Sustainable Procurement Measures
Basic Policy
Alps Alpine engages in procurement activities with around 1,300 suppliers worldwide. We work alongside suppliers in each region to improve sustainability within the supply chain.
At business policy briefings for suppliers, we ask suppliers to cooperate with CSR assessments, environmental checks, responsible minerals sourcing checks and BCP checks, and we work with suppliers to ensure responsible procurement activities.
Overview of the Supply Chain
The status of Alps Alpine’s supply chain is as follows. (As of March 2024)
Standards for Selecting New Suppliers
Basic business agreements entered when commencing business with a new supplier cover the basic requirements, such as quality, product safety, delivery and cost, as well as sustainability-related matters like legal compliance, human rights and labor, environmental protection, health and safety, and business continuity planning. We conduct fair comparisons and evaluations before settling on the best suppliers as considered from a global perspective.
At the same time, we request implementation of a CSR self-assessment referencing the Alps Alpine Responsible Corporate Action Guidelines. Suppliers related to electronic components business are additionally assessed according to our Green Procurement Standards. This involves an environmental evaluation to assess their environmental efforts and an evaluation of parts and materials to confirm that supplied items do not contain substances specifically prohibited by Alps Alpine.
<Prerequisites>
| Environmental and quality risks |
|
|---|---|
| Social risk assessment |
|
| Economic risk assessment |
|
Selection of Key Suppliers
Alps Alpine selects key suppliers after evaluation on a five-point scale looking at the size of the business in terms of value, as well as quality, cost, delivery and service. In fiscal 2023, we selected 171 companies (representing approx. 75% of transaction value) as key suppliers.
<Selection Criteria>
| Quality (Q) | Problem occurrence and response to problem occurrence |
|---|---|
| Cost (C) | Cost appropriateness, including in terms of cash conversion cycle (CCC) |
| Delivery (D) | Meeting of deadlines during normal operation and adjustment of deadlines in emergencies |
| Service (S) | Presentation of advanced technology proposals and cooperation with surveys (e.g. ESG, BCP) |
CSR Assessments
To check compliance with the Alps Alpine Responsible Corporate Action Guidelines, we ask our main suppliers to perform a self-assessment looking at areas such as human rights and labor affairs, health and safety, the environment, fair trade and ethics, information security, and business continuity planning. Scores are ranked S, A, B, or C. Improvements by suppliers ranked B or lower need to be confirmed using corrective action request sheets. We also ask prospective new suppliers to complete a self-assessment during the selection process.
FY2023 CSR Assessment Results
In fiscal 2023, all suppliers ranked B or higher. No suppliers were found to be of high risk. We followed up on improvements made by the two B-ranked suppliers using corrective action request sheets. All seven new suppliers underwent assessments.
Coverage: Main suppliers (171 key suppliers for FY2023)
Response: 171 companies (100%)
| Rank | Assessment Score | Action | FY2022 | FY2023 |
|---|---|---|---|---|
| S | 100% | Have supplier maintain the current status | 44% | 43% |
| A | 85% or higher | 42% | 56% | |
| B | 70 - 84% | Have supplier make improvements using a corrective action request sheet | 6% | 1% |
| C | 70% or lower Or at least one important management criteria not achieved |
0% | 0% |
GHG Emissions Survey
Alps Alpine shares its approach to environmental matters with suppliers through the Alps Alpine Responsible Corporate Action Guidelines.
In fiscal 2022, we additionally started a GHG emissions survey with the cooperation of our suppliers. The aim is to reduce Scope 3 GHG emissions from Category 1 (Purchased Goods and Services), which accounts for the largest portion of Scope 3 emissions.
In fiscal 2023, we prepared a simplified calculation sheet and conducted a survey of our 171 main suppliers. We also provided suppliers assistance with calculation.
Promotion of Green Procurement
Alps Alpine engages in green procurement – procurement of parts and materials containing no hazardous substances – to be able to provide environmentally friendly products to customers. We do this through a set of Green Procurement Standards that we apply in our procurement activities. Suppliers related to electronic components business additionally undergo an environmental evaluation to assess their environmental efforts and an evaluation of parts and materials to confirm that supplied items do not contain substances specifically prohibited by Alps Alpine. In fiscal 2023, we certified the conformance of an additional 32 suppliers.
The Green Procurement Standards are revised annually to reflect applicable legislative, regulatory or other changes. Annual reviews of materials and parts manufacturing bases are also carried out as part of ongoing improvements.
Whenever changes are made to the Green Procurement Standards, information is shared with suppliers via the supplier portal.
| Selection criteria for green procurement | Selection criteria for suppliers (environmental evaluation criteria) – assessment of environmental efforts |
|---|---|
| Selection criteria for materials purchased (parts and materials evaluation criteria) – assessment of each material purchased |
Response to Procurement Risk
The Alps Alpine Group conducts procurement activities through international procurement offices (IPOs) set up at production bases in Japan, China, Korea, Malaysia, Mexico, Ireland, Germany, the Czech Republic, India, Thailand, and Hungary. Procurement entails obtaining the required volume of materials and parts, superior in quality, cost, delivery, and environmental performance, at the right time. It is therefore essential that we procure from suppliers we trust. The Alps Alpine Group puts a lot of effort into building trust-based relationships.
The supply chain is also affected by natural disasters, accidents, labor disputes, bankruptcies, and other occurrences, with extensive repercussions for not only procurement activities, but also other areas, such as logistics operations. The Alps Alpine Group regularly updates its supply chain database and is currently establishing structures for globally centralizing information and responding in a timely manner when procurement risks do eventuate.
Communication with Suppliers
Alps Alpine strives to strengthen partnerships with suppliers as we value coexistence and co-prosperity through trusting relationships. At business policy briefings we hold around the world (Japan, China, North America, and Europe), we ask suppliers for their support on purchasing policy and in dealing with procurement risks and sustainability issues. In fiscal 2023, we held a briefing in May attended by 215 people from 188 suppliers. Besides asking suppliers for ongoing cooperation on mineral surveys and CSR surveys, we communicated to suppliers the thinking behind our environmental checks, which began in fiscal 2023. Alps Alpine will continue efforts to strengthen cooperation with suppliers and together advance activities in the belief that sustainable procurement is not possible without supplier support.
Cooperation with Industry Groups
Alps Alpine agrees with the stance of the Japan Electronics and Information Technology Industries Association (JEITA) and has been participating in the activities of JEITA's Responsible Minerals Trade Working Group since its establishment. We also participate in JEITA’s Procurement Committee.
Buyer Training
To assist the implementation of responsible procurement activities in keeping with our Corporate Philosophy, Alps Alpine provides training for buyers who carry out the procurement activity. Training covers a variety of material, including our fundamental approach to corporate social responsibility, the social environment, and our basic policy on sustainable procurement. Around 200 people attended buyer training in March 2024.