Guidance to Our Purchasing Procedure

This section explains how a potential supplier can become a competent supplier for Daikin through an illustration of our purchasing procedures in contrast with our typical product development process.

Click number 1 - 16 for detail explanation.

Product Development Process: In general, the development cycle for a new product takes about 3 to 4 years and follows the process illustrated in the above chart. However, during this term a wide range of minor changes are carried out, so suppliers can contact us any time without limiting to special period.
Purchasing Procedure: Daikin's basic purchasing procedure is undertaken in line with the following items and is linked with each step of the product development process.

(1) Initial contact: A potential supplier applies to the relevant Daikin Reception Desk according to the product category.
(2) Presentation: Daikin and a potential supplier exchange information concerning their corporate outlines, product handling, etc, and then Daikin asks questions on important related matters. On this occasion, the supplier is requested to make an effective presentation by providing an account of the company and the superiority of its products with the aid of corporate brochures, product catalogs, samples, etc.
(3) Supplier information registration: Daikin prefers continuous relationships with its suppliers to one-off or temporary business. With this aim in mind, we attempt to compile versatile information on our potential suppliers that will make it easier for us to approach them with orders for new business.
(4) Presentation of information on purchase items and request for estimate: When a required purchase item satisfies conditions of both parties, Daikin requests the supplier to present an estimate of its cost. At this time we provide the supplier with variety of information including detailed specifications and technical drawings, purchase quantity and required price (In principle, Daikin obtains estimates from several suppliers before making decision to purchase).
(5) Provision of estimate and delivery specifications/conditions: The supplier is expected to present an estimate along with the specifications of the trial production item. Also, supplier requests regarding delivery specifications and conditions should be presented at this time.
(6) Evaluation for move to prototype and testing: We judge whether prototype should be made or not after overall review of price, quality, supplier's technical capabilities and its results in the field.
(7).(8).(9) Trial production and its evaluation: We ask the supplier to make prototype. Also, depending on the type of product, we may request the supplier to provide test data. At Daikin, we carry out test evaluations of prototype and inform the supplier of our results.
(10) Finalization of specifications for mass production and request for pilot products and re-estimate of the cost: We finalize specifications for mass production based on the results of prototype. Then, we request pilot products for the preparation of mass production and re-estimate of its cost for final specifications.
(11).(12) Fabrication of pilot products and their evaluation: Evaluation of final specifications will be conducted with pilot products of which specifications are equivalent to those of mass production. Then, if necessary, we ask the supplier for permission to visit and view the manufacturing process.
(13) Making contract: Once we decide to use the product, we arrange the details of the contract conditions.
(14) Issuance of order sheets: We place orders based on the delivery conditions agreed in advance with the supplier, using a standard order sheet.
(15) Mass production of ordered products: The supplier prepares for the production and delivery of the ordered products in accordance with the order sheet.
(16) Shipment of products: The supplier ships products according to order sheets.

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