The Sumitomo Electric Group considers procurement to be a “service that supports the foundation of its business activities,” and in 2006, established Basic Procurement Policies. Based on mutual trust and cooperation with our business partners, we are operating procurement activities that are fair, equitable, focused on friendly to the global environment. In 2010, to further promote our commitment to CSR in our procurement activities, we established the Sumitomo Electric Group CSR Procurement Guidelines based on the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior.

Today, there is a call from society for companies to take even more specific action to address such issues as respect for human rights and global warming. With this background, we established the Sumitomo Electric Group Policy on Human Rights in 2019 and the Supplier Code of Conduct in 2021.

We have communicated these statements not only to our group companies, but also to our main suppliers, and have sought their understanding and cooperation for our procurement activities.

In Japan, we have set up the Group Procurement Collaboration Office in the Procurement Division. The office comprises staff in charge of procurement in 22 divisions and companies, including Sumitomo Electric’s production divisions and group companies, such as Sumitomo Riko Company Ltd. and Nissin Electric Co., Ltd. We ensure that the Basic Procurement Policies are thoroughly implemented and proceed with group-wide measures and activities based on the policies.

Overseas, we promote coordinated procurement on a regional basis under the initiative of the International Procurement Offices (IPOs) of the Procurement Division located in China, ASEAN and the United States.

BCP

The Sumitomo Electric Group is committed to the development and implementation of business continuity plans (BCPs) for procurement divisions, which prepare for large-scale disasters, outbreaks of infectious diseases and other emergency situations, to ensure a stable supply of products and services, and avoid adverse impacts on the production activities of our customers. The BCP for large-scale disasters assumes a situation in which our suppliers have suffered damage from a disaster with a suspension of the supply of vital materials. To minimize the impact of such suspension on our production activities and enable quick recovery, we promote initiatives for stable procurement including the consideration of alternative suppliers and products as well as replacement with commodity items. In addition, if a disaster occurs, we identify the extent of the damage in a prompt and accurate manner based on the information on the production sites registered in our system in advance, and thereby strive to minimize the impact. Meanwhile, the BCP for infectious diseases has been designed so that we can decide operational priorities and minimize the impact on our production even in the case of a considerable decrease in procurement staff available to work.

Commitment to Compliance

Needless to say, compliance is also more important than any procurement activities. It is particularly crucial to comply with the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (hereinafter the "Subcontract Act") in regard to appropriate dealings with subcontractors as well as the Customs Law in regard to appropriate payment of customs duties on items we directly import from overseas companies. In regard to these two priority issues, we annually organize training seminars, encourage self-examination, and provide tours for instructional purposes in our divisions and domestic affiliates so that our employees can gain expertise and ensure full compliance with procurement-related laws.

Education System

We annually organize procurement and outsourcing compliance training with the focus on procurement-related laws and regulations for all employees engaged in procurement-related operations. By doing so, we strive to establish and improve their awareness of compliance with laws and regulations.

In addition, to develop reliable procurement staff and hand down procurement ethics, knowledge and expertise, we provide all working-level staff in charge of procurement both in Japan and overseas with training programs essential for carrying out practical procurement operations. By utilizing the synergy resulting from the combination of systematic training programs featuring in-house experts on each theme and conventional OJT training programs, we strive to ensure that our procurement staff acquire expertise and further raise their awareness of compliance with laws and regulations.

CSR Procurement Survey for Suppliers

To proceed with CSR procurement, it is necessary not only to inform suppliers of the Basic Procurement Policies, the Policy on Human Rights, the Supplier Code of Conduct, and the CSR Procurement Guidelines, but also to check the progress in the penetration of these policies through self-assessment surveys of suppliers and to promote improvement activities in full coordination with suppliers.

In the Sumitomo Electric Group, we have surveyed more than 4,800 suppliers that represent 90% of the value of domestic procurement. We have also begun to survey suppliers of our overseas affiliates, mainly those in China and the ASEAN region, with the total number of surveyed companies reaching about 1,000. As a new initiative in fiscal 2022, in order to thoroughly disseminate “the Supplier Code of Conduct” established in fiscal 2021, we substantially revised the questions to be asked in the interviews in consideration of the latest topics based on the contents of the code of conduct. For example, more in-depth questions based on the human rights due diligence efforts carried out by the Human Resources Division have been added to the questions on “Human Rights and Considerations of Occupational Health and Safety” in the the CSR-based procurement self-assessment questionnaire. In addition, for “Contribution to Preservation of the Global Environment,” we added questions on GHG reduction targets. If a survey reveals that there is concern about a supplier in certain important aspects, such as compliance with laws and regulations, we will conduct an interview, on-site inspection, etc. with the relevant supplier and proceed with an improvement activity in unison with the supplier.
We will continue to expand our survey and improvement activities to our affiliates in Japan and overseas sites, with the aim of improving our CSR procurement levels.

CSR Training for Suppliers

To promote CSR procurement, it is necessary to ensure that our suppliers also fully understand CSR and make the necessary efforts in unison. For this reason, we provide training for domestic suppliers with an especially high sales ratio to the Sumitomo Electric Group in order to raise their awareness of CSR.

For training to suppliers, we intend to gradually expand the scope of the training targets and content.

Cooperation for Securing Product Quality and Safety.

(Encouraging Our Suppliers to Improve Their Product Quality)

Our group is engaged in several different fields of business, and the requirements for product quality vary depending on the product and customer. In the course of our production, we purchase a wide variety of products including raw materials, electronic parts, equipment and software, and therefore, the quality control of our purchases is very important for our business operation.
Although the requirements from our customers and expectations for our suppliers differ, our philosophy on product quality is basically the same. In this regard, we developed "Quality Control Guidelines for Suppliers (*)" in September 2010 to ask our suppliers for the quality assurance of their products. Based on ISO9001, the guidelines state our policies for the quality assurance of our purchases and the requirements for our suppliers.
Through cooperation with our suppliers, we will continue our efforts to secure product quality and safety.

Committed to Green Procurement

To promote environmentally friendly procurement activities, we have made efforts to eliminate banned substances from products and enhance control of other harmful substances contained in products, based on the SEI Guidelines for Green Quality Purchases. (*) In the future, we will develop a supplier assessment and selection system incorporating the level of environmental management as an indicator, and promote initiatives to contribute to preservation of the global environment through the joint efforts with suppliers.
Sumitomo Electric also introduced the ECO Factoring System in June 2009, developed in collaboration with Sumitomo Mitsui Banking Corporation. In this system, suppliers who meet our original criteria with regard to the environmental conservation activities are certified to be applied to a favorable interest rate when suppliers convert accounts receivable into cash before the due date. With this system, we encourage our suppliers to perform environmental conservation activities.

Sumitomo Electric Group’s Responsible Minerals Sourcing Initiative

The Sumitomo Electric Group, which is “Promoting compliance-based procurement activities” as stated in the Basic Procurement Policies, recognizes that risks listed in Annex II of the Organization for Economic Co-operation and Development (OECD) such as the matter of conflict minerals(*) illegally traded by armed groups in the Democratic Republic of the Congo and its neighboring countries, cobalt mining, which is feared to be the worst form of child labor, and human rights violations and labor issues in conflict areas and high-risk areas (CAHRAs) are among the serious social issues in the supply chain. To fulfil our social responsibility in procurement activities, we aim to realize “responsible minerals sourcing” involving such illegal or dishonest acts as raw materials. To this end, we investigate the supply chain on the use of conflict minerals involving such illegal or dishonest acts when necessary.
In the event that the use of minerals that may cause human rights issues and other types of social problems or serve as fund for armed groups is found, we will take measures to avoid their use.

In accordance with the principle of “Promoting procurement activities based on mutual trust and cooperation with suppliers” in the Basic Procurement Policies, we will ask suppliers to understand the approach of the Sumitomo Electric Group and cooperate with our investigation mentioned above. In case that the use of minerals of concern is found, the relevant suppliers will be requested to take measures to avoid their use as we do in the Group to cooperate with us to realize “responsible minerals sourcing.”

* the matter of conflict minerals :Issue in which the trade of tantalum, tungsten, tin, gold, or their derivatives produced in the Democratic Republic of the Congo and surrounding countries is a source of funding for armed groups carrying out serious human rights violations