Together with Business Partners
Message from the General Manager of Procurement Strategy Planning Division
Managing Executive Officer
General Manager of Procurement
Strategy Planning Division
IHI’s Group Procurement Policy is based on three core principles — fair and impartial procurement, mutually beneficial partnerships with business partners and satisfying compliance and societal needs.
The procurement of materials or equipment involves not only compliance with legal requirements but also consideration of human rights, the environment and conflict minerals*. In addition to education for employees, IHI also satisfies societal demands by sharing information with suppliers for beneficial coexistence and co-prosperity.
* Minerals from conflict regions that, if purchased, sometimes result inadvertently in funding armed insurgents or fueling regional disputes.
IHI regards suppliers of goods and services, both in Japan and overseas, as key partners sharing similar goals.
We ensure that our procurement teams comply with domestic and foreign laws and regulations, and meet other social requirements as part of their basic code of conduct. Our suppliers are selected through a fair and impartial evaluation process, and our procurement activities help to enhance the competitiveness and prosperity of these partners, as well as IHI.
Fair and Appropriate Trade
IHI contributes to society by conducting fair and appropriate trade.
To provide products and services that respond to societal needs, we advise business partners on technical and managerial issues, if requested, after evaluating the technology, quality and price considerations.
Global procurement activities are carried out at procurement bases in each region, so to ensure adherence to local standards and compliance with import/export regulations, awareness training is conducted throughout the Group. Training also is provided on meeting requirements related to the environment, human rights, labor, health and safety.
Mutual Prosperity with Business Partners
IHI is constantly striving to enhance its procurement activities by sharing information and policies with business partners. We work to strengthen relationships with our partners through value engineering* and other initiatives for sharing information on quality, costs and delivery deadlines.
*Value engineering is a professional, function-oriented, systematic team approach to analyzing and improving value in products, facility designs, systems or services. It can be applied to any business and has been proven useful for long-term business strategy, increasing customer satisfaction and adding value to investments.
Responsibilities regarding Business Partners
The IHI procurement policy ensures that both IHI and business partners correctly understand the needs of society.
For procurement in Japan, IHI and its business partners share information on their supply chains, including tier-two and tier-three suppliers. This also helps IHI to evaluate the status of its supply chains following natural disasters, such as earthquakes.
To facilitate procurement overseas, we are setting up bases around the world, mainly in Southeast Asia, to optimize our supply chains. We provide technical assistance and quality guidance to business partners in emerging nations.
Together with Suppliers
IHI promotes enhanced collaboration by awarding suppliers who produce particularly outstanding accomplishments. In FY2016, we presented Tata Steel (Thailand) Public Co., Ltd. with an award of appreciation. Tata is a partner that supplies IHI with materials for plant construction. We recognized Tata for helping us to enhance a plant-construction project by providing high-quality products and flexible deliveries tailored to the project’s progress.
Initiatives for Legal Compliance
IHI conducts internal training on procurement-related laws, such as Japan’s Act Against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (Subcontractors Act) and the Construction Business Act.
Internal training courses designed to ensure compliance with procurement-related laws are now offered to all related divisions, helping to increase understanding and awareness of proper procurement procedures. In FY2016, 122 employees attended the Subcontractors Act course and 87 took part in the Construction Business Act course.
IHI internally audits procurement divisions to determine if they are in compliance with Japan’s Subcontractors Act, and then offers guidance as required. Voluntary inspections and improvements have been encouraged since FY2012.
To comply with foreign procurement legislation, we support voluntary post-clearance inspections for all relevant IHI divisions. We also offer training in the procurement laws and tax systems of key emerging countries and provide local personnel with training on our procurement policy to ensure global compliance.
Corporate Social Responsibility in Procurement
Since releasing the IHI Group Basic Procurement Policy in FY2012, we have circulated the policy to major business partners and asked them to respond to a CSR questionnaire to ensure compliance.
Based on the results of the questionnaire, we have been helping certain business partners to engage in more responsible procurement since FY2014.
Some 4,900 IHI group employees involved with procurement have taken e-learning courses on responsible procurement to learn about topics including Japan’s Subcontract Act and the UK Modern Slavery Act.
We will intensify efforts to raise awareness of responsible procurement, confident that these measures will help to improve the competitiveness and prosperity of both IHI and its business partners.
IHI Group Policy on Conflict Minerals
We have established the IHI Group Policy on Conflict Minerals as part of the IHI Group's Basic Procurement Policy. As a company policy, IHI will not procure raw materials, parts, or products that contain conflict minerals produced in the Democratic Republic of the Congo or its adjoining countries. We have also conveyed this policy to our major business partners to ask for their cooperation in disclosing related procurement information if requested by our clients.
Response to UK Modern Slavery Act
Some 4,900 IHI Group employees involved with procurement have taken e-learning courses on responsible procurement to learn about topics including Japan’s Subcontract Act and the UK Modern Slavery Act.
We will continue to raise awareness of responsible procurement within the IHI Group companies.
Organized Crime Countermeasures
IHI rejects any involvement with organized crime in its procurement activities. We clearly stipulate to our business partners that no relationship with such groups is permissible, especially in the case of partners from industries that are sometimes alleged to have links with organized crime.
By so doing, we strive to eliminate any involvement with organized crime.
Activities in FY2016
Deployment of Basic Procurement Rules
In addition to deploying our Basic Procurement Policy, in April 2017 we publicly announced our Basic Procurement Rules for fair and impartial procurement, mutually beneficial partnerships with business partners, and observance of compliance and social needs in work processes.
To deploy these rules throughout our global operations, we held briefings for overseas affiliates at our overseas procurement bases in Shanghai, Singapore, London and New York, and communicated the importance of compliance in procurement to employees throughout the IHI Group companies.
Moving forward, we will continue to effectively govern procurement and increase awareness within our Group.
Developing Global Procurement Professionals
To develop global procurement professionals, IHI accepts local employees of overseas affiliates for training in Japan and provides employees of affiliate companies in Japan with training in overseas procurement.
In FY2016, IHI Headquarters received one trainee from Thai affiliate IHI Asia Pacific Pte. Ltd. (Thailand), who completed a year-long OJT program related to procurement.
IHI Headquarters also received three trainees from Japanese affiliate Paul Wurth IHI, who completed a six-month OJT program on overseas procurement.
We will continue group-wide efforts to develop procurement professionals who can operate on a global level.
Plans for FY2017
IHI will provide group companies in Japan and overseas with additional assistance to strengthen their compliance with procurement rules. We will implement a range of measures, including raising their awareness of the IHI Group Basic Procurement Policy, educating procurement staff about compliance and providing lectures to affiliated companies overseas.