laws and regulations in each country and region, and implement activities to sustain and improve the global environment in all areas of business, including development, production, sales, logistics, and services.
  10. Guarantee of safe operations
    Besides ensuring safety in the workplace, obtain the trust of stakeholders in the community by always putting "safety first" and by making every effort to ensure safe operations.
  11. Respect for human rights and diversity, and compliance with labor-related laws
    Respect the human rights of each and every individual; do not in any way discriminate against people based on their nationality, race, ethnicity, religion, skin color, age, gender, birth, or disability; and respect people's diverse values and approaches to work. In addition, observe both the letter and spirit of all labor laws and regulations of each country and region, and under no circumstances sanction the labor of underage employees, minors who do not meet the minimum legal age requirements (child labor), or labor performed under compulsion or against a person’s will (forced labor).
  12. Protection of Company Assets
    We shall properly manage the tangible and intangible assets of our company to protect and utilize effectively these assets.
  13. Proper handling of accounting procedures
    Perform accounting procedures lawfully and properly according to accounting standards and tax laws, and strive for a high level of internal control.
  14. Moderation in entertainment and gift exchanges
    Exercise moderation and perform within the acceptable range of social norms and obey the laws and regulations of each country and region in regards to entertainment and the exchange of gifts related to business activities.
  15. Firm stance toward anti-social behavior
    Take a firm stance against anti-social forces or organizations that threaten the safety and order of citizens and society.
  16. Compliance with industry laws and regulations
    Accurately comprehend and observe all business laws and regulations applicable to your company's business activities.
  17. Proper grasp of industry risks and implementation of business continuity plans
    Conduct appropriate risk management in your company's business activities, and have a business continuity plan (BCP) in place.

Green Procurement Ensures Thorough Chemicals Management

One of the things the Daikin Group is doing under “9. Preservation of the global environment” of the Supply Chain CSR Promotion Guidelines is requesting that worldwide suppliers abide by our Green Procurement Guidelines, which detail restrictions on chemical substances in Daikin products. We also have our suppliers around the world respond to our green procurement survey, the results of which we use to confirm and evaluate how well suppliers are managing chemical substances.

Dealings Based on Our Basic Policy Regarding Conflict Minerals

Under “11. Respect for human rights and diversity, and compliance with labor-related laws” of the Supply Chain CSR Promotion Guidelines, the Daikin Group does not use conflict minerals, which are mined under inhumane conditions in the Democratic Republic of the Congo or surrounding countries.

In July 2013, we established our Basic Policy Regarding Conflict Minerals.

In our air conditioning divisions, in fiscal 2016 we started an online registration system for results of conflict mineral surveys based on the latest Conflict Mineral Survey EICC Sheet*. This strengthens our system for surveying the procurement sources of conflict minerals.

* Conflict Mineral Survey EICC Sheet: A standardized tool for surveying the source of conflict minerals; based on the Electronic Industry Code of Conduct, which stipulates standards covering areas such as labor and environment in the electronics industry supply chain.

Basic Policy Regarding Conflict Minerals

To ensure that the Daikin Group does not inadvertently provide assistance to inhuman acts of armed groups in the Democratic Republic of the Congo and surrounding countries, we are taking active measures to uphold appropriate mineral procurement by raising transparency of the supply chain in cooperation with our global business partners.


Fair Dealings Management Structure

Giving All Suppliers an Equal Opportunity through an Open Door Policy

The Daikin Group has an open door policy on choosing suppliers in which we welcome bids from any company, regardless of nationality, size, or years in business.

In our air conditioning divisions, information on product specs, desired quality and cost, and delivery times is posted on our website in order to achieve equality of opportunity. All companies satisfying our criteria become eligible to do business with us.

In our Chemicals Division as well, we do business with any supplier meeting our criteria for specifications, quality, price, and delivery time.

Regular Assessment of Suppliers to Review Business Relationship

Before starting business dealings in the Daikin Group, we ensure potential partners understand our Purchasing Policy, and we assess them on consistent standards. After business dealings begin, we conduct assessments based on ISO 9001 and then review the business relationship accordingly.

In the air conditioning divisions, before we start transactions with new suppliers, we use the Supplier Assessment Standard Sheet to judge companies based on their administration, quality, price, delivery, and environmental measures. We ensure that suppliers are in compliance with laws, and we assess them in aspects such as voluntary efforts to step up environmental activities. In fiscal 2016, such assessments resulted in Daikin bringing on two new suppliers. Suppliers continue to be assessed every year based on our Assessment System for Continuation of Business. Companies that do not meet our assessment standards are required to make improvement plans that Daikin follows up on.

In the Chemicals Division, we assess new and existing suppliers based on ISO 9001 from the perspective of five criteria: management control, safety control, quality control, environmental control, and production control. In fiscal 2016, such assessments resulted in Daikin bringing on two new suppliers. We strive to fairly assess suppliers from multiple perspectives, having numerous Daikin representatives negotiate with them and making regular visits to their companies.

Awards System for Suppliers

The Daikin Group recognizes the ongoing contribution suppliers make through annual awards: the CEO Award, the COO Award, and the Special Award.

Every fiscal year in each division, the supplier demonstrating the most outstanding contribution to development, production, quality, price, delivery, environment, and globalization receives the Special Award. From among the Special Award winners, all Daikin divisions get together to choose exemplary contribution and present the COO (chief operating officer) Award and the CEO (chief executive officer) Award. In addition, every 10 years, suppliers who achieve a certain average level of sales volume over five years and are poised to continue this level are rewarded for their years of service with the Long-Term Suppliers Award.


Risk Management in the Supply Chain

Risks in the supply chain include supply problems due to earthquakes and other natural disasters, bankruptcy due to suppliers’ financial troubles, supply problems due to the breaking of laws and accidents, and stoppage of the international flow of goods due to political or economic problems in certain countries.

We have created an in-house system for making quick decisions on suppliers affected by risk, and we update our databases as needed in order to improve our ability to deal with problems when they arise.

Through our Global Supplier Conference, we work to adjust order volume, streamline costs, and ensure stable procurement in dealings with our 28 overseas supplier companies.


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