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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 does everything possible to help suppliers abide by laws.

In the air conditioning divisions, we send out written requests for legal compliance and hold meetings four times a year at which we introduce case studies.
We also provide information on compliance with environmental laws and regulations 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 full compliance with the Act. We provide training to employees of relevant divisions and have them participate in 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 and quality management systems. Amidst increasingly strict chemical control laws, we regularly revise our Green Procurement Guidelines. On top of this, using a green procurement survey, Daikin Industries, Ltd. determines the effectiveness of suppliers' environmental management systems. In fiscal 2018, we introduced chemSHERPA, a chemical control system recommended by Japan's Ministry of Economy, Trade and Industry in an effort 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

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 2021, as with fiscal 2020, it was held one time to prevent the spread of COVID-19, with a total of 119 companies taking part.)
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 training was not held in fiscal 2021.)
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, one occasion for 17 companies in fiscal 2020 due to COVID-19, and one occasion for six companies in fiscal 2021. Meanwhile, quality improvement proposal meetings were held on 124 occasions for 11 companies in fiscal 2020 and 169 occasions for 24 companies in fiscal 2021.)
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. Conducted at only 44 companies in fiscal 2020 and 52 companies in fiscal 2021 due to COVID-19)
Suppliers of the chemicals divisions who provided defective products underwent audits based on ISO 9001. (Switched to online audits in some cases after narrowing the target companies to nine in fiscal 2021 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)
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. (14 companies took part in fiscal 2021).
Technical meetings Information sessions on Daikin technology are held to provide a platform for making technical proposals between Daikin and its suppliers (120 companies took part online in fiscal 2021).


Supporting Quality Improvements of Suppliers in Thailand

With in-person support made difficult due to the COVID-19 pandemic, Daikin Industries (Thailand) Ltd. provided e-learning to suppliers beginning in fiscal 2021 to support their analysis and improvement of quality issues and increase quality.
The training features a number of courses that teach about analysis and improvement of quality issues along with specialist knowledge for improving the quality of supplied parts, including ways to increase technical skills for making plastic molds and fabricating pipework and improving process management methods using 2D codes. More than 150 suppliers participated in the training. Suppliers’ comprehension of curriculum is regularly confirmed via post-training test.


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).

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.
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 2021, seminars were held online to prevent the spread of COVID-19. Approximately 500 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.
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 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 2021, the annual meeting was held online due to the COVID-19 pandemic. Also, we streamed videos and held study sessions to raise the bar of CSR procurement.
In fiscal 2021, 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, hosting an annual review of activities. 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.
Particular emphasis was given to follow-up after outsourced production start-up, and we worked with suppliers while the chemicals divisions worked alongside the Quality Assurance Department and engineering divisions to examine the products onsite.


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