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 practices and 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: Framework for promotion of supply chain management

Framework for promotion of supply chain management

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 Policies for Responsible Minerals Procurement

The Mitsubishi Electric Group aims for transparency in its supply chain to avoid any affiliation with armed groups that trade in conflict minerals*1 as their source of funding. We also recognize the possibilities of human rights violations occurring in the severe labor conditions in cobalt mining sites as a major problem. The Group adheres to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas*2, and removes certain minerals from the supply chain in situations where their procurement encourages or contributes to serious human rights violations or environmental destruction.

  1. *1 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.
  2. *2 (PDF. open new window)OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (PDF:1.6MB)

Report of survey results 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 (the Conflict Minerals Reporting Template (CMRT) or the Cobalt Reporting Template (CRT)) that is commonly used in the automobile, electric, and electronic industries. In fiscal 2019, surveys were carried out on approximately 1,200 suppliers, and responses were obtained from 83% 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. We also conduct opinion exchanges with NPOs regarding mineral procurement.

  1. *1 Conflict Minerals Reporting Template issued by the Responsible Minerals Initiative
  2. *2 Cobalt Reporting Template issued by the Responsible Minerals Initiative

Identification of smelting companies in FY2019 (No. of smelting companies identified: 4,600 companies)

Tin Tantalum Tungsten Gold
70% 73% 71% 74%

Of the smelting companies that have been identified, it was found that roughly 84% 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.

We have raised the following two points as the core activity objectives of fiscal 2020.

1. We will obtain the consent forms for the CSR Procurement Guidelines from suppliers that did not respond in the last fiscal year, as well as for applicable suppliers in fiscal 2019.

In fiscal 2018, we requested about one third of all suppliers to sign the consent forms based on the CSR Procurement Guidelines. For the suppliers that have not yet completed the signing for fiscal 2018, in addition to aiming to complete the signing, we will also seek to obtain signatures from suppliers for fiscal 2020.

2. Activities aimed at understanding and mitigating serious human rights risks in the supply chain (forced labor of foreign laborers, dangerous or hazardous labor, etc.)

In addition to the investigations in progress, we will use a check sheet we created to discern the existence of human rights violations, and conduct activities aimed toward mitigating those issues.

  • * 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.

Activity results

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 from fiscal 2019, we extended survey implementation to Europe and the U.S.

Responses to the Green Accreditation/CSR Procurement survey form (Mitsubishi Electric)

FY 2016 FY 2017 FY 2018 FY 2019
Existing suppliers 1,465 728 696 1,201
New suppliers 27 15 25 60(100% implementation rate)
Response rate 99.9% 100% 99.0% 96.0%
  • * Total number of suppliers: Approx. 10,000 companies (includes about 2,700 suppliers that were among the top 80% of purchases)
  • * We conducted surveys for all of the above suppliers (about 2,700 companies) in the three-year period between 2016 and 2018.
  • * The above figures include cases where the survey form was re-submitted following guidance for improvement.
  • * In FY 2019, there were no suppliers whose business relationship with the Mitsubishi Electric Group was canceled because of their evaluation results.

Responses to the Green Accreditation/CSR Procurement survey form (domestic and overseas affiliated companies of Mitsubishi Electric)

FY 2016 FY 2017 FY 2018 FY 2019
Surveyed suppliers 212 346 1,378 595
Response rate 100% 99.3% 94.0% 60.5%

Signatures for the CSR Procurement Guidelines consent forms in FY 2019

Mitsubishi Electric Domestic and overseas affiliated companies
Requested companies Approx. 1,400 companies Approx. 700 companies
Responses (rate) Approx. 1,280 companies (91%) Approx. 400 companies (57%)
Agreements (rate) Approx. 1,150 companies (82%) Approx. 400 companies (57%)
  • graph: FY 2019 rate of green accreditation certification among suppliers (Mitsubishi Electric)

    FY 2019 rate of green accreditation certification among suppliers (Mitsubishi Electric)

  • graph: FY 2019 results of green accreditation and CSR procurement surveys among suppliers (Mitsubishi Electric)

    FY 2019 results of green accreditation and CSR procurement surveys among suppliers (Mitsubishi Electric)

Number of suppliers given guidance in fiscal 2019 and the content of the guidance (Mitsubishi Electric)

Item No. of companies
given guidance
Number of completions Content of guidance
Environment 97 26 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 188 32 Encouraging secondary suppliers to take up CSR practices
  • 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. In order to gain the approval of suppliers to the Mitsubishi Group’s policies as demonstrated through these activities, we hold regular exchanges of views with our suppliers based on their responses to our Supplier Surveys. Suppliers are asked to further strengthen CSR initiatives at their companies as well.

Furthermore, we conduct support activities for Business Continuity Planning (BCP)*, as well as holding a variety of seminars, including those about changes  in chemical substance restrictions such as the EU RoHS Directive, and programs about compliance (including export control, information security and management, the Subcontract Act, etc.).

  • * 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.
Fiscal 2019 seminars
No. of participating companies
CSR procurement seminar Approx. 1,650 companies (including 400 overseas companies)
BCP reinforcement seminar 475 companies
Information session on chemical substance restrictions Approx. 800 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)

VOICE (Supplier)

photo: Satoshi Sawano

Satoshi Sawano,
Managing Director
Fuyo Astec Co. Ltd.

Before attending this seminar, I only had a vague idea of CSR as something a company engages in to contribute to society. After participating, I now understand that in recent years, these efforts are becoming legally required, and they do affect issues surrounding human rights and environmental problems in developing countries.
Specific checklist items were identified in the survey form, so we'd like to take this opportunity to concentrate our efforts going forward to heighten our awareness of CSR-related issues in our company, establish a comfortable working environment for all, and grow the company in ways that benefit society.

Strengthening Partnerships with Suppliers

photo: Award given by Mitsubishi Electric executives (Inazawa Works)

Award given by Mitsubishi Electric executives (Inazawa Works)

The Mitsubishi Electric Group engages in joint-development from the initial stages to the development of parts and materials, and works in partnership with suppliers to engage in VE activities with the aim of adopting advanced products, recycling resources, and reducing the consumption of materials.
Through these activities, 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. We also give awards to suppliers whose achievements are especially significant.

Mitsubishi Electric proactively conducts this activity to suppliers not only in Japan but also overseas, including in the UK, US, China, Thailand, Indonesia, Mexico, India, and Colombia. We also promote internal human resource development, such as by conferring an instructor's certificate on those who have taken a written test and participated in the VE program in VE lectures, and demonstrate a certain level of knowledge.

  • 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