Management System Supplier Evaluation and Guidance for Improvement Participating in Initiatives

Supplier Evaluation and Guidance for Improvement

The Mitsui Chemicals Group Purchasing Policy states that we select suppliers from a sustainable procurement perspective as one of the selection criteria. When commencing transactions with new suppliers, as well as periodically with our current suppliers depending on transaction details, the Mitsui Chemicals Group verifies their efforts towards realizing a sustainable society. This involves confirming a wide range of specific items that include environmental protection, occupational safety, quality assurance, corporate governance, fair transactions, human rights, and information security. In addition, we evaluate supplier companies based on the results of these surveys and offer guidance on making improvements, as needed. When such surveys and audits identify any significant discrepancies, a penalty, such as suspension of transactions, is imposed according to the penalty criteria.

Transaction Procedures

Transaction Procedures
Transaction Procedures

Survey on sustainable procurement

The Mitsui Chemicals Group requests its suppliers to understand and commit to its Sustainable Procurement Guidelines to ensure sustainable procurement.
In addition, we are conducting a survey of suppliers with the use of the CSR/Sustainable Procurement Self-assessment Questionnaire (SAQ) published by the Global Compact Network Japan Supply Chain Working Group. This SAQ was drafted to conform with the UN Global Compact’s 10 principles and international regulations such as ISO 26000 and GRI.
We tabulated SAQs turned in by suppliers. The findings are fed back to the suppliers as support in making improvements. The SAQ completion rate (Group-wide transaction value basis) is included in our 2025 Long-term Business Plan as the sustainable procurement ratio, one of the KPIs.
The SAQ survey of Purchasing Division suppliers* was conducted between fiscal 2017 and fiscal 2018. Responses were received from 307 companies, accounting for roughly 90% of our transaction value. Analysis of the responses showed a number of differences in the level of response to the SAQ and led to the publication of an awareness promotion reference guidebook in fiscal 2018, which explains the objectives of the sustainable procurement SAQ, its intention of questions and recommended activities.
We visited suppliers who scored less than 40% to provide support with making improvements matching the conditions at each company. These visits resulted in score improvements for all the companies visited and comments from the companies visited revealed that they gained a greater understanding of the purpose of these questions. We have asked these suppliers to continue to make further improvements.
In fiscal 2019 and fiscal 2020, the SAQ survey was expanded to cover suppliers of our business divisions and domestic affiliates and subsidiaries to gain their cooperation in sustainable procurement. During the period from fiscal 2017 to fiscal 2020, 898 companies (of which 419 are suppliers of the 13 principal affiliates and subsidiaries and account for a large part of their transaction value) submitted responses to the SAQ, accelerating the drive to achieve sustainable procurement across the entire Mitsui Chemicals Group.

*Purchasing Division suppliers:
510 suppliers of raw materials; 800 suppliers of equipment; 1,230 suppliers of indirect materials (as of April 2021)

Sustainable procurement SAQ results (FY2017 to FY2020)

This table is scrollable.

SAQ score levels No. of suppliers Actions for improvement
Level 3
(Score 70% or higher)
571 Feed back comments along with information about average score of all companies, industry average, and chart of company scores.
Level 2
(Score 40% or higher to less than 70%)
278 Submit a guidebook for the SAQ and request corrections by the next survey (FY2021).
Level 1
(Less than 40%)
49 Visit company premises and exchange opinions towards improvement, as well as explain the intention of SAQ using a guidebook for the SAQ. Also, request resubmission of the SAQ.
Total no. of responses 898

FY2017 to FY2020 Number of companies by total score

FY2017 to FY2020 Number of companies by total score

FY2017 to FY2020 Scoring rate by themes

FY2017 to FY2020 Scoring rate by themes

Sustainable procurement ratio

This table is scrollable.

Scope
(transaction value basis)
FY2017 FY2018 FY2019 FY2020 Medium to
Long-Term
(FY2025)
Mitsui Chemicals Group 70%
Mitsui Chemicals, Inc.
(By Purchasing Division
and major business divisions)
39% 44% 44% 45%
Mitsui Chemicals, Inc.
Purchasing Division
73% 84% 84% 85%

Other forms of support provided to suppliers

The following information is supplied to our suppliers to ensure mutually beneficial sustainable development for both the Mitsui Chemicals Group and its suppliers. In fiscal 2016, Mitsui Chemicals sent reminder letters to around 2,600 Purchasing Division suppliers and partners containing the following items.
In fiscal 2018, briefings on the following were held for contractors at our works, and the reminder letters were given to participants. A letter was also issued notifying all suppliers and partners of the Purchasing Division that no gifts can be accepted.

  • Examples of previous discrepancies
  • Request items for each supplier
    - Compliance with laws and social norms from a sustainable standpoint
    - Avoid engaging in direct price negotiations with requesting divisions regarding transactions overseen by the Purchasing Division
    - Formulate BCPs (business continuity plans)
  • The Mitsui Chemicals Group Purchasing Policy details and Risk Hotline reminder

Policy on conflict minerals

In the Mitsui Chemicals Group Sustainable Procurement Guidelines, we state “Never purchase or use raw materials containing conflict minerals” as a basis for our responsible procurement of raw materials. In fiscal 2015, the Purchasing Division conducted an investigation covering all raw materials transactions taken in fiscal 2014. As a result, we have confirmed that we do not purchase or use any conflict minerals associated with inhumane acts committed by armed groups on the ground in the Democratic Republic of Congo or any of its neighboring countries. That includes gold (Au), tantalum (Ta), tungsten (W) and tin (Sn).
Since fiscal 2016, the Purchasing Division and RC & Quality Assurance Division are working together to identify tin catalysts, etc. within all Group product compositions registered in the chemical product safety information system. Every year, we conduct conflict mineral surveys of our suppliers using CMRT* and confirm each year that none of these conflict minerals are purchased or used. The sustainable procurement SAQ includes a category for identifying all activities related to conflict minerals.
Should we be shown in the future to have used conflict minerals, we will immediately halt procurement of the relevant minerals.

*CMRT:
Conflict Minerals Reporting Template provided by the Responsible Minerals Initiative (RMI) for submitting reports on conflict minerals.

Internal training for sustainable procurement

In fiscal 2016, Mitsui Chemicals conducted sustainable procurement training targeting all of its Purchasing Division employees. Since this time, this training has been included as one of the required elements of procurement training for all newly appointed members. In fiscal 2018, we provided a training program on the items covered in the sustainable procurement SAQ to all Purchasing Division employees to ensure their understanding of the aims of the SAQ. In fiscal 2019, we explained the sustainable procurement SAQ to purchasing personnel in our business divisions and domestic subsidiaries and affiliates. In fiscal 2020, a quality audit e-learning program was added to the requirements for employees in the Purchasing Division to study how the supplier and the buyer collaborate in assessing current conditions, to study processes that lead to improvements and to enable them to be applied in various forms of audit.
For comprehensive implementation of the policy across the entire Mitsui Chemicals Group, the e-learning course on procurement rules was updated in fiscal 2020. The relevant e-learning programs have been made mandatory not only for employees in the Purchasing Division but for all purchasing staff members within the Group to ensure full awareness of the need to comply with sustainable procurement when selecting a supplier or a partner.

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