Collaboration with Our Partners (Suppliers)
The Hitachi High-Tech Group is advancing efforts to build collaborative partnerships with all of our suppliers, and to maintain and enhance mutual understanding and relationships of trust. In this context, we work with partners who demonstrate consideration for CSR.
Basic Policy
When selecting suppliers, the Hitachi High-Tech Group conducts risk assessments that include investigating the Corruption Perceptions Index (CPI) and links to negative factors such as human trafficking or money laundering. Based on the Hitachi Group’s common procurement policy, the Group conducts a full assessment of the quality, delivery schedule, and price of the item to be procured, the supplier’s technology development capabilities and acquisition of any environmental certification, and whether or not the partners fulfilltheir social responsibility (environmental conservation, protection of human rights, contribution to society, etc.)
With the cooperation and understanding of all of our suppliers, we are promoting CSR activities throughout the supply chain.
The Hitachi High-Tech Guidelines for Procurement Activities (excerpt)
In selecting suppliers, the Hitachi High-Tech Group will comply with the proper prescribed procedures, giving full consideration not only to the quality, reliability, delivery times, and prices of the materials supplied, and the management stability and technology development capabilities of suppliers, but also to an assessment of whether those suppliers are fulfilling their social responsibility. More specifically, this assessment will focus on the performance of suppliers in terms of fair and transparent disclosure of information, compliance with laws, regulations, and social norms, respect for human rights, the eradication of unjust discrimination relating to employment and occupations, the abolition of child labor and forced labor, environmental conservation activities, activities that contribute to society, the creation of good workplace environments, and a shared sense of social responsibility with their business partners.
Our Guidelines for Procurement Activities are published on the materials procurement page of this website and we undertake widespread disclosure.
Social Background
In order to strengthen business competitiveness, it is essential for companies to take steps to enhance product quality, reduce costs, shorten lead times, establish business continuity plans (BCP), and so forth throughout their supply chains. In addition, companies are being called upon to fulfill their social responsibilities to address social priorities such as ethical conduct, respect for human rights, labor practices, and environmental issues. Moreover, companies are being called upon to ensure that the products they provide to customers are manufactured in line with social priorities by not just evaluating their own activities but also those of all their partners including during the process of selecting them.
Our Group is also receiving growing requests from customers to undertake activities to address its social responsibilities throughout the supply chain, and strengthening supply chain management is a means of minimizing economic, social, and reputational risks.
Hitachi High-Tech's Targeted Direction
Our Group has adopted “Maintain Procurement and Strengthen Product Cost Competitiveness to Prevail against Global Competition, Based on Collaborative Relationships with Partners” as a key basic policy of its procurement strategy. To this end, we are focusing on “Strengthening procurement risk management,” “Strengthening product cost competitiveness,” and “Rigorously enforcing procurement compliance.” We aim to make products that are competitive by unifying global strategies, product strategies, and robust supply chain building.
In addition, we encourage collaborative creation (measures for the manufacture of high-value-added products through the provision of Hitachi Group technology and its integration with procurement partner’s technology) with procurement partners by all design, manufacturing, quality assurance, and procurement divisions and will contribute to local economies through employment of local employees and local procurement from superior procurement partners located near our business sites.
Declaration on Building Partnerships
The Group announced the Declaration on Building Partnerships in 2020 and strives to build sustainable relationships whereby the Group can grow along with its partners. Pursuant to calls from the Ministry of Economy, Trade and Industry and three economic organizations (the Japan Business Federation (Keidanren), Japan Chamber of Commerce and Industry, and Japan Association of Corporate Executives), the Group has renewed its commitment to comply with the Promotion Standards and strengthen appropriate transactions, such as taking into consideration the impacts of the rising costs of procurement partners, and accordingly, we request the continued support of our partners.
1. Compliance with the Declaration on Building Partnerships
As stated in the Declaration on Building Partnerships announced in 2020, we will adopt desirable business practices (the Promotion Standards pursuant to the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises) with procurement partners such as your company and actively seek to correct trade and commercial practices that hinder partnership building with procurement partners.
2. Setting Appropriate Transaction Prices
Transaction prices shall be determined through adequate consultations with procurement partners based on reasonable calculation methods in a manner such that prices incorporate reasonable profits for procurement partners and enable procurement partners to improve working conditions including higher wages and shorter working hours. We shall not engage in discussions that lack objective economic reasonableness or adequate consultation procedures. In transactions with Hitachi High-Tech, if there is any matter in which the effects of rising energy costs, raw material costs, labor costs, or other costs on a procurement partner are not reflected, you are requested to discuss the matter with a contact in a procurement department.
3. Request for Collaboration and Cooperation with Procurement Departments
- We request even greater collaboration concerning information than in the past regarding social trends and changes in prices.
- In the event of any incident contrary to the Promotion Standards or the Declaration on Partnership Building, please discuss the matter with a contact in a procurement department.
Organization
Supply Chain Management
Based on the Group’s basic philosophy, the Hitachi High-Tech Guidelines for Procurement Activities have been released and are steadily being implemented globally. When we start working with a new partner, we use the Hitachi Group Sustainable Procurement Guidelines issued by Hitachi Ltd. as the basis for ascertaining the status of their activities related to social responsibility (ethical behavior, respect for human rights, labor practices, environmental issues, quality, safety, etc.) and confirming whether they are in line with the Group’s procurement and selection policies.
Initiatives for CSR Procurement
Initiatives
Supplier Briefings at Each Manufacturing Base
It is essential to establish a shared awareness of CSR through the dissemination of information to suppliers and two-way communication with them, so we hold regular briefings for the partner companies that supply our product manufacturing divisions. We hold briefings at each of the Company’s manufacturing bases twice each year to explain the Hitachi Group’s initiatives aimed at promoting green procurement activities and supply chain CSR activities. So far as the policies and conceptual approach of the Hitachi High-Tech Group are concerned, the Hitachi Group Sustainable Procurement Guidelines issued by Hitachi Ltd. stands as a code of conduct that we wish all our partner suppliers to comply with. We explain social responsibility (ethical conduct, consideration for human rights, labor practices, environmental problems, quality, safety, etc.) on these basis of these guidelines, by which we have been deepening our mutual understanding and verification with all our procurement partners and promoting CSR procurement activities.
With regard to green procurement activities, we make the request to all our procurement partners at supplier briefings to engage in specific activities for prevention of global warming, cyclic use of resources, and ecological conservation in line with Hitachi Group’s environmental vision and policies. We are taking these measures in the effort to build a framework for fulfilling our social responsibility in coordination with all our suppliers.
Promoting Procurement Tailored to Environmental CSR
The Group practices green procurement, prioritizing environmentally friendly items in our procurement of products, components, and materials. With legislation such as the RoHS Directive and REACH regulations becoming increasingly stringent, we verify the chemical substances contained in delivered products, and in some cases, even if the final product does not contain these substances, we request investigations into the chemicals used during manufacturing, storage, transportation, and other stages before delivery to ensure the security of the supply chain. In addition, we respond to the extension of regulations governing chemical substances via the Hitachi Group’s A Gree’Net green procurement system. We also promote the Hitachi Group’s Environment and CSR-Based MONOZUKURI activities, while our Naka Area has provided encouragement and support to ensure that all suppliers actively engage in environmental conservation activities.
About 90% of the total of approximately 1,600 suppliers (Naka Area) are certified and registered as green suppliers.*
* Suppliers whose environmental management systems have been verified and registered.
Please click here for details of our initiatives to preserve biodiversity in conjunction with all our procurement partners.
Inspection and Monitoring of CSR Activities
Our Group sent notices to all of our procurement partners geared to the revision (in January 2017) of the Hitachi Group Supply-Chain CSR Deployment Guidebook (3rd edition), which was the precursor of the Hitachi Group Sustainable Procurement Guidelines and collected written confirmations from them of Hitachi’s approach to CSR supply chain management. We will use the returned confirmations to share issues involved in supply chain management and to minimize the risks.
In addition, since July 2012, in coordination with Hitachi High-Tech’s Procurement Department, we have been visiting our procurement partners’ production bases in China and other Asian countries to conduct inspections of their CSR activities, for the purpose of evaluating existing suppliers in order to identify high-risk businesses. During an inspection, inspectors with RBA* authorization check the status of the supplier’s efforts, mainly with respect to labor and human rights, safety, the environment, and ethics, based on the SA8000 international standard for work environment evaluation developed by Social Accountability International, a U.S. certification body. We have been conducting evaluations since FY2015, inspecting seven companies (six in China and one in Malaysia) as of the end of FY2019 and recognizing no major violations. We have also placed a requirement on each supplier to submit a plan for improvement measures and will continue to follow up until improvement has been completed based on the plan. Since FY2023, we have been using EcoVadis, a third-party evaluation platform, to evaluate and monitor the sustainability performance of procurement partners.
We assess procurement partners with significant procurement amounts that are strategically important based on four evaluation categories to confirm their sustainability initiatives: environment, labor and human rights, ethics, and sustainable procurement.
* Responsible Business Alliance: An industry body composed mainly of large electronics and IT companies.
Education for Procurement Staff
Our Group seeks to be a business organization that continuously fulfills its social responsibilities throughout the entire value chain and strives at all times, together with all business partners involved in our business activities, to build lawful, ethical, and fair relationships. At the annual kickoff conducted in the Procurement Department, information on CSR procurement activities is disseminate and department personnel undergo training in accordance with an annual curriculum (environmental management, quality control, social responsibility, and other topics) to ensure comprehensive implementation of CSR procurement activities.* In addition, to clarify corporate ethics and approaches regarding compliance that should be shared throughout the Hitachi Group, we established the Hitachi Group Code of Ethics and Business Conduct. By each member of the Hitachi Group putting the Code into practice, we will respond to the trust of society in good faith and with sincerity. There were zero cases of violations or sanctions in procurement in FY2023.
* CSR Procurement Activity Education Results
| Participation rate in CSR procurement activity education | Scope | Unit | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|---|---|
| Consolidated | ％ | 100 | 100 | 100 | 100 | 100 |