Procurement
Basic Approach and Policy
The Olympus Group aims to strengthen supply chain management (SCM) within the context of business continuity and sustainable value creation. In June 2021 we replaced our procurement policy with a supply chain policy in line with our ESG (environment, society, and governance) initiatives to contribute to sound and fair transactions and the sustainable development of society. In addition, we formulated the Olympus Group Green Procurement Standards, which set out our basic environmentally conscious approach to procurement. Since then, the Olympus Group has disclosed its basic stance on the supply chain both internally and externally through its website and training sessions, while strengthening compliance with laws, regulations, and social norms. We have also established the "Expectations of Suppliers" as a concrete guideline for complying with laws, regulations, and social norms, including respect for human rights and the elimination of antisocial forces, prohibiting corruption and bribes, promoting fair and lawful transactions, and taking the environment into consideration. When selecting new suppliers, we review their current response to compliance with social norms and environmental issues as one of our screening criteria.
Based on these principles for procurement activities, the Olympus Group strives to create and strengthen good relationships with our suppliers through fair, just, and transparent transactions.
System, Mechanisms and Initiatives
Sharing Business Strategies and Supply Chain Policy
We share our "Expectations of Suppliers" and "Green Procurement Standards" in writing with our suppliers in Japan, asking them to comply with laws and regulations, social norms, and environmental considerations. We conduct an annual web-based supplier survey in Japan with 30 CSR questions to raise suppliers' awareness of issues related to the Sustainable Development Goals (SDGs).
Our Global Procurement ESG strategy consists of three materiality topics as part of the focus area of Responsible Supply Chain:
1. Improve supply chain risk mitigation and resilience by implementing a multitier supply chain risk monitoring solution.
2. Enhance social (human rights) commitment in SCM: This includes creating and publishing a Global Supplier Code of Conduct as well as monitoring ESG risk in our supply chain.
3. Environmental Supplier Management: We will begin creating a baseline of CO2 emissions from our suppliers, as well as asking suppliers to set science-based targets for our Science Based Targets initiative (SBTi1) certification.
Supplier Survey and Improvement Activities
Once a year Olympus conducts a web-based survey of our major suppliers around the world with whom we have ongoing business in Japan. The survey covers 123 questions, of which 24 are related to sustainability management information, sustainability initiatives, and business continuity plans (BCPs). In FY2023 we added six questions relating to climate change, including actual greenhouse gas emissions.
In FY2023 the survey was conducted on 667 companies, including overseas suppliers. Responses were received from about 86% of companies. If the survey results show that a supplier does not satisfactorily comply with legal and social norms, as well as environmental protection, and needs to improve, an onsite audit is conducted, and they must implement corrective actions in order to meet the points listed in our “Expectations of Suppliers.” At the same time, wherever possible, we recommend self-improvement actions to prevent the risk of incidents.
Key Evaluation Items in Supplier Survey for Initiatives with Suppliers
| Evaluation | Criteria Details |
|---|---|
| Management information | Corporate information, financial condition |
| Sustainability | Compliance with laws, regulations, and social norms Protection of human rights (child labor, forced labor, inappropriate low-wage labor) Protection of worker rights (labor standards, occupational safety and health) Protection of the environment (CO2 emissions, waste discharge, water usage, environment-related chemical substances) Personal and confidential information protection, intellectual property protection |
| BCP | Business continuity strategy, manufacturing site information, contact information during emergencies and disasters, confirmation of supply chain, confirmation of employee safety |
| Environment and quality | Acquisition of ISO 14001, ISO 9001, and ISO 13485 Procurement and process management (5Ms [materials, methods, measurement, machinery, manpower], change information, noncompliant treatments) |
| Delivery/Cost | Production plans, progress and distribution management, cost reduction activities |
| System | Computer security |
Response to Conflict Minerals
One of the effects of the continuing civil war in the Democratic Republic of the Congo (DRC) has been the use of minerals, including tantalum, tin, tungsten, and gold, mined in the DRC and neighboring countries to raise funds for armed groups. For many years, this practice has resulted in human rights violations, including child labor, sexual violence, and environmental damage. In July 2010 the United States sought to cut off this supply of funds to armed groups by introducing an amendment to its financial regulation law defining these four substances as conflict minerals. Companies listed in the United States that use conflict minerals are now required to submit reports to the US Securities and Exchange Commission (SEC). Other moves by international organizations, governments, NGOs, and industry organizations to solve this problem include the publication of the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas by the Organization for Economic Cooperation and Development (OECD).
The Olympus Group upholds international efforts to resolve the problem of conflict minerals. On behalf of the Olympus Group, Olympus participates in a committee established by the Responsible Minerals Trade Working Group of the Japan Electronics and Information Technology Industries Association (JEITA). Working together with suppliers, such as by discussing the conflict minerals at the Supply Chain Policy Meeting, we ensure transparency in our supply chains and continue the procurement of parts and materials that does not cause human rights violations.
Education for Compliance with the Subcontract Act
Olympus regards the Subcontract Act as one of the most important applicable laws, and we engage in a wide range of activities to ensure compliance. The participation rate for the Subcontract Act e-learning programs for all employees of Olympus and its Japan subsidiaries in FY2023 reached 97%. Following the establishment of the Subcontractor Act Promotion Committee in FY2020, we are reinforcing the Olympus Group's compliance with the act and are providing internal workshops as a part of such efforts. In FY2023 we held specialized training according to the nature of transactions for each function with 178 participants from procurement, 1,401 participants from manufacturing, and 2,703 participants from R&D to further deepen their understanding of the Subcontract Act.
We will continue to provide education to ensure Group-wide compliance with the Subcontract Act.