Supply Management Policies and Systems

Supply Management Policies and Systems

• Supply Management Policies and Systems - Overview

  Kyocera International, Inc. (KII) has an established its Supply Management Policies to ensure that transactions with our business associates and suppliers are carried out fairly, transparently and in line with all legal requirements. The KII Supply Management Team works together with all business associates and suppliers to implement fair business practices.
  
  

  The Management Rationale of the Kyocera Corporation and KII is: "To provide opportunities for the material and intellectual growth of all our employees, and through our joint efforts, contribute to the advancement of society and humankind." We aim to realize this rationale by committing ourselves to the implementation of fair business activities in our supply chains. The Kyocera Corporation and KII believe that the mutual prosperity of the entire supply chain can only be realized if all companies in the chain work together to meet the demands of society. To this end, KII actively communicates with business partners and focuses on building partnerships based on mutual trust, ethics and the highest of business principles.
  
  

• Basic Supply Management Policy

  KII Supply Management will implement fair and transparent business policies, practices and processes that promote and support Kyocera's Corporate Philosophy and its Corporate Social Responsibilities (CSR) Guidelines, while also following all legal and governmental requirements. We will implement and adhere to programs and initiatives such as; KII's Code of Conduct, the RBA Code of Conduct, KII's Supplier Code of Conduct, KII's CSR Supplier Guidelines, Governmental FARs/DFARs Requirements, KII's Human Trafficking Policy, and Environmental Requirements such as REACH, RoHS, and Conflict Minerals.

  KII's Supply Management Team works to secure a stable supply of necessary raw materials and services along with continuous cost reductions that contribute to KII's profitability, while also resolving daily, tactical supply issues."
  
  

  Cost Reductions gained by Supply Management enable development of competitive products, leading to an increase of sales and profits.

  A stable supply of good and services, secured by all-around risk management, enables stable production, contributing to increased sales and profits for KII and its suppliers.

  Leadership and ownership for resolving multiple daily issues to accomplish the mission of Corporate Purchasing Group shall be performed by each member of Supply Management, keeping KII on track to meet or exceed its goals.
  
  

• Supplier Selection Policy

  We select our suppliers based on the following principles:

  • Understanding and embracing of KII's basic corporate philosophies.
  • Supplier's own corporate philosophies basically being in line with KII's.
  • Supplier must be appropriate and stable in terms of size and finances, aiming to continually improve its management, its technical capabilities and its manufacturing performance.
  • Supplier must have overall excellence in quality, price, delivery time, and service responsiveness.
  • Supplier be active in global environmental conservation activities and embracing KII's CSR Procurement Guidelines.
  • Supplier must accept and comply with KII's Code of Conduct for its suppliers.
    
    

  KII designates certain suppliers as Approved Suppliers and Critical Suppliers (referenced as Key Suppliers) and asks them to respond to a regular KII CSR survey which includes Labor, Environmental, Health and Safety, BCP, Conflict Minerals, Ethics and Supply Chain.
  
  

• Promoting CSR in the Supply Chain
  
  

  KII works together with its suppliers to promote CSR activities in order to fulfill our social responsibilities such as human rights, labor, and environmental protection. KII has established the KII CSR Procurement Guidelines to appropriately address important CSR issues throughout our supply chain, also including responsible mineral procurement, respect for human rights, and the formulation of a BCP for the prompt restoration and continuation of business operations in the event of a disaster. Based on these guidelines, we conduct regular surveys of our suppliers' CSR activities, including those of our overseas suppliers. We place a particular focus on human rights due diligence in accordance with the Kyocera Group Human Rights Policy.

  KII's Supply Chain CSR Guidelines can be found [here].
  
  

• KII Supply Chain Risk Evaluation
  
  

  KII performs a Risk Evaluation of its key suppliers on a regular basis. This evaluation includes a perspective and evaluation of their CSR replies in the follow areas; Labor, Environmental, Health and Safety, BCP, Conflict Minerals, Ethics and Supply Chain. Suppliers with poor scorings or no improvements in these categories are considered higher risk. After our review of the CSR Survey replies, we may provide feedback on the survey results to suppliers who we have been determined to be higher risk or those which are showing insufficient improvements. If we can ascertain the reasons behind the lack of effort are due to misunderstandings, we explain the CSR survey again and request that the supplier make improvements. We may also choose to disqualify that vendor.

  In addition, our Key Suppliers are also evaluated on these risk elements:
  
  

  1. Sole Source
  2. Single Sourced
  3. Financial Risk
  4. Capacity constraints
  5. Market Conditions
  6. Geographical/Geopolitical Risk
  7. No leverage
  8. M&A/New Management
  9. EOL
  10. Laws & Regulations
      
      

• KII Business Continuity Policy
  
  KII's BCP Policy is to require that its suppliers establish policies, programs and procedures for the swift restoration and restart of their business following any event that disrupts their supply of products or services. Developing a Business Continuity Plan is a vital business process that will aid in ensuring a continuous supply of products and/or services to KII and its suppliers' other customers. The main objective of our suppliers' BCP programs will be to increase the resilience of our suppliers' businesses which should also increase their long-term profitability and viability. Their BCP should also include the integration of any existing plans they may already have in place for crisis responses and IT recovery plans. We also require that our suppliers flow the requirement for a BCP down to their suppliers as well. KII will include survey questions in its CSR Survey on the status of its suppliers' BCP programs and the quality or existence of BCP Planning will affect our evaluation of our suppliers. KII will publish its expectation of BCP programs on its Supplier Information Website.
  
  

• The Need for Responsible Conflict Minerals Sourcing
  
  

  On 21 July 2010 the United States Congress enacted legislation that requires certain public companies to provide disclosures about the use of specified conflict minerals (Gold, Tin, Tantalum and Tungsten) emanating from the DRC (Democratic Republic of Congo) and nine adjoining countries (Covered Countries). Section 1502 of the Dodd-Frank Act is intended to make transparent the financial interests that support armed groups in the DRC area. By requiring companies using conflict minerals in their products to disclose the source of such minerals, the law is aimed at dissuading companies from continuing to engage in trade that supports regional conflicts. Section 1502 is applicable to all US Securities and Exchange Commission (SEC) "issuers" (including foreign issuers) that manufacture or contract to manufacture products where "conflict minerals are necessary to the functionality or production" of the product. The Act requires companies to verify and disclose their sources of Gold, Tin, Tantalum, and Tungsten.
  
  

  KII's ceramic packages frequently use gold plating for circuit-pattern forming and connection terminals. Additionally, tin is required for soldering. Furthermore, tantalum is used in capacitors to increase the storage capacity, and tungsten is used in printed circuits.
  
  

  KII will continue to work with our suppliers to build a strong supply chain, for example, by having them contact us as soon as they become aware of a smelter's involvement in a dispute. In addition, Kyocera Corporation is a member of JEITA's "Smelter Support Team" and they continue to encourage smelters to obtain certification directly.
  
  

• The Conflict Minerals Sourcing Policy

  It is KII's policy not to purchase conflict minerals (Gold, Tin, Tantalum, Tungsten and Cobalt) that serve as a source of funding to armed groups or any other materials or products made using metals that pose a risk to human rights. KII will work with an industry recognized survey agency to conduct its annual surveys using the current CMRT or EMRT form and will be compliant with the OECD Due Diligence Guidance and the Dodd-Frank Act. KII will also utilize its resources within the Kyocera Corporation Supply Management group to support us in these efforts as required.