Fair Dealing
Fundamental Procurement Policies
Basic Policies
Canon is enhancing its cooperative relationships with suppliers through implementation of the EQCD concept*1, which stipulates the timely delivery of high-quality products at reasonable prices to customers worldwide while taking the environment into consideration.
Accordingly, Canon has formulated and widely published its Procurement Policy, and is endeavoring to build good relations with suppliers by deepening their understanding of Canon's basic stance toward procurement.
In addition, Canon has promoted a policy of green procurement*2 since 1997. In keeping with our corporate philosophy of kyosei, we will continue to progress with this policy, giving due consideration to social as well as environmental issues as we carry out our procurement activities.
- *1The EQCD concept
This is Canon's basic product development policy.
"E" stands for environment: Companies are not qualified to manufacture goods if they are incapable of environmental assurance.
"Q" stands for quality: Companies are not qualified to market goods if they are incapable of providing quality products.
"C" and "D" stand for cost and delivery: Companies are not qualified to compete if they are incapable of meeting cost and delivery requirements.
- *2Green procurement
Favoring the procurement of materials and products that have a lower environmental burden.
【Procurement Policy】
Based on its corporate philosophy of kyosei, Canon, aiming to be a truly global company, strives to develop, manufacture and market useful products, boost profits, and achieve corporate growth and development, and thus contribute to the prosperity and well-being of the world.
The Procurement Division adopts a global perspective in purchasing quality, appropriately priced merchandise in a timely manner. This facilitates improvements in product quality and reductions in prices, and positions us to work with our suppliers to meet customer needs.
- 1.We comply with all applicable laws and regulations as well as corporate ethics, and operate in a manner that is protective of the environment.
- 2.We are open to any and all suppliers, and promote fair and free competition in accordance with the principles of faith and trust.
- 3.We improve manufacturing by mutual growth with reliable, quality suppliers, which are selected through a fair evaluation process.
Asking Suppliers to Fulfill Their Social Responsibilities
Canon strives to ensure that suppliers understand our procurement standards in order to be certain that social responsibilities are not only being fulfilled by Canon itself, but also throughout the supply chain. As part of this effort, we posted a page entitled Requests for Suppliers on our website in November 2009. This is a list of items concerning our suppliers' responsibilities in regard to the environment, human rights, labor, compliance, and other matters.
These requests and their purpose are explained to our suppliers at the procurement policy briefings held at locations around the world every year.
We will continue to pursue business across the entire supply chain that meets the expectations and fulfills the trust of society as we strengthen cooperative ties with our suppliers.
【Request for Suppliers】
- 1.Comply with all applicable laws and regulations. (human rights, labor, safety and health, and so on)
- 2.Contribute to the growth of society as a "good corporate citizen".
- 3.Promote fair, honest and highly transparent business, along with the implementation of corporate ethics by prohibiting the activity against corporate social responsibility, such as abuse of dominant position and eliminating antisocial forces.
- 4.Construct a production system considering environmental conservation by observing Canon Green Procurement Standards and promoting activities to reduce CO2 emissions, and so on.
- 5.Secure personal and customer information, and strictly manage the information obtained through business.
- 6.Promote persistent improvement in order to maintain strong financial standing for continuous business and a high level in quality, cost, delivery and technical aspects.
Addressing the Issue of Conflict Minerals
The term “conflict minerals” refers to certain minerals originating in the Democratic Republic of the Congo and adjoining countries in Africa, the profit from the trade of which, provided through the global supply chain, is alleged to be funding armed groups in that region. There is growing concern worldwide about the issue of conflict minerals. In the United States, for example, legislation has been enacted requiring publicly listed companies to disclose their usage of such minerals.
Canon began investigations into conflict minerals in 2010 and established a project team at its headquarters in 2011. In these ways, the Company is working to create a framework for responding to legal regulations and guidelines from international organizations. Seeking to ensure the peace of mind of our customers, the Company is working together with business partners and industry entities to identify the history of minerals used in its products with the aim of avoiding the use of conflict minerals.
Reinforcing Compliance in Procurement
In 2004, Canon established the Canon Group Procurement Code of Conduct to ensure fair and transparent business transactions with suppliers and strict compliance with laws and regulations on procurement from a global perspective. This code stipulates that employees of the procurement divisions of each Group company in Japan and overseas abide by the code's content, maintaining compliance with all applicable laws and ordinances at all times while upholding corporate ethics.
In 2007, Canon established a dedicated compliance department within its procurement division to maintain and enhance the fairness of business relationships through divisional self-audits and mutual audits among divisions. In 2008 we compiled a Procurement Ethics Reader, a collection of case studies intended to encourage compliance with the Procurement Code of Conduct. This was distributed to the employees of procurement divisions of each Group company in Japan and overseas, so as to strengthen awareness.
In addition to procurement division staff, departments related to suppliers are undertaking training on the Subcontracting Law. In 2009, we inaugurated an e-learning program, expanding the training environment to facilitate wider participation.
We are also developing procurement ethics promotion activities at our global sites in China and elsewhere. We are improving trade transparency by conducting procurement ethics inspections based on cooperation between the procurement and business operations.
Partnership with Suppliers
Development of Procurement Information Infrastructure
Canon aims to rationalize and boost the efficiency of its business and that of its suppliers through the introduction of electronic ordering systems and electronic quotation systems, which digitalize the formerly paper-based work of ordering and cost estimation.
The electronic ordering system provides order information, such as delivery dates, volumes, and unit prices to suppliers. Starting by incorporating production materials procurement into the system, we completed the introduction of an electronic ordering system for all production sites in Japan in 2006 and our overseas production sites in 2009. Introduction and expansion of an electronic ordering system for indirect materials was begun in 2008, with installation completed at all sites in Japan in 2009. We have installed these systems upon the establishment of new sites since then.
Through the electronic quotation system we send diagrams and other such materials to the supplier and receive quotes (unit prices). Installation of this system was complete at 27 domestic and overseas sites as of the end of 2011, with installation planned at one overseas and one domestic site in 2012.
We are currently proceeding with the development and adoption of a Global General Commodity Purchasing System, which will consolidate the business process, including overseas sites. This will replace the existing electronic ordering system for indirect materials, which is specialized for domestic transactions only. We will begin installation of this system at domestic sites in 2013, and at overseas sites in 2014.
Cooperative Activities with Suppliers
Canon holds regular business trend briefings and procurement policy briefings for suppliers at its operational sites and manufacturing Group companies to gain their understanding of the Company's business plans and procurement policies. These activities also promote cooperation with suppliers.
These briefings were held at 15 sites in 2011, where we explained product buying trends, market share, and future business plans to from tens of suppliers to around 200 supplier companies.
We are also developing the types of cooperative activities described below for the purpose of building stronger ties with suppliers and growing our businesses together.
Deepening dialogue and strengthening ties with suppliers
【Examples of Cooperative Activities with Suppliers】
- Improving the procurement lead time results in better in-process inventory*1 and yield*2 for our trading partners, and a stronger production structure at both Canon and the trading partner
- Holding training sessions on production-related innovation to bolster understanding of how to eliminate wasteful practices
- Developing activities to encourage production-related innovations at suppliers by making full use of improvement methods that eliminate wasteful practices through on-site diagnoses
- Promoting improvements during processing, as well as cuts in waste materials and efficiency upgrades during transportation of parts and distribution to reduce CO2 emission volumes, and supporting efforts to reduce energy use
- *1In-process inventory
Items in a materials-to-finished goods production process ("works in process") which cannot be sold as-is.
- *2Yield
This is the ratio of quality products among all goods produced (yield = quality products/quantity of manufacture).
Fair and Transparent Selection of Suppliers
Promoting Open Procurement
As we state in our Procurement Policy, we open our doors equally to all suppliers worldwide and conduct business in a fair and impartial manner, and have instituted our Open Procurement policy to make a broad appeal to suppliers not already in our network.
Canon launched the Suppliers Proposal Site within its main company website in 2001, with the purpose of soliciting marketing information, including products handled and manufacturing consignment information, from companies worldwide (excluding intellectual property such as designs, ideas and inventions). Products proposed on this site are now being used in Canon products.
Of the four proposals designated as candidates in 2010, one is currently undergoing the final evaluation process. Of 81 proposals newly received in 2011, two are under consideration.
Supplier Evaluation Structure
Before initiating transactions with a new supplier, Canon assesses whether it satisfies the Company's independent criteria with respect to such areas as global environmental protection, parts supply system and financial position.
Particularly in the environmental field, satisfying the Canon Green Procurement Standards is a condition for doing business, ensuring that green procurement of the parts and materials used in our products is practiced.
Canon also conducts regular evaluations of existing suppliers, with objective evaluations made of quality, cost, supply capacity, technical ability, and response capability in the previous fiscal year. The results are registered on our Supplier Panel, with highly ranked suppliers receiving preferential selection. We also offer improvement guidance and education to suppliers with low marks.
We have continued to expand these evaluations of domestic and overseas sites successively, and in 2008 introduced the system in Asia, where many of our important production sites are located.
We will continue to analyze the strengths and weakness of each supplier with the aim of growing our businesses together.
Supplier Evaluation Flow
Education of Supplier Evaluators
To ensure fair, impartial and transparent assessments of suppliers, Canon has carried out training to cultivate supplier evaluators since 2005.
Centering on evaluator assessments that compensate for variations among evaluators, the training program aims to foster knowledge using samples of hypothetical suppliers. We conduct follow-ups with trainees from previous years via the Canon Intranet to maintain or raise their evaluation levels.
We planned a third round of training in 2011, but due to the effects of the Great East Japan Earthquake and the Thai floods we held them at only two sites, Toride and Nagasaki, with a total of 22 in attendance.
| 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|
| Number of sessions | 2 | 2 | 5 | 2 |
| Number of participants | 35 | 41 | 96 | 22 |
