The DENSO Group's Procurement Policies

As a global corporation with operations in 35 countries and regions, DENSO aims for optimum procurement and purchases of components, materials, and equipment worth ¥4.0 trillion from some 7,500 suppliers each year (with a local procurement rate of about 80%).
DENSO has established five policies, shared by all Group companies, based on the principle of appropriate transactions that are fair, transparent, and open. Accordingly, DENSO has made an explicit commitment to an “open door policy” that provides opportunities for suppliers to participate in its business in a fair manner without regard to national origin, company size, or previous transaction history. DENSO is also committed to undertaking efforts to realize mutual development by designating suppliers as equal business partners and to comply with Japan’s Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors and the laws and regulations of each country and region in which the Company is active.

As the global procurement Head Office, DENSO CORPORATION coordinates with the procurement departments of each overseas regional headquarters to promote local procurement.

DENSO uses its corporate website and its various opportunities for face-to-face interaction, including the Supplier Appreciation Meeting, to share information on procurement and other policies and foster communication in order to facilitate mutual growth with its suppliers in the midst of global competition. The Company has also created the Constitution Assessment Program for Suppliers (CAPS), which evaluates supplier capabilities based on the five perspectives of quality, cost, delivery, management, and safety and the environment, in an effort to strengthen partnerships. DENSO utilizes this program to help suppliers reinforce their business structures and to recognize outstanding supplier performance.
At overseas Group companies, the procurement departments of each regional headquarters are playing a central role in holding discussions and appreciation meetings with individual suppliers to deepen mutual understanding and establish policy to further the development of all parties.

In September 2020, DENSO CORPORATION announced the Declaration of Partnership Building, a framework introduced by the Cabinet Office and the Ministry of Economy, Trade and Industry in Japan. This declaration was adopted for the purposes of achieving coexistence and co-prosperity throughout the supply chain, creating new partnerships that extend beyond existing company size and business relationships, and ensuring compliance with desired business practices (“Promotion standards” pursuant to the Law on Promotion of Small and Medium Subcontractors). Going forward, DENSO will continue to form new partnerships and achieve coexistence and co-prosperity with all of its suppliers in order to provide even more value throughout the supply chain.

At DENSO, our procurement divisions take the lead in entrenching the principle of appropriate transactions that are fair, transparent, and open. They also distribute the Code of Conduct for DENSO Group Associates, which clearly outlines the standards of conduct for each and every employee, to all members of the Group. At the same time, we share the Business Etiquette for Buyers, which lays out standards of behavior that should be adhered to within procurement activities, to all employees involved in procurement and promote awareness through eLearning courses and other initiatives. We also encourage suppliers to utilize our Internal Reporting System and distribute and share the DENSO Compliance Declaration, which clarifies items to be observed in conducting business, to suppliers and internal procurement departments. Moreover, we offer anonymous surveys to suppliers on fair transactions and carefully reflect on the unfiltered feedback that we receive. In these ways, we are working to ensure strict compliance and make improvements to better meet supplier needs.
Looking ahead, we will continue to strengthen our partnerships with suppliers and deliver products and services that satisfy our customers through the procurement of components, materials, and equipment that boast superiority in terms of quality, technology, delivery times, environmental and safety performance, and compliance. While doing so, we will strive to contribute to the development of the automotive industry as a whole.

DENSO is working on a Groupwide basis to ensure appropriate transactions and adherence to laws and regulations. To that end, the Company has been engaging in close communication with each of its suppliers to better understand cost fluctuations and the issues that suppliers face. Amid the soaring costs of various goods, including not only unavoidable increases in raw material and energy costs, but also rises in wage levels, we have been working to set appropriate prices within the supply chain, seeking to set in motion a virtuous cycle across the industry and the domestic economy.
Looking ahead, we will further deepen our communication with suppliers, explicitly discussing the need to reflect increases in labor, raw material, energy, and other costs in transaction prices during price negotiations. At the same time, we will implement initiatives to ensure strict adherence to laws and regulations on a Groupwide basis. In these ways, we will aim to achieve sustainable development based on mutual trust with our suppliers.

To respond to more diverse and frequently occurring risks, such as recent natural disasters (earthquakes, floods, fires, etc.), cyberattacks, and unexpected events (epidemics, wars, and terrorism), and to ensure that we can continue our supply to customers, we are moving forward with a broad range of activities, together with our suppliers, with the aim of solidifying our foundation for a stable supply.
As part of our risk-prevention efforts, we will work to clearly define our supply chain on a global scale while seeking to bolster our disaster mitigation measures and fire-prevention structure. We will also conduct information security inspection activities to prevent production disruptions and confidential information leaks caused by cyberattacks.
Meanwhile, in an effort to prepare for risks, we are working to enhance continuity by standardizing components and spreading out production activities across multiple plants so that we can ensure backup production throughout the supply chain when a risk occurs. We are also taking steps to secure the amount of risk inventories needed until production is restored, in the event of a disruption. Furthermore, to enact swift measures to stabilize supply when a risk occurs, we are leveraging systems that visualize supply chain information and ensuring that we are able at all times to ascertain information at our suppliers in the areas where a risk occurred.

For DENSO, suppliers are a partner with whom we strive to achieve growth and foster trust through open dialogue and ongoing communication. In addition to spreading knowledge on and rigorously enforcing appropriate transactions both internally and externally, we have been working to create environments that make it easy for suppliers to voice their concerns and to alleviate said concerns. Going forward, throughout the DENSO Group, we will make efforts to strengthen partnerships with suppliers and continue to offer customers fulfilling products and services through the procurement of parts, materials, equipment, and services that are superior in terms of quality, technology, cost, time to delivery, and environmental and safety compliance. In these ways, we will work toward mutual growth with our suppliers. DENSO will remain committed to establishing a positive economic cycle that encompasses all stakeholders, from customers to suppliers.