Supply Chain Management
NSK’s Approach
The NSK Group’s operations are made possible by the support of its many suppliers. We consider suppliers to be essential business partners, and we seek mutual development while building relationships of trust. We have established a basic procurement policy to ensure fair procurement practices that also takes into account potential impacts on society and the environment. We carry out CSR procurement and green procurement globally, working across the entire supply chain to help build a sustainable world.
Mission of NSK’s Procurement Division
NSK’s procurement division strives to improve earnings and cost competitiveness by ensuring stable procurement and optimizing quality, cost, and delivery time through fair, transparent transactions with suppliers. In our relationships with suppliers, we practice sustainable, responsible procurement by ensuring compliance and focusing on CSR procurement. We also share our Green Procurement Standards and Supplier CSR Guidelines with suppliers in order to foster CSR activities throughout the supply chain.
Policy
NSK Supplier CSR Guidelines
The NSK Group asks its suppliers to ensure compliance with competition laws and anti-bribery laws, to respect the basic human rights of workers by prohibiting child labor and forced labor and maintaining occupational safety and health, to avoid the use of conflict minerals, and to make efforts to preserve the environment through activities such as managing environmentally harmful substances.
NSK Supplier CSR Guidelines
NSK Group Green Procurement Standards
The NSK Group has established standards for green procurement throughout the supply chain, starting at the beginning with parts and materials, and works together with suppliers on this issue. The standards address efforts to fight climate change, promote resource conservation and recycling, manage environmentally harmful substances, and other important matters.
NSK Group Green Procurement Standards
System
Global Supply Chain Management Promotion System
The Procurement Division Headquarters is tasked with ensuring that the NSK Group fulfills its social responsibility throughout the entire supply chain. Directed by a senior vice president, it plays a central role in building systems to promote supply chain management, working in collaboration with relevant functional divisions, such as the CSR Division Headquarters and Global Environment Department, as well as production, procurement and administrative divisions within the NSK Group. Procurement policies and progress on CSR procurement and other related measures are reviewed at the biannual Global Procurement Conference, which brings together those responsible for procurement from each region of the world.
Targets and Performance
Sixth Mid-Term Management Plan Targets (FY2019–2021) and the FY2020 Targets and Performance
| Policy | Sixth Mid-Term Management Plan targets | FY2020 targets | FY2020 performance |
|---|---|---|---|
| Ensure stable supply and optimize supplier portfolio | Stable procurement | BCP audits of 30 major companies (Cumulative total of 100 companies since FY2018) | On-site inspections not carried out due to the effects of the COVID-19 pandemic, efforts implemented centered on remote follow-ups of inspections conducted on 70 companies in FY2018 and 2019 |
| Sustainable and responsible procurement | Implementation of self-assessments based on the NSK Supplier CSR Guidelines (every other year) | Implemented to additionally reflect the assessment items pointed out in the CSR audit conducted by a third party in FY2018 Obtained responses from 416 companies in Japan (response rate 95%) and implemented verification of level of progress of efforts |
Initiatives
Regional Distribution of the NSK Group’s Supply Chain
The NSK Group has transactions with approximately 1,200 suppliers worldwide (after adjusting for overlap between regions) for direct materials.
Stable Procurement Based on Relationships of Trust
Sharing NSK’s Value Creation with Suppliers
The NSK Group holds procurement policy briefings every year to explain its procurement and other policies to major suppliers. Suppliers are asked to reinforce their efforts to implement CSR activities to ensure the same level of performance throughout the entire supply chain.
Promoting Fair Trade
In 2017, the NSK Group created an internal manual to address various fair trade trends in government and industry, such as laws and regulations like Japan’s Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, and industry agreements like the Voluntary Action Plan of the Japan Automobile Manufacturers Association, Inc. and Japan Auto Parts Industries Association. The manual is designed for employees involved in procurement, and it covers key issues and warns against specific types of conduct that are likely to be viewed with suspicion. We disseminated the manual and continue to work hard to promote fair trade.
Compliance Hotline
The NSK Group has established the compliance hotline (whistleblowing system) to enable anyone to anonymously convey their criticisms, opinions, and concerns. This helps to ensure any issues will be identified at an early stage so corrective measures can be taken. In Japan, for example, the hotline has two points of contact: one is the Head of the CSR Division Headquarters and the other is an outside attorney. We are careful to ensure that not only internal whistleblowers but also suppliers can use the hotline safely and securely and face no repercussions as a result. We have distributed leaflets to make the compliance hotline more widely known.
Identifying and Managing Risks in the Supply Chain
Supplier Risk Management
The NSK Group obtains understanding and agreement from all suppliers to follow the NSK Supplier CSR Guidelines and NSK Group Green Procurement Standards. We have also incorporated clauses on environmental, social, and governance (ESG) performance into basic transaction agreements to further strengthen risk management. We determine the risk that each supplier in NSK's supply chain presents by taking into account the procurement cost and volume, the importance of the procured parts, the availability of replacements, the risk of the presence of environmentally harmful substances and conflict minerals, and the risk of damage from earthquakes, wind or flood.
Suppliers estimated to present a high level of risk are placed under critical control, and we assess supplier risk by checking their financial condition, requiring them to conduct CSR self-assessments, and other methods. The necessary measures to reduce risk are then implemented in close collaboration between those suppliers and the relevant departments at NSK, such as design and production. We also conduct a careful study of risk before beginning to do business with any new supplier. We confirm their management structure, check for legal violations including violations of environmental and labor laws, and verify practices related to quality control and environmental management, among other things.
Supplier CSR Self-Assessment
The NSK Group asks its suppliers to perform CSR self-assessments and monitors the condition of their operations (every two years). We then report the results of our evaluation of their activities back to the suppliers.
Respecting Human Rights (related site)Enhancement of Supply Chain BCP Effectiveness (Japan)
The NSK Group has built a system for quickly identifying the scale of damage and problems at suppliers in the event of a disaster. The system also facilitates a precisely targeted response with the cooperation of suppliers. Drills are conducted regularly to ensure sites properly utilize the Supplier Safety Confirmation System, which is used for emergency contact. We have also asked major suppliers to create their own Business Continuity Plans (BCP) and verified their progress in order to strengthen risk management throughout the supply chain.