Supplier Code of Conduct
In response to the rising social expectation for CSR-oriented supply chain management, the NGK Group promotes CSR procurement. We preferentially select CSR-conscious companies and purchase CSR-sensitive raw-materials and services.
CSR Procurement Guidelines
The NGK Group created the CSR Procurement Guidelines in ﬁscal 2010 as a guide to promote CSR procurement across the Group. The Guidelines speciﬁcally describe our obligations as a socially responsible buyer as well as our requirements for socially responsible suppliers, such as specifying environmental obligations like greenhouse gas emissions reductions.
In ﬁscal 2013, the Guidelines were expanded by being integrated with the previous Green Procurement Guidelines, which set forth rules for preferential purchase of environmentally friendly products and services, and adding provisions of conﬂict minerals, anti-corruption, human rights, and labor issues.
The expanded CSR Procurement Guidelines are publicly available on our website in multiple languages (Japanese, English, and Chinese).
Supply Chain Evaluation
Within NGK, raw materials and molding molds for main production items are considered critical items, and of the suppliers who supply these items to NGK, 38 companies (22 Tier 1 companies, 16 Tier 2 companies) are considered critical suppliers from a transaction volume, and BCP standpoint.
In order to identify sustainability-related risks in the supply chain, which includes these suppliers, we perform partner maintenance and selection based on the CSR Procurement Guidelines, as well as visit suppliers to identify who are our high-risk procurement partners.
Improving CSR Procurement
At the NGK Group, we develop activities to promote CSR procurement, such as visiting individual suppliers and conducting on-site inspections. We also request our suppliers, particularly new companies, to sign an agreement to comply with the CSR Procurement Guidelines.
We will conduct a survey over the course of 2020 to 2021 in order to ascertain the degree to which suppliers understand and incorporate CSR procurement; to determine what CSR procurement initiatives are in place, and their status, at each supplier; and to provide support with improvement, which is appropriate to the relative criticality of each supplier.
Ongoing Promotion of CSR Procurement
Procuring Resources and Raw Materials Responsibly
The NGK Group conducts procurement activities that consider impacts on regional communities stemming from the use of raw materials (e.g. conflict minerals*) with the potential to cause social issues such as human rights violations and poverty, and takes steps to avoid using such materials. Additionally, in response to requests from customers, we investigate suppliers regarding their responsible procurement of resources and raw materials.
Minerals including tin, tantalum, tungsten, and gold produced in the Democratic Republic of the Congo and surrounding countries, and used as a source of funding for armed conflict in the area.
Enhancement of Group-Wide Cooperation and Procurement Capabilities
Within the NGK Group, we work to strengthen the procurement capabilities and ensure good governance for the Group as a whole through a number of approaches, including sharing information among Group companies and undertaking joint initiatives aimed at various procurement matters. Based on each company’s purchasing system and transaction situation, we clarify issues and provide support and reinforcement, such as collective purchasing of common materials, sharing cost and supplier information, and introducing domestic supplier management methods to Group companies.
We will continue expanding the use of collective purchasing, standardizing supplier management methods, and developing other approaches that will contribute to improved procurement functions Group-wide, both in terms of cost and governance.
Communication Activities with Procurement Partners
Distribution of Earnings Explanation and Materials Procurement Policy Resources to Suppliers
Because of the COVID-19 pandemic, NGK’s annual earnings presentation for suppliers was canceled. Instead, earnings explanation and materials procurement policy explanation resources were distributed to around 130 companies, along with an introduction to NGK’s initiatives for maintaining ongoing communications.
Ongoing Operation of the Supplier Helpline
In 2008, NGK established the supplier helpline system. Receiving consultation via e-mail, fax, and telephone, we make an effort to respond with solutions quickly.
Visiting Individual Suppliers in Japan and Overseas
In order to ensure procurement from the most appropriate suppliers, NGK visits individual suppliers in Japan and overseas to conduct on-site audits, evaluating their QCD (quality, cost, and delivery) performance in a fair and equitable manner. In fiscal 2020, we conducted audits of 28 existing suppliers, with some being carried out online due to the COVID-19 pandemic.
Through these activities, we strive to strengthen our QCD management system as well as to communicate with our suppliers to forge a relationship of mutual trust.
Supplier Training-Driven Support Efforts
The NGK Safety Cooperation Conference hosts meetings for facilities and equipment construction-related supplier members. These meetings are used as opportunities to share accident and disaster case studies, as well as to provide safety-related lectures.
The fiscal 2020 meeting was attended by around 20 people from NGK and 88 people from 74 conference member companies. The keynote address was on the topic of communication focused on on-site accident prevention.
Monitoring Activities Aimed at Suppliers outside Japan
We systematically undertake quality audits of our suppliers outside Japan.