Quality Assurance Framework

The IHI Group has established the IHI Group Quality Committee as a Group-wide committee on quality. The Committee confirms that important policies related to quality have been translated into specific initiatives. The Officer responsible for Group Quality Assurance acts as the Committee chairperson. Committee members consist of Presidents of Business Areas, Executives responsible for quality for Business Areas, and Executives of Corporate Divisions. Until fiscal 2025, the Committee met twice a year in principle. From fiscal 2026, the meeting frequency will be increased to four times a year in principle. In fiscal 2025, the Committee met a total of four times, including ad hoc meetings, in light of the status of quality assurance risks. The Committee also deliberates on the quality policy for the next year at the final meeting of the fiscal year.

Quality Improvement Promotion System

IHI Group Quality Committee

Risks

The IHI Group has built a Quality Assurance Framework and has put in place a quality management system (QMS) to ensure quality in order to provide products and services that achieve customer satisfaction, safety, and peace of mind. The Group strives to maintain the QMS in an appropriate state at all times by reviewing it in a timely and appropriate manner in response to changes in customer expectations for products and services and changes in the external environment, including legal requirements.
However, if an unexpected situation were to occur, it could compromise customer safety and undermine public trust and reputation, as well as compensation for damages, which could have a negative impact on the IHI Group’s business performance and financial condition.

Opportunities

Ensuring quality and product safety provides the IHI Group with great opportunities to improve customer satisfaction, strengthen its brand image, and improve market competitiveness.
Also, rigorous approach to the quality management system will enhance the quality assurance capabilities of the entire organization and enable timely and appropriate responses to environmental changes, thereby promoting product innovation. In addition, the IHI Group is advancing initiatives to enhance quality management through the use of AI and digital technologies. Specifically, in certain businesses, past cases accumulated in nonconformity information databases and other sources are referenced, and generative AI is used to support the identification of key considerations and preventive measures for upcoming projects. The resulting insights are utilized as reference information during the design phase, including design reviews.
In another Business Area, efforts are underway to clarify and make more accessible its QMS which has become increasingly complex through years of revisions and additions. By utilizing generative AI, rules and requirements are organized and classified according to business processes, thereby supporting the identification of applicable rules. Through these efforts, an environment is being developed in which personnel can easily access, understand, and apply the relevant rules and requirements.

Quality Assurance Activities

The IHI Group carries out its business activities under obtaining Quality Management System (QMS) certification based on public standards such as ISO 9001 at its sites that provide products and services. QMSs that have been certified may be required to obtain certification other than ISO 9001 due to customer requests, and due to the nature of their business, there may be cases in which they intentionally do not obtain third-party certification.
Of the 61 locations of IHI and its consolidated subsidiary companies in Japan and overseas, 49 locations have acquired the QMS certification for fiscal 2025 (certification attainment rate: 80.3%). The breakdown is 28 of 34 locations in Japan (certification attainment rate: 82.4%) and 21 of 27 locations overseas (certification attainment rate: 77.8%).
To maintain and improve the effectiveness of the QMS, business units themselves verify the implementation status of the QMS in daily operations through internal audits. Rather than merely obtaining third-party certification, Corporate divisions at headquarters also take the lead in reviewing and verifying how QMS processes have been established and operated based on QMS implementation requirements standardized across the IHI Group, thereby promoting continuous improvement.
In line with the IHI Group quality policy and key quality measures and based on annual and medium-term plans of each operating company and business area, the IHI Group sets quantitative quality objectives and target dates according to product characteristics and business operations. Progress toward these objectives is monitored through the operation of the QMS and the objectives are regularly reviewed and revised through internal audits and management reviews. For example, in the Industrial Systems & General-Purpose Machinery Business Area, quality costs associated with addressing defects (an internal management indicator: warranty and service costs) and the ratio of such costs to cost of sales (warranty and service cost ratio) are monitored. These indicators are used for non-mass-produced models, with certain exceptions, to capture the occurrence and impact of quality defects on a monetary basis and to verify the effectiveness of quality improvements. For fiscal 2026, the targets have been set at 944 million yen and a warranty and service cost ratio of 0.52% (cost-of-sales basis). In this business area, the Group aims to achieve a warranty and service cost ratio of less than 0.5% over the medium term.
In addition, in order to make Quality Assurance Activities using QMS more effective, the IHI Group has been continuing activities since 2019 to create a comfortable workplace by solving problems that arise in the workplace.
The Group aims to disseminate outstanding initiatives throughout the entire company by announcing them at Group-wide results reporting meetings.

Ensuring Product Safety

To ensure product safety, the IHI Group has established systems tailored to each stage from design and development through manufacturing and post-delivery response, and operates them systematically. The key systems and processes for ensuring product safety are outlined below.

(1) Risk mitigation during the design and development stage
The IHI Group conducts lifecycle risk assessments during product development and implements design measures to reduce risk as much as possible. The Group then provides residual risk information to its customers.

(2) Quality and safety requirements for suppliers
Under its procurement policies and related rules based on the IHI Group Code of Action, the IHI Group sets standards for its suppliers regarding the quality, performance, reliability, and safety of products and services.
The Group communicates these standards to suppliers through procurement requirements, contract terms, and other means, and deploys these standards and verifies compliance with them in procurement and contracting processes to ensure that the quality standards expected by the Group are continuously met. To ensure quality, it is important to communicate requirements, including applicable laws and regulations, to suppliers appropriately and specifically. Accordingly, the Corporate Divisions conduct reviews to confirm that each Business Area fully understands and appropriately cascades requirements to suppliers.

(3) Prevention of nonconformities and their release in each process
Based on its Quality Management System, the IHI Group conducts activities to verify the quality of outputs, including design drawings, products, and records, throughout each process from design and development to procurement, manufacturing, inspection, and shipment (delivery), according to product characteristics and business operations. Through these activities, the Group works to prevent the occurrence of nonconformities (conditions that fail to satisfy customer requirements, laws and regulations, standards, or internal rules) and their release to subsequent processes or external parties. If a nonconformity is detected, the Group identifies and segregates it to prevent unintended use or delivery. The Group then takes measures depending on the nature and impact of the nonconformity, including correction, repair, disposal, suspension of shipment, notification to customers, and acceptance under concession with customer approval, where necessary. The Group also takes corrective actions (to prevent recurrence).

Key initiatives at each stage are as follows:

• Design stage: Reviewing and verifying design outputs (design reviews) to ensure conformity with requirements and prevent the occurrence of nonconformities.
• Procurement stage: Promoting Group-wide efforts to directly verify supplier understanding of and compliance with critical requirements such as legal and regulatory requirements, rather than relying solely on suppliers, to prevent the occurrence and escape of nonconformities.
• Manufacturing and production stage: Conducting quality verification at each stage of manufacturing, production, inspection, and testing and, if a nonconformity is detected, identifying and segregating it and taking prescribed measures to prevent its escape.
• Final verification stage: Conducting final quality verification prior to delivery and, if a nonconformity is detected, identifying and segregating it and taking measures, including suspension of shipment, to prevent its escape.

(4) Customer Complaint Handling Process
If an incident (nonconformity) occurs in which a product provided to a customer does not meet the requirements of the customer or society, including issues related to product safety, each organization provides contact points for product inquiries through which customers can submit complaints and request resolution. In addition to general inquiries, these contact points formally accept complaints and concerns regarding products, and the nonconformity is handled in accordance with the procedures defined in each organization’s QMS. Information received through these contact points is also addressed in coordination with relevant divisions and appropriately handled, including notifying customers upon receipt (acknowledgment of receipt). Where necessary, customers are informed of response policies and expected response timeframes. Certain businesses have developed response systems through service sites and other locations, enabling customer inquiries and requests to be addressed in coordination with relevant divisions.

(5) Recurrence prevention and incorporation into management systems
To prevent the recurrence of previous nonconformities, the Group conducts a thorough investigation of the problem, which may include issues with systems and procedures, their management and operation, competence management, education and quality awareness. Based on the investigation results, the Group reviews the Quality Management System (QMS) that encompasses these elements and conducts the necessary education and training, thereby leading to more reliable recurrence prevention.

Customer Complaint Response Process (Overview)

This diagram illustrates the common approach and framework for customer complaint handling across the IHI Group. Specific operating methods and procedures may vary across companies and organizations.

(6) Response to significant quality issues and information disclosure
When quality issues or instances of quality misconduct are identified, the IHI Group conducts root cause analysis and implements corrective and recurrence prevention measures, managing such matters within its quality management and crisis management frameworks.
The Group also makes appropriate external disclosures regarding significant quality issues or quality misconduct, taking into consideration laws, regulations, and potential social impact.

Number of Law Violations

Quality-Related Training Participants

Limited to the Quality Assurance Division until FY2023