Social

Supply Chain Management

Basic Policy

The Mitsubishi Electric Group ensures fair and impartial selection and evaluation of business partners in Japan and overseas by providing an explanation of the Group's Purchasing Policy and CSR Procurement Policy, and requesting business partners' understanding of these policies. By ensuring proper evaluation of suppliers based on selection and evaluation criteria established by the Group, risks are also mitigated along the supply chain.

The Group’s criteria for evaluating business partners include not only quality, cost, delivery schedules and services, but also initiatives in response to environmental regulations and CSR initiatives. As a basic policy, the Group preferentially procures materials from suppliers who rank high in a comprehensive evaluation.

Our Purchasing Philosophy

Mitsubishi Electric purchases a wide variety of materials and components from both Japanese and overseas markets. We recognize our corporate responsibility and are eager to provide business opportunities for the communities in which we operate.

1. Easy Access and Equal Opportunity

To guarantee our customers the highest-quality products, we are constantly searching for new suppliers. We encourage business partners from all over the world, regardless of size, to contact us about submitting a quotation. The decision to embark on a new business relationship is made after careful consideration of three major factors: product price, product quality, and delivery performance. To ensure continued high quality and efficiency, we periodically review our relationships with our partners.

2. Mutual Prosperity

We believe in long-term relationships built upon understanding and trust. This will allow the participation of our business partners during the product development stage, paving the way for mutual prosperity.

3. Ecological Soundness

We are interested in the materials and manufacturing processes used by our suppliers. Because we value the environment, we buy only ecologically sound products. Our mission is to satisfy the needs of people around the globe. To meet their growing expectations, we must widen and strengthen our affiliations with companies all over the world. We are seeking cooperation, not just business, and are looking for potential partners who are willing to join us in our drive toward global prosperity.

CSR Procurement Policy

We carry out material procurement activities in line with our "CSR Procurement Policy," which was established in 2007.

We have also established the CSR Procurement Guidelines in 2018 to widely disseminate Mitsubishi Electric’s CSR policies and matters for compliance by our business partners. Going forward, approaches will be made to all business partners to verify their agreement to promote procurement activities in line with the guidelines.

  1. Compliance with domestic and foreign laws/regulations and social standards
    1. Ensuring compliance with laws and regulation
    2. Respecting human rights and prohibiting discrimination, child labor, and forced labor
    3. Creating proper work environments and giving consideration to safety and health
  2. Assurance of quality and safety of products and services
  3. Environmental considerations
    1. Procuring materials with less negative impact on the environment
    2. Ensuring strict management of harmful chemical substances based on an environmental management system
  4. Promotion of fair trade based on corporate ethics
    1. Practicing honest trade on fair and equal footing, based on laws/regulations and agreements
    2. Ensuring strict management and safeguarding of information by establishing an information security system
    3. Thorough elimination of fraudulence, bribery, and other such conduct that violates corporate ethics

Framework for Promotion of Supply Chain Management

The Mitsubishi Electric Group launched the WΣ21II (Worldwide Strategic Integration for Global Markets in the 21st Century Advance to the Next Stage)* activity in April 2017, and is promoting optimal procurement activities suited to each region through the Materials Planning Office. The Materials Planning Office was established in collaboration among regional corporate offices in China, Asia, Europe and Americas to implement purchasing strategies through conferences of procurement officers and other such meetings. Accompanying this initiative, the supply chain has also expanded to various countries where the Group operates, so initiatives are also pursued to mitigate any perceived risks regarding a range of issues related to labor laws and regulations, and to environmental problems.

  • * WΣ21II: An initiative by the Corporate Purchasing Division toward achieving sales of 5 trillion yen and an operating profit of 8% or more by 2020
  1. Duration: Three years from 4/1/2017 to 3/31/2020
  2. Priority activities
    1. Progress of cost-planning activities toward the achievement of target costs
    2. Strengthening of the competitiveness of product models in cooperation with suppliers
    3. Promotion of optimal regional procurement throughout the world
    4. Strengthening of supply chain management
    5. Construction of a platform for supporting relevant activities and measures
diagram: The Supply Chain of the Mitsubishi Electric Group

The supply chain of the Mitsubishi Electric Group

graph: Local procurement rate in the major regions (Mitsubishi Electric Group)

Local procurement rate in the major regions (Mitsubishi Electric Group)

  1. *1 Local procurement rate: Materials, parts, etc. (regardless of country of origin) that are procured by overseas production sites at their own discretion
  2. *2 Local production ratio: Among all locally procured items, the procurement ratio of items produced in the country of the overseas site
  3. *3 Foreign origin: Among all locally procured items, the procurement ratio of items produced in countries other than the country of the overseas site

Mitsubishi Electric Group Initiatives for Responsible Minerals Procurement

The Mitsubishi Electric Group views such issues as environmental destruction and the abuse of human rights by armed groups in the Democratic Republic of Congo and its neighboring countries as issues of the utmost concern. As transactions of conflict minerals* are said to fund these armed groups, we are implementing measures to ensure the transparency of our supply chain so that we do not encourage or become complicit in such issues in any way, and to promote responsible mineral procurement.

  • * Conflict minerals refers to gold, tin, tantalum, tungsten, and other minerals that have been determined by the U.S. State Department to be a source of support for armed groups when mined in the countries referred to above.

Survey of restrictions on conflict minerals

Mitsubishi Electric takes part in the Responsible Minerals Trade Working Group of the Japan Electronics and Information Technology Industries Association (JEITA), and addresses restrictions on conflict minerals in cooperation with other industry organizations. Surveys are conducted using the survey form (EICC-GeSI* conflict mineral report template) that is commonly used in the automobile, electric, and electronic industries. In fiscal 2018, surveys were carried out on approximately 1,000 suppliers, and responses were obtained from 95% of these suppliers. In addition to requesting suppliers to collect accurate information on smelting companies, various other measures will continue to be implemented in order to comply with the restrictions on conflict minerals.

  • * EICC: Electronic Industry Citizenship Coalition
    GeSI: Global e-Sustainability Initiative

Identification of smelting companies in FY2018 (No. of smelting companies identified: 12,000 companies)

Tin Tantalum Tungsten Gold
57% 63% 61% 61%

Of the smelting companies that have been identified, it was found that roughly 75% handle conflict-free minerals.

Strengthening CSR Initiatives along the Supply Chain

Initiatives to address environmental issues

Since 2006, the Mitsubishi Electric Group has been evaluating the progress of suppliers’ initiatives to address environmental issues under the Green Accreditation System. Based on the Green Procurement Standards Guide and using an original survey form, the System involves a survey of each supplier’s progress in acquiring environmental management system certification, the supplier’s status of compliance with laws and regulations related to the environment, and its management of chemical substances contained in components and materials they deliver to our company. Under the System, suppliers who meet our standards are certified.
We ultimately minimize environmental risks by properly evaluating the progress of our suppliers’ environmental initiatives under this System, and by providing advice on any corrections that should be made by suppliers who do not meet the certification standards.

Initiatives to address social issues

From 2009, the status of CSR initiatives has been included in the survey items, and a survey is also made of issues such as human rights, labor practices, safety and health, legal compliance, and product safety. Furthermore, the CSR Procurement Guidelines were established in 2018 based on international standards; the Guidelines contain the RBA Code of Conduct (Version 6.0) that was formulated and announced by the Responsible Business Alliance, and the Supply Chain CSR Promotion Guidebook issued by JEITA’s Materials Committee. To verify our suppliers’ commitment to promoting the content of the guidelines, a consent form is attached to the last page of the guidelines.

  • * The Mitsubishi Electric Group’s Green Procurement Standards Guide and CSR Procurement Guidelines are provided below. These documents are reviewed as appropriate in response to changes in laws, regulations and social norms.

Requests to Suppliers

Suppliers to the Mitsubishi Electric Group are requested to gain an understanding of the Group’s Purchasing Policy and CSR Procurement Policy, and to disseminate these policies to their supply chain. They are especially requested to thoroughly comply with the points below, which the Group has identified as priority issues to be addressed through the entire supply chain. Additionally, new suppliers are asked to submit their agreement to comply with the CSR Procurement Guidelines and a completed survey form upon reading and understanding the guidelines.

For details, please refer to each of our guidelines (Green Procurement Standards Guide, CSR Procurement Guidelines).

1. Compliance with laws, regulations and social norms

Please comply with laws and regulations in countries and regions where you engage in business, as well as with international agreements, transaction ethics, and social norms.
(Elimination of corrupt practices such as bribery, embezzlement, and illegal political contributions; compliance with relevant laws and regulations, including the Antimonopoly Act, Subcontractor Act, and Foreign Exchange Act; prohibition of the illegal acquisition and utilization of intellectual property; proper information disclosure; execution of faithful transactions based on contracts, etc.)

2. Respect for human rights

Please respect basic human rights in countries and regions where you engage in business.
(Prohibition of inhumane treatment like forced labor, child labor, abusive treatment, human trafficking, and harassment; prohibition of all forms of discrimination; proper payment of wages; proper management of working hours; respect for the right to organize, etc.)

3. Consideration for health and safety

Please give due consideration to health and safety in all countries and regions where you engage in business.
(Safety measures for machines and devices; evaluation and measures against the occurrence of accident and health hazard risks; preventive measures against large-scale disasters and accidents, etc.)

4. Environmental considerations

Please take measures to provide products and services that place minimum burden on the environment.
(Acquisition, maintenance and management of environmental management system certification; compliance with environmental laws and regulations; proper management of chemical substances in products, etc.)

5. Product and service quality and safety

Please take measures to ensure the quality and safety of products and services you provide.
(Design, evaluation and testing for ensuring safety; compliance with laws and regulations related to safety; construction, maintenance and management of quality management systems, etc.)

6. Security measures for information systems

Please take appropriate measures to protect against computer network threats.
(Construction of prevention measures against computer viruses and cyberattacks; prevention of information leakage through proper management of confidential information and personal information, etc.)

Evaluation status of suppliers' initiatives to address CSR issues

Basic policy of supplier surveys

The Mitsubishi Electric Group verifies the progress of suppliers’ initiatives to respond to the requirements outlined in the Green Procurement Standards Guide and CSR Procurement Guidelines by requesting principal suppliers who fall within the top 80% in terms of purchase amounts to complete a survey form (prior to commencing transactions in the case of new transactions and at certain intervals in the case of ongoing transactions (every three years, as a rule)). In response to our suppliers’ replies to these surveys, we provide feedback about the results of the evaluation. We also communicate with suppliers who have scored low in any one of the survey items, to request the necessary corrections. This is done through individual meetings and other such means. The survey form has been revised in 2018 following the formulation of the CSR Procurement Guidelines.

Record of evaluation activities

From 2006, the evaluation covered domestic suppliers only. However, the range was expanded in fiscal 2018 to include overseas suppliers also. The fiscal 2018 survey placed priority on the China and Thailand region, but going forward, survey will be implemented in sequence in other regions as well. Particular efforts will be made to extend the survey to suppliers in Europe and the U.S. in fiscal 2019.

Responses to the Green Accreditation/CSR Procurement survey form (Mitsubishi Electric Group)
(Only the Green Accreditation survey was conducted from 2006 to 2008. CSR items were added to the survey in 2009.)

2006 2,656 companies
2007 1,390 companies
2008 534 companies
2009 1,932 companies
2010 954 companies
2011 929 companies
2012 1,395 companies
2013 771 companies
2014 675 companies
2015 1,704 companies
2016 1,062 companies
2017 1,178 companies (incl. approx. 400 overseas companies)
  • * Total number of suppliers: Approx. 25,000 companies (FY2018)
  • * Survey rate for new suppliers: 100% (FY2018)
  • * The above figures include cases where the survey form was re-submitted following guidance for improvement.
  • * In FY2018, there were no suppliers whose business relationship with the Mitsubishi Electric Group was canceled because of their evaluation results.
  • graph: FY2018 rate of green accreditation certification among suppliers (Mitsubishi Electric Group)

    FY2018 rate of green accreditation certification among suppliers (Mitsubishi Electric Group)

  • graph: FY2018 results of supplier surveys on green accreditation/CSR procurement

    FY2018 results of supplier surveys on green accreditation/CSR procurement

Number of suppliers given guidance in fiscal 2018 and the content of the guidance

Item No. of companies
given guidance
Content of guidance
Environment 11 Further strengthening of initiatives for the restriction of chemical substances in products (particularly in response to the revised RoHS2 Directive)
Human rights, labor practices, safety and health 15 Improvement of the management of working hours, correction of dangerous areas, strengthening of safety measures for machines and devices
  • photo: Providing safety guidance during an onsite inspection of a supplier's company overseas

    Providing safety guidance during an onsite inspection of a supplier's company (overseas)

  • photo: Providing safety guidance during an onsite inspection of a supplier's company in Japan

    Providing safety guidance during an onsite inspection of a supplier's company (in Japan)

Communication with Suppliers

photo: Exchange of views with suppliers

Exchange of views with suppliers

At each office, the Mitsubishi Electric Group holds seminars that disseminate a full understanding of the Group's Purchasing Policy and CSR Procurement Policy among suppliers. Through these initiatives, suppliers are asked to concur with the policies and strengthen CSR initiatives at their companies as well.
In fiscal 2018, as before, we held a variety of seminars for our suppliers, including BCP* seminars, seminars to disseminate an understanding of changes in chemical substance restrictions such as the EU RoHS Directive, and compliance programs (export control, information security and management, the Subcontract Act, etc.). Direct exchanges of views are also held with our suppliers in regard to matters outlined in the supplier survey form. In these ways, we will maintain close communication with our suppliers and continue to organize seminars that promote further CSR initiatives.

  • * BCP (business continuity planning): Being prepared for any disaster or other emergency situation by planning how to minimize damage to the company and how to continue or restore business activities.

The Mitsubishi Electric Group believes it is important to provide an understanding of the Group's policies to overseas suppliers as well, and thus holds CSR seminars and other relevant seminars in overseas sites.

Fiscal 2018 seminars
No. of site No. of participating companies
CSR seminar 24 (In Japan) Approx. 1,800 companies (Overseas) 243 companies
BCP seminar (anti-earthquake and disaster mitigation measures) 13 Approx. 400 companies
Information session on chemical substance restrictions 19 Approx. 5,000 companies
  • * The number of companies is the cumulative total number of companies.
  • photo: Seminars for suppliers held at each office (Communication Systems Center)

    Seminars for suppliers held at each office (Communication Systems Center)

  • photo: Seminars for suppliers held at each office (Power Distribution Systems Center)

    Seminars for suppliers held at each office (Power Distribution Systems Center)

  • photo: Seminars for suppliers held at each office (Thailand Region)

    Seminars for suppliers held at each office (Thailand region)

Strengthening Partnerships with Key Suppliers

Recognizing the importance of building a favorable business relationship with our business partners from a medium-term perspective, we preferentially procure materials and components from suppliers who have acquired high overall scores in a supplier selection evaluation. Suppliers who play a particularly important role in promoting our business are regarded as "key suppliers." With key suppliers of parts that influence product performance and parts that require advanced technological capabilities, we build a partnership and together engage in activities for creating cost (cost co-creation activities), such as by pursuing their joint development from the initial development stages, adopting advanced products, and promoting value engineering (VE)*.

Through these initiatives, we reduce the input of materials and minimize environmental burden by making products more compact and lightweight, and build a win-win relationship that leads to increased sales and enhanced technology capabilities for both Mitsubishi Electric and our partners.

The cost co-creation activities that Mitsubishi Electric has thus pursued with our key suppliers from the initial stages of product development have produced significant results since fiscal 2004, giving us reason to actively continue the initiative.

We also recognize the need to promote initiatives to strengthen our competitiveness alongside our suppliers not only in Japan but also overseas, including in Europe, the Americas, China, and other Asian countries, in terms of cost, quality, and delivery time. To strengthen these initiatives, we actively organize presentations on VE case examples and VE lectures overseas (UK, US, China, Thailand, Indonesia, Mexico, India, Colombia, etc.). We also promote human resource development, such as by conferring an instructor's certificate on those who have taken a writing test and VE program and demonstrate a certain level of knowledge.

Based on the awareness that it is essential to also build partnerships with outstanding suppliers overseas, in fiscal 2017 we established a system for awarding suppliers who have made particular achievements in terms of price, quality, and delivery time, as part of our ongoing initiatives for creating good relationships with our suppliers.

  • * VE (value engineering): a method in which the minimum cost that is required to achieve a product's essential functions is pursued from the initial parts stage.
  • photo: VE lecture in the Southeast Asia region (Indonesia)

    VE lecture in the Southeast Asia region (Indonesia)

  • photo: VE lecture in the Southeast Asia region (India)

    VE lecture in the Southeast Asia region (India)

  • photo: Presenting an award to a supplier in the Southeast Asia region (Malaysia)

    Presenting an award to a supplier
    in the Southeast Asia region (Malaysia)

  • photo: Meeting with a supplier in the China region

    Meeting with a supplier in the China region

Providing Learning Programs on Procurement Laws and Regulations

The Mitsubishi Electric Group offers various learning programs on laws and regulations related to the operations of employees in charge of procurement activities. In Japan for example, our course on materials procurement laws provides guidance and education for thorough compliance with laws and regulations that particularly pertain to procurement activities, such as the Anti-Monopoly Act, the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, and the Construction Contractors Law. Guidance and education are also provided overseas. Based on the Code of Conduct and check sheets, learning programs strictly teach employees not to become involved in bribery, embezzlement, or any other form of action that goes against the principle of fair trade. Compliance education related to procurement is also held for local employees in charge of procurement operations overseas.

To further strengthen CSR initiatives (particularly along our supply chain), we are making greater efforts to share information on activities implemented by each office as well as instructional information, such as by holding Review Meetings for CSR Promotion in the Supply Chain and providing CSR education to employees in procurement departments.

  • photo: Compliance education related to procurement in the Thailand region

    Compliance education related to procurement in the Thailand region

  • photo: Review Meeting for CSR Promotion in the Supply Chain

    Review Meeting for CSR Promotion in the Supply Chain