TAIYO YUDEN

Activities on Procurement

Introduction

In recent years, socially conscious course of action based on high ethical standards is demanded in global business activity. In response to this demand, Taiyo Yuden Group is promoting the Corporate Social Responsibility (CSR) activities under the CSR Charter "To win the trust and goodwill of society, the TAIYO YUDEN Group will respect human rights, keep abreast of and comply with laws and international rules and regulations, and take a socially conscious course of action based on high ethical standards".

In this document, the concept of CSR procurement in Taiyo Yuden Group is indicated in "2. Taiyo Yuden Group Policy" and the minimum requirements for our supplier to comply with the code of conducts are indicated in "3. Request to Our Supplier".

As a member of Taiyo Yuden Group, we are requesting our suppliers to support and to enforce the CSR procurement practice in all the business activities.
Please submit the attached document "Agreement on CSR Procurement" to us with a signature of authorized representative.

Taiyo Yuden Group Policy

Global Procurement

Taiyo Yuden Group shall procure the parts, material, technology, information and services most suitable for our products needs from the suppliers in the world.

Fair Trade

Opportunity to have business with Taiyo Yuden Group is open to suppliers in the world based on equal and fair standard.
Compliance with the laws and the ethics shall be applied to the procurement activities of Taiyo Yuden Group.

Mutual Trust/CSR

Taiyo Yuden Group shall actively practice the CSR management in procurement activities and further establish sound partnership to build mutual trust and development.

Material Procurement Policy

  1. Provide Fair and Equal Opportunity / Fair Procurement
    Fair procurement will be practiced based on ethics. Taiyo Yuden Group will sincerely respond to a company who wishes to establish business partnership with us. Fair evaluation standard will be applied to the rating of the supplier evaluation. If the company fails to have business as a result of the evaluation, its reasons shall be disclosed upon request to the possible extent.
    Moreover,
  2. Specification of the Procurement information
    Procurement policy, procurement principle, registration process of the new supplier and various processes from purchase order to payment and corresponding contact persons are clearly indicated.
  3. Master Purchase Agreement / Control of Confidential Information
    Taiyo Yuden Group shall conduct procurement based on written contract and strictly controls and manage the information acquired during the business transactions in accordance with the written contract.
  4. Compliance with the Law
    Taiyo Yuden Group shall comply with laws and regulations related to procurement.
    Unlawful acts such as intentional setting of an unfavorable negotiation with specific suppliers to their disadvantage, abuse of dominant bargaining position and other unreasonable restraint of trade or any suspicious acts shall not be conducted.
  5. Environmental Conservation/Preservation
    Taiyo Yuden Group shall promote "Green Procurement" in the procurement of the parts, materials and services to respect environmental conservation viewpoint.

Request to Our Suppliers

Taiyo Yuden Group CSR Charter

Taiyo Yuden Group has established a charter related to Corporate Social Responsibility (CSR Charter) and the CSR Code of Conduct, a specific code of conduct for the employees of Taiyo Yuden Group to abide by.
Our suppliers are requested to check the Taiyo Yuden Group CSR charter/ CSR code of conduct and to support our practice.

Compliance with the EICC ® Code of Conduct

Our Suppliers will comply with the Electronic Industry Citizenship Coalition ® Code of conduct in all the business activities.
This is to request the compliance with the EICC ® Code of conduct in your supply chain (at least your primary supplier) and to check the current compliance status.
We are asking for all suppliers to comply with the EICC ® Code of conduct and to create the management system to promote continuous improvements.

Compliance with Laws and Regulations

We request our suppliers to comply with the laws and regulations and the social norms of the country and the area where supplier conducts its business ("Regulations").
Followings are the list of some major Regulations.

  1. Labor related laws, health and safety related laws, environment related laws, laws related to subcontractors, Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, laws related to intellectual property, export and import security related laws, laws related to protection and disclosure of the information, laws related to product safety, laws related to elimination of the anti-social force, and the company laws.
  2. Regulations to prohibit the child labor and the forced labor and to protect the freely chosen employment.
  3. Regulations related to maintaining the work environment free from maltreatment, harassment and inhumane treatment.
  4. Regulations related to prohibit racial and sexual discrimination, and honor dignity of individual employees.
  5. Regulations related to maintain safe and clean work environment.
  6. Regulations related to the prevention, control and an emergency response to work-related accidents and work-related illness.
  7. Regulations to prohibit the corruption and unfair trading.
  8. Regulation related to detecting and preventing the wrongful acts through the application of the system.
  9. Regulations to eliminate the relation with the anti-social force (individual/group).
  10. Regulations to respect the freedom of the employee association.

For the compliance with the Regulations of the items above, suppliers will establish internal rules accordingly: The information shall be disseminated to all employees. If the need for a meeting with employees and/or a labor union arises, suppliers will correspond to it accordingly.

Conflict Minerals*1: US Dodd-Frank Wall Street Reform and Consumer Protection Act

In accordance with the purport of Article 1502 of Dodd-Frank Wall Street Reform and Consumer Protection Act, Taiyo Yuden Group shall aim "Conflict-free" procurement. Also, we request all suppliers to understand our policy, to cooperate with survey on procurement and to procure from refiners/smelters that are either participants of Conflict-Free Smelters & Refiners' Program established by CFSI*2 or certified smelter by other internationally recognized frameworks to assure that company does not take any part in procurement of conflict-minerals.
We shall disclose its survey results*3 to our customers.

Conflict Minerals *1: Gold, Tantalum, Tungsten and Tin
CFSI *2: Conflict-Free Sourcing Initiative
Survey results *3: Survey result by "CFSI's Conflict Minerals Reporting Template

Declaration regarding the conflict minerals in Taiyo Yuden Group is stated in our website.
Dealing with Conflict Minerals

Prohibition of Retaliatory Act

Supplier will create and maintain a communication process to allow employees to freely address their concerns on promoting CSR activities without fear of reprisal.

Information Management

  1. The provided information to the supplier from Taiyo Yuden Group contains confidential information. Suppliers will ensure to handle the provided information with appropriate precautions to prevent the confidential information from leaking.
  2. Ensure the security measure on defense against the threat to computer network security.
  3. Handling of personal information related to the business must be secured under the privacy and information security laws and regulation.

Promotion of Sound Business Management and Disclosure of Information

  1. To build a business partnership with Taiyo Yuden, it is necessary to promote sound business management. All transactions made in the operation must be transparent and the entry to the financial book and record shall be recorded correctly.
  2. Suppliers will provide us with accurate information on the procured material of the supplier and disclose information in accordance with the laws and regulations. (e.g. Conflict minerals, REACH, Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc. and custom clearance etc.)
  3. Suppliers will disclose the information regarding the business condition (Financial Report, etc) and the business outline on regular basis to us.

Export Control

We may export Materials delivered from our suppliers to various Taiyo Yuden Group companies.
In order to comply with applicable Foreign Exchange and Foreign Trade Act ("Foreign Exchange Act"), we will arrange classification under Foreign Exchange Act and obtain necessary permission of governmental agency, if so required.

If Materials delivered from our suppliers need classification under Ordinance of the Ministry Specifying Goods and Technologies Pursuant to Provisions of the Appended Table 1 of the Export Control Order, Ordinance of the Ministry Specifying Goods and Technologies Pursuant to Provisions of the Appended Table 2 of the Export Control Order, Appended Table of the Foreign Exchange Order, or Export Administration Regulation of USA (EAR) for products or product utilizing technology of USA, suppliers shall so inform us, regardless weather Material falls under the categories of "Applicable" or "Non-Applicable".
If Material falls under the category of "Applicable", suppliers shall submit data designated by us, including but not limited to, Non-Application Certificate and parameter sheet.

Environmental Preservation

Suppliers will take an initiative to promote the Environmental Preservation activities and Environmental Management to supply Materials with a consideration towards environment.

  1. Cooperation for environmental conservation activities compliant with "ISO14001"
    Taiyo Yuden Group consolidated management system and obtained international standard "ISO14001". And Taiyo Yuden Group works to environmental conservation activities based upon a consensus among Group. Taiyo Yuden Group requests suppliers to consolidate management system compliant with "ISO14001" and to promote environmental conservation activities.
  2. Request for Cooperation in Green Procurement
    One of the most important purposes in Taiyo Yuden Group’s environmental conservation activity is to promote “Environmental Friendly Products”. To attain this, we must procure the materials and parts, or anything in the production process to have lower environmental impact.
    Therefore, Taiyo Yuden Group has policy to procure Materials with lower environmental impact preferentially from suppliers with high environmental consciousness.
    In relation to the Material procurement in Taiyo Yuden Group, “Green Purchase Standard’ is established separately to indicate the minimum items for suppliers to comply with.
    Supplier will check and comply with the content of the Green Purchase Standard.
    Moreover, suppliers will submit the required documents on the Materials supplied to Taiyo Yuden Group in accordance with the Green Purchase Standard.
  3. Chemical Substance Management of the Materials
    Some of the Materials procured from our supplier or Taiyo Yuden Group’s product which contains the portion of the Material are sometimes exported from procured county by Taiyo Yuden Group. Supplier will comply with the regulation on the chemical substance management in the country of origin and export destination.
    If necessary, supplier will conduct following matters.
    Attachment of GHS Label in a language of export destination.
    Checking of new and existing chemical substance control list of hazardous material and submission of the [new certification of non-inclusion of hazardous material] in country of the export destination.
    For the custom requirement of the country of export destination, provide the CAS No. with MSDS or the certification of the non-use of the banned substance.
  4. Biological Diversity
    Suppliers will consider the biological diversity in business activities, such as conservation of resources, energy and re-forestation activities.

Establishment of Stable Supply System

Suppliers will provide us with a plan, system and its structure to achieve the business continuity activity against calamity or accidents.
In case the supplier is affected by the calamity or accident, such a situation will not only affect the supplier but Taiyo Yuden Group, its client and its stakeholders.
Suppliers will establish contingency plan in preparation of calamity such as earthquake, flood and other pandemics. Suppliers will indicate the estimated damage and its restoration plan, downsizing the affected risk etc.

Optimum Quality

Suppliers will create a quality control system in order to comply with the quality assurance provisions indicated in Master Purchase Agreement.

  1. Promote IATF16949(TS16949) quality control level
    Taiyo Yuden Group is implementing quality activities which aim for IATF16949(TS16949) level quality control system. Suppliers will promote quality control with the same target as well.
  2. Basic Requirements for suppliers
    Establish quality policy and target and, enforce it to all departments.
    Select Quality Assurance representative and notify information on the selected person to Taiyo Yuden.
    Clarify and standardized the product standards, work procedures, etc. and implement these thoroughly within the company.
    Create QC process diagram appropriately.
    Establish control items for material supplier and outsourcing company, conduct regular audit and purchase materials with stable quality and supply.
    Implement process quality control such as 5S thoroughly and conduct quality control education to employees.
    Establish a mechanism that prevents discharge of Non Conformities. Implement receiving, intermediate and shipment inspection accurately.
    Inspection and test devices that need calibration must be calibrated accurately and regularly and those devices that are within the effective period must be used.
    Establish mechanism for prompt notification to concerned departments and prompt countermeasure and investigation on the causes of Non Conformities.
    If there will be changes on the production site and 5M (material, machine, method, man and measurement) of Materials, supplier will file change request beforehand using the format specified by Taiyo Yuden and obtain prior approval from Taiyo Yuden.

Request on Business entertainment and Gifts

Business entertainment and Gifts that supplier provides to Taiyo Yuden Group shall be within the bounds of socially accepted limits.

Audit and Self-check

There may be cases that process audit for supplier will be conducted by Taiyo Yuden's QA department for material process control and delivery compliance. Taiyo Yuden may also conduct audit supplier's office and production site and request submission of self-check sheet designated by Procurement Department of Taiyo Yuden in order to check supplier's performance on CSR and business continuity.
In this regard, supplier will understand the necessity of audit and cooperate with the audit.