SocialWorking Together with Business Partners

Nihon Parkerizing aims to achieve environmental and social sustainability through our businesses under our corporate philosophy of “contributing to the preservation of the global environment and creation of an affluent society by creating new value from resources through surface modification of all kinds of materials, to make effective use of limited resources on planet Earth.”

To fulfill our social responsibilities under this philosophy, we provide our customers with safe and secure chemical raw materials. We aim to mutually enhance our corporate value by promoting sound procurement activities with our suppliers through legal compliance, respect for human rights, and fair trade. We strive for a sustainable procurement policy with our business partners under the following Policies.

Procurement Policy

1. The Nihon Parkerizing Group aims to realize coexistence and co-prosperity with suppliers based on mutual trust.
2. The Nihon Parkerizing Group will provide opportunities for procurement transactions to all suppliers and select them fairly and honestly, considering quality, price, delivery time, and other factors.
3. The Nihon Parkerizing Group will comply with domestic and foreign laws, regulations, and social norms and request that its suppliers comply with the same laws and regulations.
4. The Nihon Parkerizing Group is committed to sustainable procurement activities, fully considering the environment, human rights, occupational.

Procurement Guidelines

Supplier Management: Initiatives for Sustainable Procurement

We conduct transactions in accordance with our procurement guidelines.
When starting new business relationships, we prioritize suppliers that meet the following conditions.
The same criteria apply to continuing business relationships.

1. The company must be in sound business condition.
2. Compliance with laws, regulations, social norms, and the like and consideration for human rights and the environment.
3. The quality, prices, and delivery dates of products from the suppliers are appropriate.
4. Suppliers have a stable supply and can respond to supply and demand risks.
5. Ability to achieve supply continuity through BCP measures.

For existing suppliers, we request the conclusion of quality-assurance-related agreements and the completion of surveys regarding the management of chemical substances contained in products.
Furthermore, we conduct supplier performance evaluations based on the frequency of delivery nonconformities.
Based on the evaluation results, we confirm corrective actions and conduct audits as necessary to achieve “sustainable procurement.”
To promote sustainable procurement, we request the following information from our suppliers:

1. Delivery specifications
2. Quality control
3. Business partner
4. Supply-demand risks
5. Legal compliance and international codes of conduct
6. Raw materials purchased
7. Chemical compliance

Supplier Engagement

We aim to achieve sustainable and responsible procurement by ensuring that our suppliers understand and implement initiatives in line with the “CSR Procurement Guidelines” and the “Green Procurement Guidelines.”
According to these guidelines, we also evaluate our suppliers.

① Self-Assessment Report

Submission Status of the FY 2024 Self-Assessment Report
In accordance with the requirements of the IATF 16949 standard^*1, we requested that 133 suppliers, including newly scheduled business partners,  submit our company’s original Self-Assessment Report^*2. A total of 108 suppliers responded, representing a response rate of approximately 80 percent.
Based on our own assessment method, no suppliers were identified as non-compliant. We will continue this survey in FY 2025 and beyond to identify risks related to product supply and promote activities to reduce them.

*1: IATF 16949 is a quality management system standard specific to the automotive industry.
*2: The Self-Assessment Report is our original questionnaire designed to meet the quality requirements of the automotive industry.

② Response to Raw Material Nonconformities^*3

When nonconformities are identified in received raw materials, the factory promptly issues a “Supplier Check Sheet” to share information among relevant departments.
Where necessary, suppliers are requested to take corrective actions.
Through our continued efforts, the number of nonconformity cases has decreased steadily year by year.
In FY 2024, 23 nonconformity cases were identified upon delivery, all of which have been corrected.
We will continue to work closely with our suppliers to prevent the recurrence of such issues.

*3: Nonconformities that do not affect product quality, such as missing inspection sheets or other documentation, packaging or container defects, and delivery delays.

Number of Nonconformities

1. Supplier Risk Assessment

We collaborate with all suppliers to share cases of nonconforming products that occur after business transactions begin and to implement corrective actions. Nonconforming products are defined as follows:

• Nonconformities in raw materials (supplier products) that are likely to cause significant defects in the quality or performance of our products.
• Nonconformities identified during incoming inspections at our manufacturing plants result in rejection.

When such nonconformities occur, our Quality Assurance and Procurement Departments promptly request that suppliers take corrective actions and identify root causes, documenting their findings in a “Corrective Action Report,” which includes a root cause analysis form. Audits are conducted as necessary after corrective actions to prevent recurrence.

2. Supplier Audits

As part of our quality management system, we conduct audits—based on the self-assessment report submitted in advance—to ensure product quality and supply stability for suppliers identified as requiring evaluation. In addition, we conduct a supply risk investigation for all suppliers once every two years to collect essential information necessary for stable procurement, such as details of manufacturing sites and product storage locations. If disruptions occur in suppliers’ production activities due to natural disasters, fires, or equipment failures, we conduct special audits or investigations to identify issues and facilitate early resolution.

3. Responsible Procurement (Conflict Minerals Survey)

We conduct annual conflict mineral surveys among our suppliers. In FY 2024, we investigated six target minerals, tin, tantalum, tungsten, gold, cobalt, and mica, tracing them back to their mining origins. The response rate was approximately 90 percent, and no minerals were found to have been sourced from mines associated with armed groups or inhumane business practices. The survey results are disclosed to customers upon request. We will continue these surveys from FY 2025 onward to ensure responsible mineral sourcing.

Survey Response Rates and Results (Past 3 Years)

4. Supplier Communication

We distribute the Procurement Bulletin monthly to all our suppliers. The bulletin provides information on recent delivery nonconformity cases, important announcements, and quality management updates to help maintain and improve product quality. We provide advanced notice about these periodic surveys to help suppliers better understand our initiatives. To confirm suppliers’ understanding of the Procurement Bulletin, we have been conducting an annual survey since FY 2022. In FY 2024, the response rate was 71 percent, and the results were published in the same bulletin. Through these activities, we strengthen mutual understanding with our suppliers and prevent delivery nonconformities.

Survey Response Rate

5. Supplier Employee Training

We provide training programs for our suppliers’ employees to ensure fair, honest, and equitable business transactions. These programs are conducted in accordance with legal requirements and the Nihon Parkerizing Group Principles of Ethics and Conduct. In particular, in accordance with our company policy to comply with the Subcontracting Act, we offer introductory training sessions on the Subcontracting Act to employees involved in procurement operations and administer follow-up tests to reinforce understanding. In FY 2023, 63 employees completed the training, and in FY 2024, 56 employees participated. Approximately 80 percent of participants passed the comprehension test.

Announcement of the Declaration of Partnership Building

Supporting the intent of the Council on Promoting Partnership Building for Cultivating the Future promoted by the Cabinet Office and the Small and Medium Enterprise Agency, Nihon Parkerizing has announced the “Declaration of Partnership Building”.

Nihon Parkerizing aims to build new partnerships by promoting collaboration, coexistence and shared prosperity with business partners in its supply chain and business operators who seek to create value.

Participation in the Keidanren Biodiversity Declaration Initiative

Our group supports the “Keidanren Declaration of Biodiversity and Action Guidelines” issued by the Japan Business Federation and participates in the “Keidanren Biodiversity Declaration Initiative.” In our procurement activities, we place importance on biodiversity and natural capital, and we are working across the entire supply chain to minimize negative impacts and maximize positive impacts.