Engagement with Major Business Partners
Cooperative Initiatives to Improve QCD
In addition to the annual QCD (quality, cost, and delivery) assessment, Fuji Xerox enhanced its assessment methods by introducing a mutual consensus assessment in fiscal 2006; by adding CSR/green procurement to assessment items in fiscal 2007; and by adding assessments of suppliers' management initiatives in fiscal 2011.The mutual consensus assessment is a system whereby our business partners conduct their own self-evaluation of their operations alongside assessments by Fuji Xerox. The system seeks to achieve mutual consensus assessments - that is, to resolve discrepancies between the two perspectives through discussion, with the goal of reaching accord on assessment scores. Based on this system, we strengthen ties to premier partners selected from suppliers with high assessment scores. Each April, we explain our management policies to our business partners and certify premier partners.
In addition to giving premier partners priority for parts orders submitted for new products, we ask premier partners to work with us to improve quality, cost, and delivery times, along with joint efforts in CSR/green procurement. This is intended to achieve mutual growth, as a group of true partners. Suppliers not certified as premier partners can strive to achieve such certification by undertaking improvement activities as partners.
Through such efforts, we seek to achieve continuing improvements in supplier QCD (quality, cost, and delivery) and to strengthen CSR/green procurement.
Both in logistics and in purchases, including purchases of paper and production materials, Fuji Xerox and its partners are committed to ethical procurement that accounts for all the societal implications posed by the supply chain, including the environment, human rights, and the labor environment.
To promote ethical procurement, we first hold briefing sessions to share information on the objectives of these activities, then ask suppliers to perform self-assessments on ethical procurement issues. Based on analyses of the results, we draw up improvement action plans alongside our business partners and provide support for improvement efforts. This approach helps ensure that ethical procurement practices take firm root and continue to improve at all our business partners.
Based on the Electronic Industry Citizenship Coalition (EICC) Code of Conduct Note 1, the Self-Checklist consists of 263 items covering three areas: the environment (74 items), human rights and labor (147 items), and business ethics (42 items).
The items are classified into four levels to clearly indicate their relative importance and priority rankings to our respondents.
As part of efforts to achieve ethical procurement better suited to each business area, we have also prepared separate CSR Self-Checklists for materials supply and product logistics.
- Items related to laws and ordinances (highest importance):
Areas in which noncompliance would likely threaten the Company's business or survival or result in an order to suspend operations from regulators or government authorities
- Items related to laws and ordinances (high importance):
Areas in which noncompliance would likely result in strong warnings or notices from regulators or government authorities or social sanctions, such as consumer boycotts
- Items related to laws and ordinances (medium importance):
Areas in which noncompliance may result in warnings or notices from regulators or government authorities and that pose the risk of damage or other impact to Company management, even if resolved
- Other items:
Items not enshrined in laws or ordinances but are required by society
- Note 1 Electronic Industry Citizenship Coalition (EICC) Code of Conduct: a code of conduct drawn up by Dell, Hewlett-Packard, and IBM in 2004 to promote appropriate business management in areas such as labor, health and safety, the environment, ethics, and management systems.
Ethical Procurement in Production Materials
Since fiscal 2009, the compliance rate for the highest-priority requirements as specified in the CSR Self-Checklist (57 items) has consistently remained above the 90% target figure. For this reason, while requesting self-assessments by new suppliers, we have shifted to the policy of asking long-standing suppliers to submit only improvement action plans for problems identified during the previous fiscal year.
To achieve compliance rates of 90% or higher for the highest-priority requirements in the CSR Self-Checklist (57 items) at all suppliers, we also enhanced supplier management training through continuing supplier assessment visits in Japan and China by teams of experts from Fuji Xerox (Human Resources, Legal, CSR, and Procurement departments). We are also continuing efforts launched in Japan in fiscal 2011 to gather information on positive case studies as CSR judgment criteria and best practices, as selected by the teams of experts on the onsite visits.
While these efforts succeeded in achieving the target compliance rate for this fiscal year, the rate fell slightly, from 95.6% in fiscal 2011 to 93.8% last year. We believe this is attributable to the relatively lower rates among new suppliers compared to long-time suppliers, pointing to a need for focused improvements in the future.
In response to the finding that the checklist responses of some of our suppliers in China differ significantly from actual practices and to the resulting need to quickly assess conditions, procurement personnel in China with basic CSR training performed on-site status checks of all business sites operated by our suppliers in China. Teams of experts are currently visiting suppliers where procurement personnel have identified problems to consult with the suppliers and to achieve thorough improvement measures.
Furthermore, we applied the lessons learned from the time it took to ascertain the status of suppliers damaged by the Great East Japan Earthquake and flooding in Thailand in reviewing our business continuity plan (BCP). In doing this, we adopted a system of identifying the locations of our suppliers and production facilities of parts used in each product on a global map to pinpoint supplier locations worldwide.
CSR Activities in Logistics
In the area of logistics, Fuji Xerox has been working together with Fujifilm Logistics Co., Ltd., to which Fuji Xerox subcontracts some of its operations, to promote CSR activities at the companies that handle our logistics. In fiscal 2012, all subject business partners in Japan performed self-assessments. Striving to achieve a compliance rate of 90% or higher on the 100 highest-priority requirements, we engaged in various follow-up activities, including visits to specific sites and sharing of best practices. All (100%) business partners achieved the target rate, up from 98.4% in fiscal 2011. After confirming that efforts have taken firm root in Japan, we had first-tier logistics partners responsible for handling hub logistics in the Asia-Pacific region (at the China-Singapore hub and China-Australia hub) perform self-assessments. Based on issues discussed and shared in subsequent one-on-one meetings and support for improvement activities, 75% of subject sites achieved a compliance rate of 90% or better.
In addition to establishing dependable domestic programs in Japan, we plan to expand self-assessments in overseas logistics, starting with international logistics hubs in the Asia-Pacific region.
- For details, please see Ongoing Initiatives - Promoting Ethical Procurement.
- Please also see Main CSR Indicators.
In Response to the Conflict Minerals Issue
Our policy is to avoid business activities that support conflicts or human rights abuses, whether directly or indirectly. In response to the issue of conflict minerals Note 1, the mining of which represents a leading cause of conflict and human rights abuses, we began preparing to assess the origins of minerals in fiscal 2012 to make it possible to respond to requests from customers, as required under the final rules adopted by the U.S. Securities and Exchange Commission pursuant to Article 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In fiscal 2013, we plan to move forward with research on mineral origins and request our partners to initiate corrective action in cases where use of conflict minerals is confirmed.
- Note 1 Minerals considered problematic due to human rights violations at mining sites or unethical actions supported by funds earned from mining.
Procurement Aimed at Local Development
At Fuji Xerox, we aim not only to promote fair, impartial procurement with our partners, but to contribute to the local economy in China in areas where our production bases are located and to pursue optimal quality and prices. Our procurement plans include increasing the local procurement rate of raw materials and parts. At the same time, however, we have been careful not to hastily transfer overseas some of our technologies and the production of certain parts. Instead, these parts are produced at and procured from the Japanese production sites of our business partners.
In fiscal 2012, efforts to advance the shift of parts procurement to China boosted the local procurement rate in China to 60.6% (from 60.3% in fiscal 2011). In the future as well, we will deploy appropriate local procurement activities while seeking to increase local content rates, thereby contributing to economic growth in locations around the world where we engage in business, including Vietnam where we are currently developing a new production facility.