Supply Chain
Basic Approach
Procurement Policy
To ensure the stable provision of safe and high-quality products and services to our customers, we consider our suppliers to be important partners. Our production activities are supported by collaboration with many business partners around the world, including raw material manufacturers, parts manufacturers, logistics companies, and sales-related businesses. We adhere to the principle of good faith and sincerity as a fundamental principle of our business transactions and aim to establish a division of production based on mutual trust with our suppliers.
Open, Fair, and Transparent Business Transactions
In selecting suppliers, we provide fair and equitable opportunities for participation, regardless of nationality, company size, or prior business relationship. Our selection process comprehensively evaluates suppliers based on quality, delivery time, cost, and technical capabilities, as well as their commitment to continuous improvement, their response to environmental and social issues, their ability to ensure stable supply, and their sustainability initiatives.
Coexistence and Co-prosperity Based on Mutual Trust
Through close, two-way communication with our suppliers, we share necessary information and build relationships of mutual trust. Based on this trust, we work together as partners to strengthen competitiveness and achieve mutual growth, thereby promoting coexistence and co-prosperity.
Partnership Building Declaration
In March 2024, we issued and published the "Partnership Building Declaration," declaring our commitment to focusing on fair business practices. Based on this declaration, we promote mutual prosperity with our suppliers, enhance added value throughout the entire supply chain, and ensure fair business practices.
Promoting Green Procurement
Based on our "Green Procurement Guidelines," we promote the provision of products and services with minimal environmental impact. We require our suppliers to manage prohibited and restricted substances, reduce greenhouse gas emissions such as CO2emissions, promote resource recycling, including waste, conserve water, and protect biodiversity.
Initiatives
Sustainable Procurement
Guidelines for Suppliers
We have established the "Supplier Sustainability Guidelines" and "Green Procurement Guidelines" to promote sustainable procurement with our suppliers. When entering into contracts with new suppliers, we provide both guidelines and explain our initiatives for environmental conservation and addressing social issues. We begin business transactions after requesting that suppliers implement similar initiatives not only within their own companies but also upstream in their supply chains.
Supplier Sustainability Guidelines
The "Supplier Sustainability Guidelines" outlines the basic compliance requirements for suppliers in order to promote sustainability initiatives throughout the entire supply chain of the automotive industry. These guidelines set out requirements covering our corporate philosophy, sustainability policy, basic procurement policy, contribution to a sustainable society, compliance, human rights and labor, local and global communities, risk management, compliance with the guidelines, and evaluation.
Requests Concerning Human Rights and Labor
We ask our suppliers to promote and embed human rights initiatives and education throughout their organizations. Specifically, we are requesting them to implement the following nine measures: ① elimination of discrimination, ② prohibition of human rights violations and harassment and protection of whistleblowers, ③ prohibition of child labor, ④ prohibition of forced labor, ⑤ fair wages and benefits, ⑥ working hours in accordance with the law, ⑦ freedom of dialogue and consultation with employees and freedom of association, ⑧ ensuring a safe and healthy working environment, and ⑨ realization of diverse working styles.
Anti-Bribery in the Supply Chain
To promote fair and transparent business and procurement practices, we require our suppliers to take measures to prevent corruption. We request that suppliers comply with the laws and regulations of each country and region when making political donations or contributions and maintain transparent and fair relationships with political and administrative bodies. We also require them to refrain from giving or receiving entertainment, gifts, money, or other benefits for the purpose of illicit transactions.
Responsible Sourcing of Resources and Raw Materials
We promote procurement activities that take into consideration the impact on local communities caused by the use of raw materials that may contribute to social issues such as human rights and environmental problems. Regarding conflict minerals *1, since 2013, we have been conducting annual surveys of their use by tracing back through domestic and international suppliers and their supply chains, in line with the activities of our customers and the Japan Auto Parts Industries Association. We also conduct surveys on extended minerals *2.
- Conflict minerals
These four minerals—tin, tantalum, tungsten, and gold—are mined in the Democratic Republic of Congo and surrounding countries in Africa and serve as a source of funding for armed groups. They are commonly known as "3TG" (Tin, Tantalum, Tungsten, Gold). - Extended minerals
The six additional minerals, excluding conflict minerals, are cobalt, natural mica, copper, natural graphite, lithium, and nickel.
Green Procurement Guidelines
To promote environmental conservation activities throughout the entire supply chain, we have established "Green Procurement Guidelines" and continuously revise them in accordance with changes in domestic and international environmental regulations. These guidelines specify concrete environmental requirements for suppliers, including compliance with laws and regulations, establishment and maintenance of environmental management systems, management of chemical substances contained in products, reduction of greenhouse gas emissions, resource recycling, water resource conservation, and biodiversity conservation.
Addressing Companies Without External Environmental Management System Certification
We request suppliers that have not obtained external certification for their environmental management systems * to conduct self-audits of their environmental initiatives and evaluate the results. We request corrective actions and improvements where necessary and encourage suppliers to progressively enhance their environmental management systems toward obtaining external certification.
* ISO14001, KES, Eco Stage, Eco Action 21, etc.
Management of Chemical Substances in Products
At our annual procurement policy briefing, we communicate our requirements for green procurement. In addition, based on customer requirements, we conduct ongoing surveys to determine whether products contain specific substances such as phthalates and PFOA.
Supplier Evaluation
Supply Chain Overview and Evaluation Scope
In fiscal 2025, we had purchasing transactions with approximately 220 direct suppliers of primary materials and approximately 620 suppliers in total, including suppliers of auxiliary materials.
Safety, Health, and Environmental Assessment for New Suppliers
Before commencing business with a new supplier, we evaluate its safety, health, and environmental practices and confirm that it meets our required standards.
Sustainability Self-Assessment
Every year, our suppliers are required to conduct self-assessments based on our "Supplier Sustainability Guidelines," covering areas such as legal compliance, respect for human rights, occupational safety and health, environmental protection, and corruption prevention. The results are then provided as feedback to each supplier. We also evaluate their anti-corruption efforts, including compliance with applicable laws regarding political contributions and donations and the prevention of entertainment, gifts, or other benefits intended to facilitate improper transactions. Through these evaluations, we share each supplier's strengths and areas for improvement and work to enhance sustainability across the entire supply chain.
Risk assessment
Basic Policy for Risk Management
In addition to natural disasters and fires, we promote risk management and strengthen BCP (Business Continuity Planning) across the entire supply chain to address various risks that could disrupt the stable procurement of purchased goods, including infectious diseases, geopolitical risks, terrorism, and cyberattacks. We also work to mitigate potential risks identified through supplier evaluations and audits by implementing improvement activities.
Stable Procurement through Multiple Sourcing
To ensure a stable supply of purchased goods, we have secured multiple suppliers for each item, and we are working to reduce the risk of supply disruptions.
Supplier Risk Assessment
To ensure stable supply, we regularly assess supplier-related supply risks. We trace supply chains to understand production systems and risk information, and evaluate natural disaster risks and business continuity risks to enhance the resilience of the entire supply chain. Based on the evaluation results, we work with suppliers identified as requiring priority action to implement measures to reduce risks and promote improvement activities.
Natural Disaster Risk Assessment
We verify the location of production sites, the seismic resistance status of buildings and production equipment, the implementation status of flood control measures, information on alternative production sites in case of emergency, and emergency contact systems. We also conduct natural disaster risk assessments based on the expected maximum seismic intensity and flood depth. For suppliers identified as being at high risk, we urge them to implement countermeasures.
Business Continuity Risk Assessment
In addition to the status of production sites and equipment, we regularly assess factors that may affect our suppliers' business continuity, including their management conditions, the availability of successors, and equipment aging. If a supplier is identified as being at high risk, we share the issues through dialogue with the supplier and promote improvement activities to ensure stable supply.
Audit and On-site Verification
Safety, Hygiene, Environment, and Sustainability Audit
We regularly visit our suppliers to conduct on-site audits of their safety, hygiene, environmental, and sustainability practices and provide guidance for improvement when deficiencies are identified. In fiscal 2025, we conducted audits of six suppliers and worked with them to achieve further improvements.
Quality Audit
We conduct quality audits targeting suppliers with specialized processes and companies that have not yet obtained IATF 16949 certification. We plan to conduct quality audits at least once every five years for approximately 150 companies. In fiscal year 2025, we conducted quality audits for 26 companies. The audits verify important quality assurance items, including quality management systems, compliance with quality standards, process control, change control, equipment management, measuring instrument management, training, and handling of abnormal occurrences.
Tier 2 Supplier Management
We are working to strengthen our quality assurance system not only for primary suppliers but also throughout the supply chain beyond them. For primary suppliers certified to IATF 16949 or ISO 9001, we ask them to conduct audits of their Tier 2 suppliers using a quality system audit sheet, and we review and approve the results. We also conduct audits ourselves as necessary to strengthen quality management throughout the supply chain, including upstream processes.
Raw Material Quality Control
We have established quality standards for raw materials used by both us and our suppliers. Raw material manufacturers prepare test (inspection) reports for each manufacturing lot, and our receiving inspection personnel review the reports to confirm compliance with our standards. If the standards are not met, we require the raw material manufacturer to take corrective action.
Support and Collaboration with Suppliers
Request for Improvement / Follow-Up
For suppliers whose issues are identified during evaluations or audits, we request the development of corrective action plans and regularly monitor their progress until improvements are completed. We conduct re-evaluations and on-site inspections as needed, and encourage continuous improvement through dialogue and support.
Compliance
Based on relevant laws and regulations, the "Guidelines for Fair Trade in the Automotive Industry" formulated by the Ministry of Economy, Trade and Industry, our "Supplier Sustainability Guidelines," and our "Green Procurement Guidelines," we promote fair and honest procurement activities. We ensure that every employee engaged in procurement activities conducts procurement fairly and honestly in accordance with the "EXEDY Code of Conduct."
Compliance Matters under the Basic Transaction Agreement
Our basic agreements with suppliers include provisions regarding "environmental protection," "resource conservation," and "exclusion of anti-social forces," and we strive to build sustainable and fair trading relationships.
Management of Hospitality and Gifts
To ensure fair and transparent business and procurement practices, employees are, in principle, required to decline hospitality and gifts from business partners. When circumstances make acceptance unavoidable, employees must report the matter to their supervisors and executives, and we ensure that all such cases are handled transparently.
Supplier Support Desk
To ensure fair and transparent transactions, we have established a consultation service for suppliers. Suppliers can consult with us or report any violations of laws and regulations, unethical conduct, inappropriate trading practices, or other compliance concerns in their transactions with us. This consultation service is included in the "Transaction Manual" distributed to suppliers and is widely publicized.
Fair Trade Education
We provide education and awareness training to employees engaged in procurement activities on relevant laws and regulations, internal rules, and codes of conduct. We also participate in sustainability workshops hosted by our customers to deepen our understanding of social issues. Furthermore, we take e-learning courses organized by the Ministry of Economy, Trade and Industry and the Small and Medium Enterprise Agency to raise awareness of fair trade practices, including the Procurement Act, among our employees and employees of our affiliated companies. We also participate in fair trade promotion seminars hosted by various organizations.
Procurement Policy Briefing
Every May, we hold a procurement policy briefing for key suppliers to share priority initiatives and expectations based on our medium- to long-term strategy. The procurement department provides information on risk trends and regulatory changes related to safety, the environment, BCP (Business Continuity Planning), and sustainability, and encourages appropriate responses. In addition, the Quality Assurance Department supports suppliers in enhancing their quality assurance capabilities and preventing quality risks by communicating quality policies and priority issues, sharing defect cases, reviewing measures taken in response to past problems, and promoting the use of recurrence prevention tools.
The procurement policy briefing for fiscal 2026 was attended by suppliers representing approximately 90% of our total procurement value.
Mutual Improvement and Human Resource Development Support
With the aim of improving the skills of our suppliers and strengthening their corporate structure, we provide human resource development support to our key suppliers. We have established a system to accept them into our in-house training institution, "Global EXEDY Technical School," in accordance with their needs.
Furthermore, with the aim of improving the technical skills of each individual and acquiring the ability to take on more challenging tasks, we regularly hold the "EXEDY Olympics." The competitions include those aimed at improving safety awareness and technical skills in areas such as forklift operation and mold changing, as well as competitions aimed at acquiring accurate and speedy measurement skills. Not only our employees but also our suppliers participate in these competitions.
Supporting Skill Development through Information Sharing
We share information with our suppliers on quality, safety, and environmental initiatives, including examples of quality issues, measures to prevent workplace accidents, cybersecurity, the latest legal and regulatory developments, and best practices for reducing greenhouse gas emissions. Through these efforts, we aim to enhance quality, safety, environmental, and compliance capabilities across the entire supply chain. We also invite suppliers to seminars on fair trade practices to promote understanding and implementation.