Procurement Practices Procurement Practices

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Approach to Materiality in Conflict Minerals

Supervising division Procurement Administrative Department
KPI Continuing efforts to use materials where the risk that said minerals have been produced using conflict minerals is low, by asking business partners to ensure transparency in regard to the sources of materials and components, etc., and by working together with industry organizations and business partners to investigate information relating to conflict minerals (i.e. mineral processing firm information).
FY2018 target Continuing efforts to use materials where the risk that said minerals have been produced using conflict minerals is low, by asking business partners to ensure transparency in regard to the sources of materials and components, etc., and by working together with industry organizations and business partners to investigate information relating to conflict minerals (i.e. mineral processing firm information).
FY2017 result
  • Conducted surveys and gathered answers related to relevant business suppliers
  • Participated in the JEITA Responsible Minerals Trade Working Group
Material Reasons Conflict minerals are not only regulated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but it is also a major problem faced by society as a whole. Advantest is no longer subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act after delisting its corporate stock in the United States in April 2016. However, Advantest remains aware of the importance of responding to the issue of conflict minerals, which also has deep ties to efforts conducted by the entire industry.
Boundary Advantest Group
Relevant policies Procurement Policy (3. Supplier Expectations)
Relevant commitments Sec. 1502 of the Dodd-Frank Act (Conflict minerals) and other relevant regulations
Responsible department/division CSR & Environmental Affairs Promotion Office/Procurement Administrative Department
Relevant complaint processing policy Establishment of a contact window
Assessment

Approach to Materiality in Supplier Labor Practice Assessment

Supervising division Procurement Administrative Department
KPI To facilitate a ratio of dealings with new suppliers after an assessment of their labor practices
FY2018 target 100%
FY2017 result
  • FY2017: 3 of 3 new suppliers
  • Revised the evaluation sheets when hiring new suppliers and added assessment items about whether a code of conduct is in place.
Material Reasons Advantest considers the execution of its own businesses in accordance with human rights and labor practices important for a broad range of stakeholders, including our business partners.
Boundary Advantest Group
Relevant policies Procurement Policy, Advantest CSR Procurement Guidebook
Relevant commitments Labor Standards Law, Industrial Safety and Health Act, RBA Code of Conduct
Responsible department/division Purchasing (Purchasing Department/Procurement Administrative Department)
Relevant complaint processing policy Establishment of a contact window
Assessment ––

Approach to Materiality in Supplier Human Rights Assessment

Supervising division Procurement Administrative Department
KPI To facilitate a ratio of dealings with new suppliers after an assessment of their human rights practices.
FY2018 target 100%
FY2017 result
  • FY2017: 3 of 3 new suppliers
  • Revised the evaluation sheets when hiring new suppliers and added assessment items about whether a code of conduct is in place.
Material Reasons Advantest recognizes the influence it has as a company on human rights violations in part, material as well as manufacturing processes and it considers the broad protection of human rights even at our suppliers vital.
Boundary Advantest Group
Relevant policies Advantest CSR Procurement Guidebook, Advantest Procurement Policy
Relevant commitments RBA Code of Conduct
Responsible department/division Purchasing (Purchasing Department/Procurement Administrative Department)
Relevant complaint processing policy Establishment of a contact window
Assessment ––

Approach to Materiality in Assessment of the Supplier Impact on Society

Supervising division Procurement Administrative Department
KPI To facilitate a ratio of dealings with new suppliers after an assessment of their effect on society
FY2018 target 100%
FY2017 result
  • FY2017: 3 of 3 new suppliers
  • Revised the evaluation sheets when hiring new suppliers and added assessment items about whether a code of conduct is in place.
Material Reasons Advantest recognizes where the impact it has as a company even for compliance proposals and adherence to social norms in part, material as well as manufacturing processes and it considers the fulfillment of its social responsibility throughout the entire supply chain that includes all of its business partners vital.
Boundary Advantest Group
Relevant policies Procurement Policy, Advantest CSR Procurement Guidebook
Relevant commitments RBA Code of Conduct
Responsible department/division ––
Relevant complaint processing policy Establishment of a contact window
Assessment ––

Approach to Materiality in Environmental Assessments of Suppliers

Supervising division Procurement Administrative Department
KPI To facilitate a ratio of dealings with new suppliers after an assessment of their effect on the environment
FY2018 target 100%
FY2017 result
  • FY2017: 3 of 3 new suppliers
  • Revised the evaluation sheets when hiring new suppliers and added sections to add results and even comments about environmental activities such as the acquisition of the ISO14001 in questions about purchasing policies.
Material Reasons Advantest considers the development of high-quality green products vital by working from the perspective of environmental conservation in parts, materials as well as manufacturing processes.
Boundary Advantest Group
Relevant policies
  • Advantest Group Environmental Policy
  • Advantest Green Procurement Guidelines
  • Procurement Policy
  • Advantest CSR Procurement Guidebook
Relevant commitments RoHS Directive and regulation and reference values in environmental laws from each municipality
Responsible department/division CSR & Environmental Affairs Promotion Center/Environmental Management Supervisors
Relevant complaint processing policy Establishment of a contact window
Assessment

Advantest Procurement Policy

The Advantest Group's CSR Policy pledges respect for our suppliers, places value on open communication with our suppliers, and emphasizes the maintenance of fair business relationships in accordance with relevant laws and regulations. We are also committed to sharing values and building collaborative relationships with our suppliers, toward our goal of achieving mutual growth.

Organization to Promote Fair Trade (CSR Procurement)

In order to promote and manage fair trade we have established a department whose role is to check the purchasing department and we implement a once-yearly audit by Audit and Supervisory Committee to ensure that there are no problems and that normal trade practices are being followed. Also, every year we implement an internal control audit using an external organization and we were able to confirm again in fiscal 2017 that there were no problems.
Moreover, for outstanding orders, in addition to checking the status at the end of each month to ensure that there are no acceptance inspection omissions, for orders where the acceptance inspection is taking a long time we report the reason for this and the expected completion date to the Audit and Supervisory Committee.

Education for Practicing Fair Trade

Since fiscal 2010, we have held seminars on a subcontractors law, participation in which is not restricted to purchasing department staff. Moreover, we began employee e-learning about the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors in fiscal 2016 to raise greater awareness about this law. We also implemented follow-up training with internal instructors to each of our departments. In the future, we will continue to educate our employees in order to realize the principles of fair trade.

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A scene from the subcontractors law seminar

Social Responsibility in the Supply Chain

Implementation of questionnaire survey for suppliers

Advantest has published its Procurement Policy and the Advantest CSR Procurement Guidebook on its homepage as a way of fulfilling its social responsibility in a supply chain that includes all of its business partners, and it asks these business partners to adhere to relevant laws and ordinances as well as social norms.

We evaluate our business partners on QCD* every quarter and carry out an annual CSR questionnaire primarily for our business partners who largely impact procurement of Advantest. We devise the questions and conduct this survey to match the perception of all of our business partners by re-examining the priority issues of our company and questions every year based on an analysis of the assessment results for the previous year with focus on the Advantest CSR Procurement Guidebook. Furthermore, by creating materials that bring together the answers for each business partner to provide feedback independently about areas that have been highly evaluated and areas where improvements are requested, we are building a bond in which we will grow together with these business partners.

In fiscal 2017, we carried out the questionnaire in March 2018 and obtained the answers from each company. The return rate for completed questionnaires was 100%. We were able to confirm that each company had established an overall policy and Code of Conduct for societal responsibility in accordance with the Advantest Procurement Guidebook. We will conduct another questionnaire in fiscal 2018 based on the results from the questionnaire conducted in fiscal 2017 and confirm our business partners' response to our procurement policy.

* QCD: abbreviation of Quality, Cost, Delivery

Average Response Rate of Advantest Procurement Questionnaires
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One priority issue for Advantest in fiscal 2017 was to strengthen informational security. Therefore, we asked all of our business partners to conduct information security training for their employees. We also conducted an informational security survey primarily for business partners who largely impact procurement of Advantest to assess the state of corporate informational security measures and informational security training. Every company within the scope of this survey responded, and we were able to confirm all of our companies had the appropriate security measures.

Set up of inquiry and reporting window

During trade with our business partners, in the event that one of our employees infringes, or is suspected to infringe, on our Code of Conduct, a trade contract or a relevant law, we request that this is reported to the Contact Window on our website. In fiscal 2017 we did not receive any complaints. The reporter and their company would not be penalized in any way for reporting. Following an investigation, in the case that a problem is recognized, the action in question would be stopped and measures would be taken to prevent reoccurrence.

Measures Against Procurement Risks

Advantest promotes purchasing from multiple procurement sources as a general rule to put in place a contingency for the procurement of components from the perspective of BCP. In procurement of products that must respond to sudden increases in production volume often seen today, we are also mitigating risk through not only examining inventory policies able to flexibly adapt to fluctuations as well as the handling of long-term delivery products in supply chain departments independently but also by organizing response team that include management to enable cross-departmental response.

Response to Conflict Minerals

Implementation of survey

At Advantest, in order to respond to Section 1502 (conflict minerals provisions) of Title XV of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations in the U.S., we are playing an active role together with the industry organization to address the conflict minerals problem.
Since 2013 we have been implementing an annual survey of our business partners regarding use of conflict minerals through a RMI* report (conflict mineral reporting template (CMRT)) and releasing the results.

* RMI: Responsible Minerals Initiative