Supply Chain CSR

Supply Chain CSR Initiatives

Socially Responsible Procurement Program

Under Epson's socially responsible procurement program, suppliers are asked at supplier briefings to practice socially responsible procurement and complete an SAQ (Self Assessment Questionnaire) to assess their own observance of the Epson Supplier Code of Conduct. Answers are verified on-site and audits are performed to share issues and drive improvement. In addition to conducting periodic evaluations of all new and current suppliers, we apply a more detailed socially responsible procurement program to key suppliers, which we define as large suppliers, mission-critical parts suppliers, and sole-source suppliers.

FY2017 Action Items and Results

Under Epson's socially responsible procurement program, suppliers are asked at supplier briefings to practice socially responsible procurement and complete an SAQ to assess their own observance of the Epson Supplier Code of Conduct. Answers are verified on-site and audits are performed to share issues and drive improvement.

FY2017 Results

FY2017 Action items FY2017 Results
Ask key suppliers to observe the Epson supplier code of conduct
  • 100% CSR activity request rate for key suppliers
  • Conducted suppliers briefings to ask them to observe the supplier code of conduct. Held a total of 11 in Japan, Indonesia, and China, our major production sites, with attendance by 453 companies.
Supplier surveys and results feedback
  • 100% SAQ completion rate for key suppliers
  • Analyzed FY2016 SAQ responses from production material suppliers (220 companies) and provided feedback
  • Requested SAQ drom non-production material suppliers (logistics, construction, taffing companies, etc.), and received completed SAQ drom all companies (50 tier 1 suppliers, 16 non-tier 1 suppliers)
Supplier on-site verification and requesting corrective action
  • On-site verification of high-risk suppliers and improvement
  • Conducted a follow-up audit of two Chinese suppliers who had been received independent audit in FY2016 and confirmed that all improvements were completed.
  • During FY2017, we newly conducted third-party audits for one supplier in Japan and one in Indonesia.
  • Conducted on-site verification on 23 direct materials suppliers sueveyed in FY2016 with SAQ and judged to be high-risk to share issues and drive improvements.

Communications with Suppliers

Since FY2016, we have held socially responsible procurement briefings for suppliers to share information on Epson's socially responsible procurement programs with suppliers. In FY2017, we held a total of eleven briefings in Japan, China, and Indonesia. Briefings were attended by 613 people from 453 suppliers to share the following information:

  1. Epson's CSR activities
  2. Practicing CSR in the supply chain
    • Detailed evaluation
    • Improving accuracy of conflict mineral surveys
    • Supplier BCP initiatives
    • Establishment of compliance hotlines
  3. Product substance control
Suppliers briefing in Indonesia

FY2017 Results of Supplier Briefings

Japan China Indonesia Total
Number of companies 237 113 103 453
Number of participants 244 208 161 613

CSR Evaluations and Improvement Activities

Epson evaluates all suppliers, both direct materials suppliers and indirect materials suppliers such as logistics, construction, and staffing companies. Suppliers are evaluated from multiple angles on the basis of a supplier evaluation program. The program consists primarily of an indirect evaluation and a direct evaluation (periodic evaluation). The indirect evaluation is based on information from a credit investigation service. The direct evaluation is a self-check that suppliers do to evaluate their own QCD and other performance metrics.

Epson Group Supplier Evaluation Program

Indirect evaluation

Information from a credit investigation service
Evaluation items: Credit score, business history, capital composition, size, financial position, financing situation, management, etc.

Direct evaluation

Self-evaluation of a supplier's own QCDEM
Evaluation items: Quality control (Q), cost management (C), delivery management (D), environ-mental management (E), management (M)
Green purchasing agreement (when standard is revised)

Detailed evaluation

Self-assessment of adherence to the Epson Supplier Code of Conduct
Evaluation items: Human rights, labor, safety and health, environmental, management systems, ethics, and Epson's own item

Evaluation of emergency response capabilities

self-assessment of ability to respond to a natural disaster, fire, or other emergency
Evaluation items: Management attitudes, risk countermeasures, emergency response capability, ability to restore operations after a disaster, supply continuity capability, ability to maintain procurement, inventry management situation, etc.

Safety management evaluation

Self-assessment of response to fires and other emergency risks
Evaluation items: Management of electrical hazards, hazaedous materials, fire prevention, etc.

Self-Assessments

The Epson Group requires that suppliers to conduct self-assessments regarding their status of compliance with the Epson Supplier Code of Conduct. Based on those results, we work with suppliers to implement improvements. To facilitate assessments, we have established the Epson Group Detailed Supplier Evaluation Guideline as internal standards for conducting fair assessments and ensuring efficient and appropriate socially responsible procurement in the supply chain.

SAQ Contents

Section Number of questions
G. General 1
A. Labor (human rights) 28
B. Health and safety 22
C. Environment 14
D. Management system 16
E. Ethics 12
F. Additional items (Epson original) 7
Total 100

Risk Ranking by SAQ

Risk rank Assessed points Explanation
Low risk 86-100 pts. It basically meets the requirements of the Epson Supplier Code of Conduct.
Is able to independently correct weaknesses.
Medium risk 66-85 pts. It does not meet all the requirements of the Epson Supplier Code of Conduct but is able to independently correct weaknesses.
High risk 65 pts.
pr less
It needs to be monitored based on an improvement plan to meet the requirements of the Epson Supplier Code of Conduct.

In FY2017, we conducted the following activities for key suppliers:

  1. Six of the 66 indirect materials suppliers (logistics, construction, and staffing companies, etc.) that were surveyed with the SAQ were judged to be high-risk based on the survey results. In FY2018, we will share issues with suppliers and drive improvements.
  2. Twenty-three of the 274 direct materials suppliers surveyed in FY2016 were judged to be high-risk. Epson (or, in some cases, a third party auditor) verified the situation at the sites of these high-risk suppliers (on-site verification), shared issues, and drove improvements to minimize risks. In FY2018, we will use SAQ to reconfirm the results of improvements.

For key suppliers judged to be high-risk, we conducted on-site verification and shared issues with suppliers to improve their state based on a corrective action plan so that their risk ranking shall be medium risk or better by FY2020.

Audits and Corrective Action

In FY2017, an independent firm was hired to audit one supplier in Japan and one in Indonesia. We revisited the Japanese supplier after the audit to explain the content of the audit report and discuss an improvement plan. The supplier will implement improvements based on the plan while receiving support from Epson.

In FY2016, two Chinese suppliers were independently audited. We conducted a follow-up audit upon completion of the planned improvements and confirmed that all improvements were completed. Both companies were asked to continue efforts to ensure socially responsible procurement.

Third party audit at Japanese supplier
Third party audit at Indonesian supplier

Supplier BCP Initiative

We have established Guidelines for Supply Chain BCP and are improving business continuity and resilience throughout the supply chain so that even if a disaster, accident, epidemic, or other event should cause disruption, we can fulfill our responsibility to customers by recovering and providing products and services within a target recovery time.

The Epson supply chain BCP is divided into five categories.

Epson is working with suppliers to ensure that they establish their own BCP systems so that the supply of parts to Epson is not disrupted.

In FY2017, a fire that had occurred at an overseas supplier had an impact on our product shipments. From that experience, we launched special activities focused on promoting workplace safety inspections at supplier facilities.

(Unit: companies)

 ItemsDetailsFY2016FY2017
Questionnaire survey BCP self-evaluation Self-check of emergency response capabilities by suppliers 436 319
Safety self-evaluation Self-check of safety management status by suppliers 357 1,353
On-site check Site safety inspection Inspections with focus on fire-prevention conducted by Epson safety specialists and sharing of prevention measures (mainly in China, Indonesia and the Philippines) - 399

Internal Education

Worker Interview Training

During on-site verification, we conduct worker interviews in addition to document reviews and site tours to better ascertain labor and human rights risks at supplier plants.

Aimed at developing the skills to identify worker concerns and dissatisfaction within a limited amount of time, we invited outside instructors to conduct worker interview training for Epson employees responsible for on-site verification. Training curriculum includes instructor lectures as well as roleplaying conducted by the trainees to help learn interview techniques, procedures, and points of caution. At Epson, we position this training as required training for employees who implement on-site verification to improve the accuracy of verification.

Socially Responsible Procurement Training at an Indonesian Affiliate

Epson believes that it is vital to understand the Epson Supplier Code of Conduct (RBA compliant), SAQ, and other initiatives in addition to international CSR trends when promoting socially responsible procurement and, therefore, it provides socially responsible procurement education conducted by external instructors. In FY2017, we conducted training to procurement department members at our Indonesian affiliate on topics including CSR issues, RBA framework, and SAQ.

Sustainable procurement training
(Indonesian affiliate)

Compliance & Procurement Initiatives

We have committed ourselves to exercising high ethical standards and a social conscience, and we have declared that we will conduct our procurement activities in strict compliance with both the letter and spirit of laws and regulations in region in which we operate. As such, employee training is an important part of this commitment.

All employees in Japan are required to take the Introduction to Procurement (Ethics & Code of Conduct) and the Introduction to Procurement (Subcontract Act) online training courses. Employees directly involved in procurement must successfully complete procurement and compliance management training based on an in-house certification system. Renewal training is also conducted every five years to ensure that employees learn the latest information and knowledge. Moving forward, we will expand the scope of these initiatives to include overseas Group companies as we further elevate the level of our compliance and procurement initiatives.

FY2017 Training Results

FY2015 Results FY2016 Results FY2017 Plan
Results
Procurement & compliance management training 24 times 862 employees 29 times 1,008 employees Plan26 times
Results36 times 1,120 employees
Procurement & compliance management renewal training 51 times 3,127 employees 55 times 1,603 employees Plan30 times
Results33 times 1,019 employees
Introduction to Procurement online course 14,759 employees 16,546 employees Results15,301 employees

Partnerships with External Organizations

Epson is a member of the Global Compact Network Japan Supply Chain Subcommittee and a member of the Japan Electronics and Information Technology Industries Association (JEITA) CSR Committee. We partner with various industry corporations to help permeate and elevate socially responsible procurement.