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Engagement with Major Suppliers

Cooperative Initiatives to Improve QCD

Fuji Xerox is cooperating with its business partners for the continuous improvement of QCD (quality, cost, and delivery) and the enhancement of green procurement at the partners' sites.

Mutual Consensus Assessment

In addition to the annual QCD assessment, Fuji Xerox enhanced its assessment methods by introducing a mutual consensus assessment in fiscal 2006; by adding CSR/green procurement in fiscal 2007 and adding the cooperation of the supplier management team with Fuji Xerox's procurement activities to the assessment items 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 an agreement on assessment scores. This system is thus designed to give assessments in a manner that is more acceptable to our business partners and encourage them to voluntarily make improvements in reference to the assessment results.

Selection of Premier Partners

We select premier partners from among suppliers who achieved high scores in the mutual consensus assessment, thereby strengthening partnership with the suppliers. Each April, we explain our management policies to our business partners and certify premier partners.
In addition to giving premier partners priority for orders of parts 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 in the next fiscal year by undertaking improvement activities as partners.

Our Approach to Ethical Procurement

Tools to Support Ethical Procurement

Fuji Xerox requests its business partners to conduct CSR activities voluntarily for the environment, human rights and labor, and business ethics issues, for which we have prepared the Management Guideline and the CSR Self-Checklist. The Management Guideline describes the social background, including the related laws, regulations and international standards, the level of measures to be taken for the issues, and specific examples, and the CSR Self-Checklist is used by our business partners to check the measures they are implementing.

Image of the Management Guideline and CSR Self-Checklist The Management Guideline and CSR Self-Checklist

Specific Measures for Ethical Procurement

Fuji Xerox is implementing measures for ethical procurement for production materials, products logistics, and indirect–materials.

Chart of Ratio of Suppliers with Compliance on "very important" items Ratio of Suppliers with Compliance rate of 90% or higher on "very important" items

Ethical Procurement in Production Materials

In recent years, companies (production plants) have been more strictly required to fulfill their CSR. In response, we annually revise the CSR Self-Checklist for production materials to align them with these stricter requirements.

Fuji Xerox sets a target for all of its suppliers to achieve a compliance rate of 90% or higher for the highest-priority requirements as specified in the CSR Self-Checklist, encouraging them to make more efforts to promote sustainability.

In fiscal 2014, the percentage of suppliers with a CSR Self-Checklist compliance rate of 90% or higher dropped. This seems to have ensued from the latest full revision of the Self-Checklist, aligned with EICC, which has become stricter, and from the increase in the number of plants that started to produce parts for Fuji Xerox in ASEAN countries, including Vietnam, and other regions.

In fiscal 2015 we worked to promote suppliers' understanding of the requirements and enhance our support for their improvement activities, but the percentage of suppliers with a compliance rate of 90% or higher remained at the same level as in the previous fiscal year.

We will continue to help our suppliers to make improvements by sharing good examples with the partners through seminars and other opportunities, with a view to increasing the percentage of suppliers with a compliance rate of 90% or higher.

CSR Activities in the Product Logistics

In Japan, 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. As a result of follow-up visits to specific sites and the sharing of best practices, all the companies (100% of the companies) achieved the target (Self-Checklist compliance rate of 90% or higher) in fiscal 2015 as in the previous fiscal year. Moreover in fiscal 2015, we selected 11 partners from among the first tier partners that subcontracted some of their operations to other companies, asked these second-tier partners to do simplified CSR self-check, and collected the results from all of them via the first-tier partners. In addition, we began conducting ethical procurement activities targeting 41 partners engaged in the collection and transportation of industrial waste across Japan.

Overseas, 62 out of 63 partner companies (98.4% of the total) achieved the targeted Self-Checklist compliance rate of 90% or higher in fiscal 2015.

In addition we strengthened efforts in the Asia-Pacific region and visited some of our partners in China to check whether their self-check results matched the actual situation on a trial basis.

Further, we expanded our CSR activities to partner companies in loading ports and those engaging in physical distribution for overseas OEM customers. 100% of the partners achieved the targeted Self-Checklist compliance rate of 90% of higher.

We will continue to support the improvement activities of the partner companies to further promote ethical procurement.

Ethical Procurement for Indirect-Materials

Fuji Xerox has been fostering ethical CSR procurement giving priority to suppliers who are important for its production activities and business continuity.

In fiscal 2015, suppliers of indirect-materials in China conducted the self-assessments and worked to make improvements based on the results in addition to those in Japan and Vietnam. The percentage of suppliers with a Self-Checklist compliance rate of 90% or higher increased to 81.6%, up 10.2 percentage points from the previous fiscal year level.

We will continue to support the improvement activities of our suppliers in consideration of their industry-specific challenges, thereby further promoting ethical procurement.

Specific measures to deal with challenges

Practical seminars held for suppliers on the themes of the environment, occupational health and safety, and labor management

CSR Activities in Logistics

In Japan, 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. As a result of follow-up visits to specific sites and the sharing of best practices, all the companies (100% of the companies) achieved the targeted compliance rate again in fiscal 2015 as in the previous fiscal year. In fiscal 2015, we selected 11 partners from among the first tier partners that subcontracted some of their operations to other companies, asked these second-tier partners to do simplified CSR self-check, and collected the results from all of them via the first-tier partners. In addition, we began conducting ethical procurement activities targeting 41 partners engaged in the collection and transportation of industrial waste across Japan.

Outside Japan, we strengthened efforts in the Asia and Pacific region, and visited some of our partners in China to check whether their self-check results matched the actual situation on a trial basis In fiscal 2015, 62 out of 63 partner companies (98% of the total) achieved the targeted compliance rate of 90% or higher.

Moreover in fiscal 2015, we expanded our CSR activities to partner companies in loading ports and those engaging in physical distribution for overseas OEM customers and 100% of the partners achieved the target (compliance rate of 90% of higher). In fiscal 2016 we will further increase the compliance rate by giving advice to help the partners to make further improvements.

Responsible Paper Procurement

For more details, please see "Engagement with the Global Environment."

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 mineralsNote 1, the mining of which represents a leading cause of conflict and human rights abuses, we conducted research and confirmed that there were no conflict mineral issues in our supply chain. The result has been reported to our OEM customers since 2013 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 2015, the response rate to the partner survey was 97.3%, and the rate of smelters with dispute-free certificationNote 2 in our supply chain was 69%. In fiscal 2016, we will strive to improve the survey response rate to 95% or higher and improve data accuracy in order to further respond to customer requests.

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 Japan and abroad, 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.
We will deploy appropriate local procurement activities while seeking to increase local content rates, thereby contributing to economic growth in the regions where we have production sites.