Mazda Promotes CSR and Improves Profitability through Strong Partnerships with Suppliers

Mazda partners with 1,087 suppliers as of March 2019. As stated in the Basic Purchasing Policy, Mazda is open to any business opportunities for both domestic and overseas suppliers. Also, Mazda comprehensively evaluates partner suppliers not only on quality, technical capabilities, prices, delivery dates, and business conditions but also on their CSR initiatives. As for CSR, Mazda has established specific guidelines and requires all suppliers to comply with them.

Since cooperation with suppliers is crucial for CSR and risk management initiatives, Mazda regularly provides communication opportunities for information exchange and dialogue with suppliers. Especially, the automaker works closely with purchasing cooperative organizations. Major organizations are Yokokai, which consists of parts suppliers, and Yoshinkai, which consists of material suppliers. The total member companies of Yokokai and Yoshinkai are 249 (as of March 2019), which accounts for 22.9% of all Mazda suppliers, and they hold about 90% of Mazda's total procurement amount.

In recent years, Mazda has been further strengthening business relationships with its suppliers. As part of this, Mazda works with suppliers in an attempt to rationalize the supply chain and improve profitability. Mazda has built a cross-functional team, consisting of selected members from procurement and production sections at Mazda, with suppliers. This is to grasp the flow of manpower, goods, and capital in the entire supply chain and minimize the harmful effects of vertical division. During the COVID-19 pandemic, Mazda offered a needs assessment on financing to partner suppliers, made referrals to several banks if needed, and introduced available resources for suppliers in need.

Mazda’s Supplier Management Policy

Basic Purchasing Policy and Supplier Evaluation System

・In line with its basic purchasing policy (documented in 1994), Mazda makes efforts to build open business relationships and ensure fair and even-handed dealings with suppliers both in Japan and overseas. - “Mazda will, in the fullest sense of coexistence and mutual prosperity, engage in research and production for improved competitiveness. The Company will build open and fair business relationships to ensure sustainable growth and raise its level of contributions for social and economic development.” - When starting a business with a new supplier, Mazda assesses the company in a fair manner according to its in-house criteria for evaluation of suppliers, and then determines the feasibility of a business partnership. The criteria include quality control system, research & development system, technological capabilities, financial conditions, and CSR initiatives. - For existing/continuing business partners, additional criteria, such as the quality and the cost and delivery time of the procured goods or services, and another comprehensive evaluation are added. - Regarding the supplier quality control system, Mazda receives daily reports and voluntary audit results from each supplier. For a supplier requiring quality improvement, Mazda employs a system that enables continuous grasping of issues, evaluation of the situation, and provision of guidance for improvement by conducting on-site quality auditing at both domestic and overseas sites. - Mazda evaluates its suppliers every year (e.g. 271 suppliers in 2018), and outstanding suppliers are recognized with awards.

Promoting Deployment of the Mazda Supplier CSR Guidelines

・Mazda requires all suppliers to comply with the Mazda Supplier CSR Guidelines. - In the Guidelines, CSR activities are categorized into six areas: Customer Satisfaction (Safety/Quality), Environment, Social Contribution, Respect for People (Human Rights/Work), Compliance, and Information Disclosure. - The Mazda Green Purchasing Guidelines are separately created to indicate the Mazda’s approach on the environmental protection area in more detail. - The guidelines were first published in July 2010 and revised 3 times. In the latest version updated in October 2018, an item related to the promotion of fair trade was added to the compliance. - Mazda has conducted questionnaire surveys for suppliers since FY2013, aiming to understand/evaluate their CSR implementation. - In FY2018, a questionnaire survey was carried out about compliance (fair business practices) and labor practices. The survey was targeted at approximately 60 local manufacturers, a major percentage of whose sales consisted of products delivered to Mazda. Based on the results, Mazda held individual interviews with companies that need further improvement. - The guidelines emphasize nonuse of conflict minerals and other materials that may cause social problems. In FY2018, Mazda conducted a survey on conflict minerals targeting about 300 suppliers in response to the request.

Information Exchange and Dialogues with Suppliers

・Mazda proactively offers suppliers communication opportunities on a regular basis to ensure that the company can work closely with them. - Maintains close liaisons with supplier-managed purchasing cooperative organizations, like Yokokai. Through the organization, member companies can visit each other’s offices to exchange examples of successful approaches and practices through subcommittee activities. In FY2019, 127 companies conducted a total of 59 activities.

Activities to Improve Manufacturing Capabilities in Collaboration with Local Suppliers

・Mazda is rolling out its J-ABC (Jiba [“local”] Achieve Best Cost) program for local suppliers in and around Hiroshima starting in 2004. - In the program, Mazda visits suppliers’ plants and uses the Mazda production system approach as a basis for identifying wasteful, unnatural, or problematic manufacturing processes. Mazda then works with them to formulate and implement countermeasures. - It has helped increase productivity and reduced production costs by around 3 billion yen per year.

In-House: Promotion of Fair Business Practices

・In order to promote fair business practices, Mazda provides in-house educational initiatives for those who engage in procurement operations at Mazda. The initiatives include administering comprehension tests on promotion of fair business practices (including Subcontractors Act), educating on financial control, posting of guides and process rules regarding fair business practices and compliance on the Purchasing Division website, and offering the fair-trade promotion seminar hosted by the third party.

Major Channels of Communication with Suppliers

Target participants		Frequency	Aims/Content
Roundtable Conference with Supplier Management	Executive-level management at major suppliers	Annual	・Mazda’s president and CEO explains Mazda’s current status and issues Mazda is facing. The general manager of the Purchasing Division also explains purchasing policies in order to heighten participants’ understanding of Mazda and gain their cooperation. ・This conference also deepens friendly ties between Mazda and its suppliers.
Supplier Meeting	Representatives of frontline business divisions and departments at major suppliers	Annual	・Mazda’s specific purchasing policies are explained to representatives of frontline business divisions at suppliers, based on the explanation given at the roundtable conference by the general manager of the Purchasing Division. This helps to promote a better understanding of Mazda and provides useful input for the work that suppliers do.
Supplier Communication Meeting	Representatives of frontline business divisions and departments at major suppliers	Monthly	・To facilitate smoother collaboration with its suppliers, Mazda provides them with information, such as topics concerning daily operations between Mazda and its suppliers (including CSR), production/sales status, quality status of purchased materials, pilot construction schedules for newly developed models, and mass-production implementation schedules for new models.
Others	-	As needed	・Mazda also employs a range of other communication channels, by using the in-house “Mazda Technical Review”, highlighting new technologies and research.

(Created based on Mazda Sustainability Report 2019)

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