Supply Chain Management
Daikin formulated a Purchasing Policy in 1992 that is the basis for fair dealings with suppliers.
"Respect Independence" and "Cooperation and Competition"
Daikin 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.
Daikin's CSR Action Plan 2020, which is a medium-term plan taking up key CSR themes, proclaims that we will conduct socially responsible procurement as we tackle issues like the environment, human rights, and labor throughout the supply chain.
In April 2017, Daikin formulated its Supply Chain CSR Promotion Guidelines. These guidelines aim to further CSR at suppliers and other partners through stable and ongoing growth. In addition to standard requirements such as proper management and abidance with laws and regulations, the guidelines urge suppliers to strive to be better in every aspect of CSR, such as improving performance in the environment, quality, labor safety, and human rights, and abstaining from dealing with companies in war-torn regions.
Our air conditioner cooperative meeting is aimed at sharing information among suppliers and promoting exchange with other industries. At the fiscal 2017 meeting, we explained our CSR Promotion Guidelines and urged the 34 suppliers in attendance to comply with these.
As part of ongoing assessments of our suppliers conducted every April in our Chemicals Division, we have them fill out questionnaires to diagnose their own compliance and that of their external providers. These questionnaires contain items related to CSR so that we can follow their progress in this area.
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.
To ensure that Daikin 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.
Before starting business dealings in Daikin, 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. 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 we assist them in implementing.
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 2017, such assessments resulted in Daikin bringing on four 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.
Daikin Industries, Ltd. 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.
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.
Since October 2008, Daikin Industries, Ltd. has been an official member of the UN Global Compact, an initiative of the United Nations. It is also a member of the local body Global Compact Network Japan. We take part in the subcommittee on supply chains, a subcommittee comprising representatives of member companies and organizations. Subcommittee members meet to discuss and exchange information on CSR efforts in the supply chain, and to collaborate and cooperate in order to advance these efforts and thus strengthen supply chain management.
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