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Social Report

Customers and Suppliers

Basic Stance on Supply Chain Management

Acquiring materials that meet customer requirements in terms of quality, delivery time, price, and advanced technology are essential for us to be able to provide customers with better products. In this context, the Group works to build a robust supply chain by seeking out suppliers around the world, who have strong management and supervisory abilities, and are capable of providing stable supplies of materials. In recent years, the Group focused especially on risk control of only one manufacturer and acquisition of new suppliers in Leading Competitive Countries (LCCs), especially in developing countries.

In addition, the Group is implementing audits and questionnaire surveys to assess the actual state of suppliers' CSR in order to recognize the suppliers' quality control/compliance structure, environmental conservation initiatives, etc. By encouraging improvement and sharing awareness, we will fulfill CSR as a unified force in the supply chain in the aspects such as respecting basic human rights, ensuring the health and safety of our workforce, complying with legal and social norms and ensuring environmentally conscious practices.

Working to Maintain Supplier Relationships Informed by Equitability and Communication

The Hitachi Chemical Group has formulated the Hitachi Chemical Procurement Policy and the Hitachi Chemical Guidelines for Procurement Activities as part of efforts to fulfill their CSR in the supply chain. Under these policies, the Group has been undertaking efforts to construct fair relationships with suppliers. Amid the growing importance of sustainable business practices and in order to deepen mutual communication with suppliers, in fiscal 2011 the Group created and published the Supply-Chain CSR Deployment Guidebook and Green Procurement Guidelines on its homepage. This guidebook and guidelines are handed out to new suppliers at the start of each trade to spread awareness.

The guidebook asks for suppliers’ support and cooperation in implementing the guidelines, which cover some topics such as working hours, wages and benefits, management of water usage, and other issues.

In addition, since fiscal 2010 the Group has been inviting some of its suppliers to its annual “Hitachi Partners Day (procurement policy briefing)," organized by Hitachi, Ltd. This initiative is designed to further deepen awareness and understanding of the Hitachi Group's procurement policy.

Strengthening Cooperation with Suppliers

The Hitachi Chemical Group works to enhance cooperation with its material suppliers by recognizing the risks that they face through periodic ISO monitoring and technical communication meetings. It enables the stable supplies of products to customers and consistent improvements in quality. We also implement comprehensive supply chain management (SCM) that includes activities ranging from briefing meetings, disclosing information business partners may need, and communicating via website aiming to support the establishment of environmental management systems. In this context, our business partners sometimes ideas on how to lower costs, for example by changing delivery specification or cutting logistic costs by making use of a consignment inventory services.

Additionally, the Green Procurement Guidelines request suppliers to cooperate in positively addressing environmental activities and reducing environmental load.

CSR-Based Procurement and Audits

The Group has distributed the "Supply-Chain CSR Deployment Guidebook" to roughly 400 of its major suppliers companies since fiscal 2014. In fiscal 2017, the Group has made substantial revisions to the Guidebook for the first time in three years and added Hitachi Group Human Rights Policy and Hitachi Group Conflict Minerals Procurement Policy to it. The Group will distribute the revised version to about 2,000 suppliers, who have ongoing business with Hitachi Chemical and continue to engage in activities aimed at enhancing their understanding of Hitachi Chemical’s views. Furthermore, our business units conduct audits of our suppliers every year in order to confirm that their system enable a stable supply of high-quality materials. In fiscal 2017, we audited 147 companies.

Number of supplier audits*
FY 2013 2014 2015 2016 2017
Companies 89 73 137 162 147


New Supplier Selection

When selecting a new supplier Hitachi Chemical conducts due diligence that includes examining the supplier from a CSR perspective as well as evaluating the price and quality of the product to be procured and checking the creditworthiness of the supplier. In all cases, the general manager of the procurement department checks the results. If there are irregularities, the trading with the supplier might be rejected. For the purpose of eliminating anti-social forces, Hitachi Chemical confirms whether the supplier has social credibility. It is the policy of Hitachi Chemical to refuse to conduct business with a supplier assessed to have no social credibility.

Approach to Conflict Minerals

In accordance with the Hitachi Chemical Procurement Policy and the Hitachi Group Conflict Minerals Procurement Policy, the Group tracks the supply chain back to determine the country of origin of the minerals used in accordance with our customers' request.

Section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted with the goal of cutting off sources of funding for armed insurgent groups that inflict serious human rights abuses in the Democratic Republic of the Congo and neighboring regions. Hitachi Chemical believes that the intent of this law should be observed and will continue to respond sincerely to any requests for investigations.

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