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Throughout its history, Panasonic has based relationships with business partners and suppliers on a philosophy of mutual prosperity. At the heart of these relationships is a spirit of mutual responsibility and mutual trust between self-reliant companies that take responsibility for their own operations. We believe that a partnership should be a relationship in which both parties pursue prosperity while sharing these same values. By achieving its own growth targets, a company contributes to the growth of the partner, too. Enlarging this chain of growth can eventually produce greater prosperity and happiness in society as a whole. This is why Panasonic believes that the spirit of mutual prosperity is vital in using partnerships to benefit society and serve as a responsible corporate citizen.
Panasonic concentrates business on business partners that have outstanding technologies and quality along with a strong commitment to CSR. Currently, major business partners account for more than 70% of our procurement. All new business partners must comprehend and agree with the Panasonic management philosophy and CSR Procurement guidelines. New business partners worldwide must also sign a Basic Purchasing Agreement before receiving the first order. Afterward, we review these business relationships periodically by performing audits that evaluate QCDS (Quality, Cost, Delivery and Service) criteria, the performance of management and CSR activities.
If a business partner violates the CSR requirements of the Basic Purchasing Agreement, we ask the company to take immediate actions to resolve the problem and report back to us. For serious violations, we may reduce or even terminate purchases from that business partner.
As part of our Green Procurement activities, we have been performing Environmental Quality Assurance System Audits since fiscal 2005. These audits were instrumental to our completion of measures to comply with the RoHS Directive in October 2005, six months before compliance became mandatory. Currently, we are using these audits to comply with REACH.
The Clean Procurement Declaration describes our commitment to fair and equitable procurement activities. To explain our stance and give business partners a better understanding of Clean Procurement, we once again sent information about this declaration to our approximately 5,000 business partners in Japan in 2008.
Compliance is at the heart of all activities at Panasonic. We are dedicated to complying with Japan's Subcontracting Law, customs laws governing global procurement activities, and other laws, regulations and social standards around the world. We frequently conduct employee training events and audits in order to procure goods and services with emphasis on fair and unrestricted competition among business partners.
Information security is essential to creating an environment for close cooperation with business partners, starting with the design and development of a new product. Security is particularly important for business partners with access to confidential information. We require these business partners to implement the same level of information security as Panasonic to prevent information leaks. Approximately 1,000 companies worldwide have access to highly sensitive information. By 2008, all of these business partners in Japan had achieved the same security level as at Panasonic. We are now working with overseas business partners to improve their security systems so they can meet our standards.
With regard to human rights, employment, and occupational health and safety, our Basic Purchasing Agreement and other contracts require business partners to respect the rights of employees in four areas: (1) equal opportunity employment, (2) prevention of discrimination, (3) respect for privacy and (4) sound relationships between the company and its employees. Panasonic business partners must also provide workplaces that are safe and not harmful to employees' health. To meet this standard, business partners must comply with all labor-related laws and regulations, including laws concerning forced labor, child labor and illegal workers.
We initiated activities toward integrating CSR-conscious procurement promotion methods and programs following the inclusion of SANYO Electric Co., Ltd. in the Panasonic Group in December 2009.
We concentrate our business with suppliers that have outstanding technologies and quality along with a strong commitment to CSR. Business partners agree with the Panasonic management philosophy and CSR procurement guidelines, as well as sign a Standard Purchase Agreement before commencing business. Each of these elements detail our standards for suppliers, and we regularly assess our business partners for QCDS (Quality, Cost, Delivery and Service) standard, management's performance, and CSR activities.
We have created a CSR-conscious approach to procurement that includes five core areas:
We strive to conduct fair and honest transactions with our suppliers, and our Clean Procurement Declaration transparently details our standards to current and prospective suppliers.
In our business partnerships, we require suppliers to comply with our Green Procurement Policy, and we give priority to suppliers that have demonstrated concrete efforts to reduce their environmental impacts.
As a public entity of society, compliance is a major component of achieving our vision. We adhere to the laws and regulations of each country and region where we do business and maintain a strong sense of ethics to conduct our business activities. We also "self-check" ourselves by asking employees responsible for procurement to selfassess whether we conduct fair and honest transactions with our suppliers based on our internal transaction rules. We also provide them with regular training on compliance.
Securely and responsibly managing business matters, as well as supplier and employee data is a key element of our responsibility as a company. We have created our own rigorous information security policies, and we require our suppliers to respect the same level of policies.
Panasonic's Standard Purchase Agreement and other contracts require suppliers to comply with policies for equal opportunity employment, prevention of discrimination, respect for privacy, and sound relationships between the company and its employees. Suppliers also strive to provide workplaces that are safe and not harmful to employees' health.
We use supplier evaluations and a supplier information database that is shared throughout our company. We use a similar product chemical substance management system to gather data on the chemical contents in all of our parts and materials.
We require all suppliers to obtain ISO 9001 and ISO 14001 certification.
Every year, we hold the Panasonic Excellent Partners Meeting to further enhance understanding of our procurement policies, commitments, and standards. At this meeting, we also review our CSR procurement standards. We encourage the exchange of ideas at this meeting to adopt a unified stance for contributing to society across Panasonic's supply chain.
We also provide our Panasonic Fair Business Hotline, which receives reports from third parties, including our suppliers, about actual or suspected non-compliance violations with our Panasonic Code of Conduct and/or our procurement standards.
CSR Procurement Approach
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