Procurement Practices Procurement Practices

Procurement Policy

The Advantest Group pledges respect for our suppliers, places value on open communication with our suppliers, and emphasizes the maintenance of fair business relationships through sustainability by promoting ESG in accordance with relevant laws and regulations. We are also committed to sharing values and building collaborative relationships with our suppliers, toward our goal of achieving mutual growth.

• Advantest Procurement Policy

Materiality of Procurement Practices

• Approach to Materiality in Conflict Minerals
• Approach to Materiality in Supplier Labor Practice Assessment
• Approach to Materiality in Supplier Human Rights Assessment
• Approach to Materiality in Assessment of the Supplier Impact on Society
• Approach to Materiality in Environmental Assessments of Suppliers

Approach to Materiality in Conflict Minerals

Conflict minerals are not only regulated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but it is also a major problem faced by society as a whole. Advantest remains aware of the importance of responding to the issue of conflict minerals, which also has deep ties to efforts conducted by the entire industry.

Approach to Materiality in Supplier Labor Practice Assessment

Advantest considers the execution of its own businesses in accordance with human rights and labor practices important for a broad range of stakeholders, including our business partners.

Approach to Materiality in Supplier Human Rights Assessment

Advantest recognizes the influence that it has as a company on human rights violations in components, materials as well as manufacturing processes and it considers the broad protection of human rights, including our suppliers, to be vital.

Approach to Materiality in Assessment of the Supplier Impact on Society

Advantest recognizes that compliance proposals and adherence to social norms in components, materials as well as manufacturing processes also affect the company and it considers the fulfillment of its social responsibility throughout the entire supply chain, including all of its business partners, to be vital.

Approach to Materiality in Environmental Assessments of Suppliers

Advantest considers the development of high-quality green products vital by working from the perspective of environmental conservation in components, materials as well as manufacturing processes.

Organization to Promote Fair Trade (CSR Procurement)

In order to promote and manage fair trade, we have established a department whose role is to check the Purchasing Department and we implement a yearly audit by the Audit Division to ensure that there are no problems and that normal trade practices are being followed. In addition, every year we implement an internal control audit using an external organization and we were able to confirm again in fiscal 2018 that there were no problems.
Moreover, for outstanding orders, we check the status at the end of each month to ensure that there are no acceptance inspection omissions; and for orders where the acceptance inspection takes a long time, we report the reason for this and the expected completion date to the Audit and Supervisory Committee.

Education for Practicing Fair Trade

We have held seminars on a subcontractors law, with participation not restricted to the purchasing department staff. Moreover, we began employee e-learning about the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors in fiscal 2016 to raise greater awareness about this law. We also implemented follow-up training with internal instructors to each of our business groups. In the future, we will continue to educate our employees in order to realize the principles of fair trade.

Social Responsibility in the Supply Chain

Implementation of questionnaire survey for suppliers

Advantest has published its Procurement Policy and the Advantest CSR Procurement Guidebook on its homepage as a way of fulfilling its social responsibility in a supply chain that includes all of its business partners, and it asks these business partners to adhere to relevant laws and ordinances as well as social norms.

We evaluate our business partners on QCD* every quarter and carry out an annual CSR questionnaire for our business partners who have a significant impact on the procurement of Advantest. We devise the questions and conduct this survey to match the perception of all of our business partners by re-examining the priority issues of our company and questions every year based on an analysis of the assessment results for the previous year with a focus on the Advantest CSR Procurement Guidebook. Furthermore, by creating materials that bring together the answers for each business partner to provide feedback independently about areas that have been highly evaluated and areas where improvements are requested, we are building a bond in which we will grow together with these business partners.
For fiscal 2018 survey, we carried out the questionnaire in April 2019 and obtained the answers from each company. The return rate for completed questionnaires was 100%. We were able to confirm that each company had established an overall policy and Code of Conduct for societal responsibility in accordance with the Advantest Procurement Guidebook by making approaches to further instill the Advantest Procurement Policy as the priority issue in fiscal 2018. When we observed a case that may be deviating from our guideline, we individually sent a feedback sheet with improvement items described and requested them to cooperate with us for improvement. We will conduct another questionnaire in fiscal 2019 based on the results from the questionnaire conducted in fiscal 2018 and confirm our business partners' response to our procurement policy.

* QCD: abbreviation of Quality, Cost, Delivery

Set up of inquiry and reporting window

When trading with our business partners, in the event that one of our employees infringes, or is suspected to infringe, on our Code of Conduct, a trade contract or a relevant law, we request that this be reported to the Contact Window on our website. In fiscal 2018 we did not receive any complaints.
The reporter and their company would not be penalized in any way for reporting. Following an investigation, in the case that a problem is recognized, the action in question would be stopped and measures would be taken to prevent recurrence.

Measures against procurement risks

Supply Chain BCP Map

Advantest promotes purchasing from multiple procurement sources as a general rule as a contingency for the procurement of components from the perspective of BCP.
In addition, we created a BCP map of our suppliers and manufacturing bases to speed up information collection and countermeasure examination in case of a disaster.

Response to Conflict Minerals

Implementation of survey

At Advantest, in order to respond to Section 1502 (conflict minerals provisions) of Title XV of the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations in the U.S., we are playing an active role together with the industry organization to address the conflict minerals problem.
Since 2013, we have been implementing an annual survey of our business partners regarding the use of conflict minerals through a RMI* report (conflict mineral reporting template (CMRT)) and releasing the results.

* RMI: Responsible Minerals Initiative