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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.
We also provide information on compliance with environment-related laws on a special website for suppliers.

In the chemicals divisions, 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, we regularly revise our Green Procurement Guidelines.

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. Since fiscal 2018, we introduced chemSHERPA, a chemical control system recommended by Japan's Ministry of Economy, Trade and Industry, and asked our suppliers to comply as needed. As a result, we will now aim to manage information on chemicals in a more speedy and reliable manner.

Since fiscal 2016, as a new part of our CSR procurement efforts, we survey suppliers on their use of conflict minerals (the four minerals of tin, tantalum, tungsten and gold, which are mined in the Democratic Republic of the Congo and surrounding countries and are used by rebel groups to purchase weapons).

Raising Product Quality and Ensuring Safety Together with Suppliers

Suppliers Take Part in Quality Improvement Conferences, Receive Quality Guidance

Daikin conducts regular quality audits at the production sites of suppliers through its business sites in Japan and overseas. We also hold information sessions and training sessions to provide opportunities for suppliers to learn about methods of improving quality, and CSR procumbent, among other matters.

Quality improvement announcement meeting

Quality improvement announcement meeting

Helping Suppliers Improve Quality and Implement CSR/Green Procurement

Daikin provides support in many aspects including quality improvement for suppliers, as well as CSR issues and green procurement.

Support provided to suppliers

Supplier meetings Explanation is given on Daikin Industries, Ltd.'s policy and situation, and information is provided on its CSR and environmental initiatives to suppliers of the air conditioning divisions. (Four times/year, but in fiscal 2020, it was held one time to prevent the spread of COVID-19, with a total of 123 companies taking part at different venues.)
Quality meetings Quality training is implemented for suppliers in aiming to permeate understanding of Daikin's quality guidelines. (Every year, 279 companies took part in the two meetings held in fiscal 2020).
Quality improvement announcement meetings, quality improvement proposal meetings Suppliers with quality problems must report on improvement measures, targeting suppliers of the air conditioning divisions.(Quality improvement announcement meetings were held on five occasions for 17 companies in fiscal 2018, four occasions for 30 companies in fiscal 2019, and one occasion for 17 companies in fiscal 2020 due to COVID-19. Meanwhile, quality improvement proposal meetings were held on 124 occasions for 11 companies in fiscal 2020.)
Quality audits Auditing institution conducts regular external audit based on ISO 9001, and internal audit are conducted jointly in the Air Conditioning Manufacturing Division and at suppliers of the air conditioning divisions. Moreover, our representatives conduct visits to suppliers for checks on management items concerning the procurement and quality of newly adopted parts and the production process to streamline production on a regular basis. (Conducted at 95 companies in fiscal 2018, 99 companies in fiscal 2019, and at only 44 companies in fiscal 2020 due to COVID-19)
Suppliers of the chemicals divisions who provided defective products underwent audits based on ISO 9001. (Conducted at only four companies in fiscal 2020 due to COVID-19.)
Quality process audit We also conduct periodic audits on quality process on suppliers of the air conditioning divisions based on Daikin's quality guidelines.
Quality forum Introduction of Daikin Industries, Ltd.'s quality policy, defect rate and quality cost of purchased goods, quality abnormalities among companies, and activities aimed at improving quality, targeting suppliers of the chemicals divisions. (Once a year)
In fiscal 2020, due to the COVID-19 pandemic, the forum’s format was switched from an in-person meeting to information provision and survey for 77 companies.
Commendation system Suppliers that make significant contributions to the areas of development, production, quality, price, delivery, environment and global business are presented with a CEO Award, COO Award or Special Commendation once a year in order to recognize the daily contributions of suppliers.
Supplier visits Managers and certified excellent engineers "Takumi" of Daikin Industries, Ltd. visit suppliers of the air conditioning divisions to provide instructions.
Technical exchange meetings Daikin representatives conducted both in-person visits to suppliers and online meetings during COVID-19 to exchange information to propose new technology and innovative techniques. (15 companies took part in fiscal 2020).
Technical meetings Information sessions on Daikin technology are held to provide a platform for making technical proposals between Daikin and its suppliers (50 companies took part online in fiscal 2020).

TOPICS

Supporting Quality Improvement at Suppliers in China

Quality meeting with suppliers

Quality meeting with suppliers

In fiscal 2020, following feedback about defective quality from customers, McQuay China (Suzhou)'s air conditioning quality department worked alongside 11 suppliers to analyze the quality management system and manufacturing process. Areas for improvement were identified and fully addressed following training and instruction given to quality managers.
The company's compressor quality department also participated in quality meetings with suppliers, adding new items to audits and improving the production process. As a result, the defect rate of purchased products was reduced by around 2% compared to fiscal 2019.

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 for "sort, sweep and standardize"), preventative measures (look for potential defects in production processes), and prevention of reoccurring problems (through regular maintenance).

In fiscal 2019, one ZD announcement meeting was held and 25 individual announcement meetings for 17 companies were held.

ZD Activities with Suppliers

ZD Activities with Suppliers

Business Partners and Staff of Outsourcing Partners Contribute to Plant Safety

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

Daikin Industries, Ltd. asks for business partners and staff of outsourcing partners to cooperate in making plants safer.

Assisting Business Partners and Staff of Outsourcing Partners to Ensure Safety

Plant safety liaison meetings Awareness on safety is raised and information sharing carried out in order to safeguard staff of outsourcing partners. (Meetings are held bi-monthly) In addition, safety patrols are held along with meetings for management of worker dispatching companies.
Driving safety seminars Drivers of supplier delivery vehicles that frequent our factories are taught about traffic rules on- and off-site. (Once a year, in fiscal 2020, seminars were held by distributing learning curriculum to prevent the spread of COVID-19. Approximately 400 drivers participated.)
Training for partner companies
  • Training is held on safety and work quality management, information on hazardous chemicals provided using Safety Data Sheets (SDS), and pocket-sized safety booklets are handed out to workers of partner companies performing periodic maintenance of chemical facilities. In fiscal 2020, training was held in-person on one occasion with a limited number of participants and infection controls in place, including body temperature checks, due to COVID-19. (358 participated in the eight training sessions held in fiscal 2020).
  • To stop the spread of COVID-19, changes were made to the traditional format of in-person training, with information provision on safe driving and survey provided to 262 companies.
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, managers including the general manager and the senior manager of the Global Procurement Division regularly visit suppliers, where they lead briefings, goodwill gatherings, and awards ceremonies as part of communication enhancement efforts. In fiscal 2020, these visits were held online due to the impacts of COVID-19.
In April 2014, we re-started our air conditioner cooperative. The aim of this cooperative 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. In fiscal 2020, we held information exchanges online on three occasions, as well as debated among those in different sectors, so that we can build among them a relationship of mutual benefit and growth.
In fiscal 2019, we again focused on activities of subcommittees in the air conditioner cooperative, which are divided into the three categories of safety, delivery improvement, and rental assets. These activities benefit both suppliers and Daikin, including through business collaboration.

In the chemicals divisions, 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.

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