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CSR Initiatives

Implementing CSR in the Value Chain

Working with Mazda's Suppliers

Lecture at a Supplier Communication Meeting
Lecture at a Supplier Communication Meeting
"Mazda's CSR and Environmental Initiatives"(September 2012)

In line with its basic purchasing policy, Mazda is taking its efforts to build open business relationships and ensure fair and even-handed dealings with its suppliers both in Japan and overseas.
In addition, Mazda is committed to promoting CSR activities aimed at building a sustainable society in full partnership with its suppliers. The Company bases its assessments of business dealings with its suppliers on a comprehensive evaluation that covers not only quality, technical strengths, pricing, delivery time and management approach, but also corporate compliance structure and initiatives for environmental protection.


Basic Purchasing policy

Mazda will, in the fullest sense of coexistence and mutual prosperity, engage in research and production for improved competitiveness.

The Company will build open and fair business relationships to ensure sustainable growth and raise its level of contributions for social and economic development. (1994)

Measures Based on the Basic Purchasing Policy

  • Mazda extends opportunities to businesses throughout the world, regardless of nationality, scale or history of transactions with the Company.
  • Upon receiving a request to start business with Mazda, Mazda assesses the company in question in a fair and even-handed manner according to its in-house criteria for evaluation of suppliers, and determines the feasibility of a business partnership.
  • Mazda requests that suppliers comply with Mazda Supplier CSR Guidelines and Mazda GreenPurchasing Guidelines.

<Examples of Specific Measures>

  • Publishing of the "Request for Thorough Compliance with Labor Related Laws" for all suppliers (January 2005)
  • Briefing sessions for employees and suppliers based on the "Guidelines for Appropriate Transactions in the Automobile Industry" formulated by the Ministry of Economy, Trade and Industry (2008)
  • Clarification of the behavioral guidelines for appropriate transactions by formulating the "Promotion Manual for Appropriate Purchasing" (2008)
  • Posted relative materials to exclusive access site for suppliers in order to continue supplier education (August 2011)
  • Example materials: "Behavioral Guidelines on Appropriate Purchasing," "Causes of and Countermeasures against Problematic Transactions," "Specific Handling Policies by Each Category of Disputable Transactions," etc.

Mazda Supplier CSR Guidelines

To promote CSR activities among Mazda suppliers, in July 2010 Mazda created the Mazda Supplier CSR Guidelines with reference to the CSR Guidelines of the Japan Automobile Manufacturers Association.

In addition to requesting total compliance with the laws and regulations of all countries and regions, the Mazda Supplier CSR Guidelines outline six areas such as respect for people including the prohibition of child labor and forced labor, environmental protection and information disclosure, and request that all Mazda suppliers comply with the guidelines in these areas.

For the revision of the guidelines in July 2013, Mazda provided the clear policy toward the disuse of raw materials, which should be the cause of social issues, including conflict minerals*1, and also request suppliers to comply with it.

Beginning in FY March 2014, Mazda plans to start the inquiry, aiming the condition where the Company is able to figure out and evaluate the status of CSR initiatives of each supplier.

The Mazda Green Purchasing Guidelines, which indicates the detail of the environmental protection area, is separately created and Mazda request suppliers to comply with them.

  • *1Conflict Minerals: Minerals and their derivative metals designated by Financial Regulatory Reform Article 1502 that are sourced from and used as financial source of armed groups in the Democratic Republic of Congo or the surrounding countries (Regulated minerals: tantalum, tin, tungsten, gold)

VOICE

Upon Revising the Mazda Supplier CSR Guidelines

Takashi Kawahara
Takashi KawaharaPurchasing Administration Department, Purchasing Division

In response to the rising interest of stakeholders in CSR purchasing, Mazda purchasing has extensively revised its Supplier CSR Guidelines. With globalization of purchasing activities taken into consideration, we have added initiatives regarding conflicting minerals as a part of measures for human rights and labor issues. In addition we have re-reviewed the existing initiatives on compliance, environmental and other issues, in collaboration with related departments.

During the revision deliberation process, we tried to keep close communication with our suppliers by soliciting advice from a supplier's perspective. In the future we will strive to make ONE MAZDA CSR purchasing a global norm, and to establish an effective collaboration/activity structure.


The Supplier Evaluation System

For each long-term supplier, Mazda conducts not only an evaluation based on quality, pricing and delivery status of procured goods or service, but also a comprehensive evaluation on the entire business including its quality control system, research & development system, and technological capabilities. For the supplier quality control system, Mazda employs a system that enables continuous grasping of issues, evaluation of the situation, and provision of guidance for improvement by receiving daily reports on product quality as well as voluntary audit results, and when a supplier is in need of quality improvement, conducts quality auditing that involves on-site confirmation of actual products at both domestic and overseas sites.

When starting business with a new supplier, related departments coordinate together to confirm the supplier's manufacturing site, control mechanisms, management status, CSR initiatives, technological/researchh & development capabilities, etc. in order to evaluate whether or not the supplier is suitable to the procurement/selection policies of the Mazda Group.

Also, comprehensive evaluation on pricing, quality, research & development, delivery, etc. is conducted once a year targeting long-term component suppliers selected based on Mazda standards. (In 2012: 172 companies)


Handling of Business Continuity (BCP) in the Supply Chain

Mazda is currently upgrading and expanding its business continuity plan (BCP) in order to prepare for risks and avoid long-term suspension of business that would extensively influence society. Learning from lessons during the Great East Japan Earthquake when it required a certain period of time to grasp the overall situation of the entire supply chain, Mazda has clarified the scope of information collection and enhanced the amount of information collected in order to realize a prompt and timely communication system that reaches all points in the supply chain. Further efforts to increase the volume and quality of supply chain information will be made in the future.


Communicating with Suppliers

To enable coexistence, mutual growth and prosperity for all parties, along with the overarching goal of building high-quality vehicles, Mazda takes steps to promptly brief suppliers on medium-to long-term business strategies and on matters related to sales and production, and arranges opportunities for the exchange of information on a regular basis. The Company also maintains close liaisons with supplier-managed purchasing cooperative organizations.*2

For example, staff from member companies visit each others' offices in order to exchange examples of successful approaches and practices through subcommittee activities. For FY March 2013, 129 companies conducted a total of 71 activities.

  • *2An autonomous management organization, comprising suppliers that have a certain degree of transaction with Mazda, with the purpose of strengthening relationships between Mazda and its suppliers as well as promoting mutual growth and prosperity.
Major Channels of Communication with Supplier
Target participants Frequency Aims/content
Roundtable conference with supplier management Executive-level management at major suppliers Once a year
  • Mazda's president and CEO explains Mazda's current status, the problems the Company faces and its policies, after which the general manager of the Purchasing Division explains Mazda's purchasing policies in order to heighten participants' understanding of Mazda and gain their cooperation.
  • This conference also deepens friendly ties between Mazda and its suppliers.
Supplier meeting Representatives of frontline business divisions and departments at major suppliers Once a year
  • Mazda's specific purchasing policies are explained to representatives of frontline business divisions at suppliers, based on the explanation given at the roundtable conference by the general manager of the Purchasing Division. This helps to promote a better understanding of Mazda and provides useful input for the work that suppliers do.
Supplier communication meeting Representatives of frontline business divisions and departments at major suppliers Once a month
  • To facilitate smoother collaboration with its suppliers, Mazda provides them with information such as topics concerning daily operations between Mazda and its suppliers, production/sales status, quality status of purchased materials, pilot construction schedules for newly developed models, and mass-production implementation schedules for new models.
Other As needed
  • Mazda also employs a range of other communication channels, by using the in-house "Mazda Technical Review", highlighting new technologies and research.
Number of Suppliers (As of March 31, 2013)
Automotive parts
471
Materials, etc.
154
Equipment and tools
406
Total
1,031
Purchasing Cooperative Organizations(As of March 31, 2013)
Parts suppliers Kanto Yokokai (Kanto region)
61
Kansai Yokokai (Kansai and Tokai regions)
47
Nishi Nihon Yokokai (Chugoku, Shikoku and Kyushu regions)
61
Materials suppliers (Raw materials, equipment, molds, etc.) Yoshinkai
77

VOICE

Promoting CSR in the Purchasing Area

Miho Sunada
Miho SunadaPurchasing Administration Department, Purchasing Division

I am promoting CSR in coordination with our suppliers. Our initiatives cover a wide range of topics such as compliance and social contribution, and we maintain close communication with the top management members through policy briefings, hearing sessions with persons in charge of practical matters, etc. In FY March 2013, we held trainings for purchasing members, our procurement contact windows, in order to reinforce their understanding toward compliance. We also ensure timely identification of CSR-related issues that require us as a company to take quick action and deliberate specifically on each issue, and securely execute countermeasures. With the recent acceleration in overseas expansion by our suppliers, we will be making further efforts to permeate the Mazda CSR approach on a global level.


Evaluating and Recognizing Suppliers

Suppliers Award Ceremony
Suppliers Award Ceremony

Every year, Mazda evaluates its suppliers from the perspectives of quality, cost, deadline accuracy, etc., in order to build more positive business relationships, and passes the results of these evaluations back to the suppliers. Outstanding suppliers are recognized with awards. Mazda also gives special awards to suppliers that have made outstanding proposals on weight trimming, which greatly affects environmental performance such as fuel efficiency, in order to promote weight reduction.

Supplier Awards for FY March 2013

96 parts suppliers, 6 materials suppliers


J-ABC Program to Promote Manufacturing Skill by Local Suppliers

Koyo Plant, Hiroshima Seimitsukogyo Corp.<br>
J-ABC Kickoff Report debriefi ng (April 2013)
Koyo Plant, Hiroshima Seimitsukogyo Corp.
J-ABC Kickoff Report debriefi ng (April 2013)

Mazda is rolling out its J-ABC program (Jiba ["Local"] Achieve Best Cost program) for local suppliers in and around Hiroshima Prefecture. Under this program, Mazda staff visit suppliers' plants and use the approach employed in Mazda production systems as the basis for pinpointing wasteful or problematic manufacturing processes. Mazda then works cooperatively with the suppliers to formulate and implement countermeasures. This program is also expected to enhance potential for improvement at manufacturing sites in connection with Mazda's Monotsukuri Innovation activities*3

Results of J-ABC Activities for FY March 2013

Case Example 1: Cooperative Improvement Efforts

Operating under themes such as "outstanding productivity" and "shortened lead times," Mazda achieved major results in terms of improved operation rates, shorter production cycle times, improved logistical operations, etc.

  • A total of approximately 1,500 visits to 41 plants at 24 companies were carried out to implement cooperative improvement programs. As a result, 42 improved model lines were completed at 19 plants. In addition, more than 60 lines in 28 plants began voluntary improvement activities.

Case Example 2: J-ABC Karakuri Kaizen® Dojo

Mazda launched these workshops in 2006 with the aim of fostering high levels of creativity and making work more fun without incurring additional costs.

  • The ability to devise mechanisms for increased productivity was improved through practical programs such as lectures and onsite guidance meetings.
  • Held twice a year in the Hiroshima and Hofu districts, with a total of 22 participants from 22 companies successfully completing the program in FY March 2013.
  • Outstanding works to be proactively submitted to the Mazda Hiroshima Plant Karakuri Exhibition and Karakuri KaizenŽ*4 Mechanism Exhibition

Case Example 3: J-ABC Maintenance Workshop

With the goal of preventing facility stoppages and drops in production capability, Mazda has held these workshops since 2010.

  • The ability to both detect and properly respond to irregularities was improved through practical programs such as lectures and on-site guidance meetings.
  • Held twice a year in the Hiroshima and Hofu districts, with a total of 8 members from 8 companies successfully completing the program in FY March 2013.

Case Example 4: J-ABC Conference

Mazda has held this conference every year since 2005 for all participating companies, providing a venue for case presentations, awards, and other events.

  • The 2012 conference was attended by a total of 420 participants, with 340 participants from 43 local suppliers and 80 participants from Mazda.
  • Also used as a brainstorming opportunity where J-ABC activity policy and outstanding case examples are shared.
  • *4Karakuri Kaizen® is a registered trademark of the Japan Institute of Plant Maintenance.
"The 8th J-ABC Conference" Award Ceremony (October 2012)
"The 8th J-ABC Conference" Award Ceremony (October 2012)
The 8th J-ABC Conference: Outstanding presentation (October 2012) Hofu Plant, Hirotec Corp.
The 8th J-ABC Conference: Outstanding presentation (October 2012)
Hofu Plant, Hirotec Corp.

VOICE

Winner of the "Karakuri Kaizen Dojo Annual Excellence Award" at the FY March 2013 J-ABC Conference.

Mr. Masashi Fujii
Mr. Masashi FujiiTask Force, Thermal Exchange Manufacturing Team, Headquarters Plant
Japan Climate Systems Corporation

Being in a mid-level position at my workplace, I decided to participate in the J-ABC Karakuri Kaizen Dojo to try my skills. Based on what I learned, I built a machine that automatically lines up the position and angle of a small ring-shaped component, and sets it onto a pipe. My work was implemented into the workplace and my colleagues found it very useful, but then I began wishing for more: I wanted my work to win the Excellence Award of the Karakuri Kaizen Dojo. I was disheartened when the machine failed to perform on the day of the screening. However, when a colleague tried to encourage me by saying "it's so useful, I'm sure it will win the award!", I became ashamed that I wanted to win more than I wanted to improve my workplace. I did end up winning the Excellence Award, but from that experience I learned that what is important is, above all else, "Karakuri that is useful in the workplace." I hope to continue my efforts toward improvement by using what I learned and putting myself in the shoes of those who are working.

Activities to Improve Capabilities at Each Workplace Production Site in Thailand (A-ABC Program)

"The 1ST A-ABC Conference" Award Ceremony (July 2013)
"The 1ST A-ABC Conference" Award Ceremony (July 2013)

In February 2013, Mazda launched the A-ABC (ASEAN Achieve Best Cost) program on a trial basis at AutoAlliance (Thailand) Co., Ltd. (AAT) to promote initiatives to improve quality and productivity jointly with suppliers. Two Mazda representatives in charge of the J-ABC program and two AAT production representatives serve as the facilitators in conducting activities along with seven local suppliers. This 5-month program is designed to understand/analyze the current situation of each supplier, develop/implement measures for improvement, and finally report the results. It aims to identify the key points in continuously promoting improvement activities in workplaces while respecting different national characters and cultures and to develop leaders at both AAT and suppliers to support improvement activities of suppliers.


Efforts to Eliminate Inefficiencies in the Forward Supply Chain

Mazda takes measures to reveal production inefficiencies and loss throughout the supply chain, ranging from manufacturing of single parts to completed automobiles, and works in close cooperation with suppliers in order to prepare and implement improvement measures.

Efforts to Eliminate Inefficiencies in FY March 2013

  • Efforts to improve transport efficiency: commenced efforts to reduce environmental burdens through improved transport efficiency by bringing together our suppliers, logistics companies, and Mazda in conducting an overall review of the logistics method.
  • Development with consideration to transport efficiency: in some domains, commenced operation of a new parts development process that takes into consideration transport efficiency in order to reduce losses in the entire supply chain.

Other Measures for Supplier Support

  1. Change to the "milk-run" system: Mazda has shifted from the conventional system, with delivery of parts by each supplier, to the "milk-run" system (MRS), in which Mazda trucks stop at multiple suppliers to collect parts. This system reduces workload in logistical operations and contributes to reduced environmental impact.
  2. Mazda provides advice on joint subscription systems for product liability insurance, which reduces manufacturers' liability risks for parts.
  3. Mazda provides information on third-party exhibitions and conventions to showcase the latest technologies and manufacturing methods.


In-House Education to Ensure Fair Transactions

The following educational initiatives are conducted for those engaging in procurement operations in order to realize fair and equal transactions.

  • Participation in the "Seminar for the improvement of subcontracting transactions" hosted by the National Association of Trade Promotion for Small and Medium Enterprises
  • Administering comprehension tests on the Subcontractors Act
  • Education on financial control
  • Posting of guides and process rules regarding appropriate transactions on the Purchasing Division website on the Intranet
  • Sharing of training/seminar content relating to consideration for human rights within the supply chain

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