Supply Chain Management

| Policy and Systems Related to Purchasing Activities | Measures to Address Conflict Minerals |
 Policy and Systems Related to Purchasing Activities
The Kyocera Group thinks that the mutual prosperity of the entire supply chain will only be realized if all companies involved in the series of business processes including development, production, sales and service work together to meet the demands of society. To this end, the Kyocera Group actively communicates with business partners and focuses on the building of partnerships based on mutual trust. We also ensure thorough compliance with business-related laws such as the Subcontract Act, by regularly implementing in-house education and audits of personnel in charge of materials and business divisions.
Basic Policy on Purchasing
At the Kyocera Group, we are determined to contribute to value creation and business development through materials business, diligently conduct work, and coexist with business partners, thereby attempting to be better people and win society’s trust. We established the Basic Policy on Purchasing with this idea as the basis of our purchasing activities. Under this policy, we conduct various surveys on corporate overviews and CSR to evaluate and select our business partners fairly.
· Whether the fundamental thinking of the Kyocera Group is understood.
· Whether the thinking of the business operator and the management rationale of the prospective supplier are acceptable to Kyocera.
· Whether the company aims to improve management ability, technological strength and manufacturing ability; and whether business management is appropriate and stable in terms of scale and finances
(e.g.: VA*1 / VE*2 proposal strength).
· Whether the company excels in such areas as quality, price, delivery time, service response, etc.
(e.g.: ISO9000 series or equivalent quality management systems; lead-time reduction activity).
· Whether the company is seriously involved in global environmental conservation activity
(e.g.: ISO14001 certification).
*1 Value Analysis  
  *2 Value Engineering  
Holding of Supplier Seminars and Social Gatherings
photo: Awarding at the social gathering in the supplier seminar

Awarding at the social gathering in the supplier seminar
The Kyocera Group regularly holds supplier seminars and social gathering with business associates in order to better allow them to understand the management policy and business policy of the Group and request their further cooperation with our activities.

In FY2016, the supplier seminar and social gathering were held in Kyoto for major business partners, or 159 people from 136 companies. In addition, we awarded particularly excellent business partners in terms of quality, pricing and delivery, selected based on the transaction records in the past one year.
CSR Deployment in the Supply Chain
The Kyocera Group promotes CSR activities together with our business partners in order to fulfill our social responsibilities in terms of human rights, labor and environmental conservation.

Kyocera established the Kyocera Supply-Chain CSR Deployment Guidelines to appropriately handle CSR issues that should be addressed by the entire supply chain, including formulation of BCP regarding conflict minerals and swift business restoration and continuation in disaster situations. We survey the CSR activity efforts on the part of business partners based on the Guideline.

Specifically, we surveyed human rights, labor, environment, safety and health, fair trade, ethics, quality, safety, business continuity plans (BCP), information security and other items with the help of our business partners. For business partners whose efforts on some items was found to be insufficient, we requested them to work more proactively on CSR activities. As a result, we found that many business partners showed successful results from their efforts.

We intend to deploy CSR activities to overseas business partners as well as Group companies’ business partners.
Photo: Kyocera Supply-Chain CSR Deployment Guideline
Kyocera Supply-Chain CSR Deployment Guideline
Kyocera Supply-Chain CSR Deployment Guideline(pdf/356 KB)PDF
Supply-Chain BCP Survey

Kyocera asks business partners to have their own business continuity plan (BCP) by surveying their promotion of BCP activities in order to ensure that there is no interruption of important operations in the event of damage by a disaster or an accident, to be able to restart operations as soon as possible even if they are interrupted, and to continue the supply of products and services to customers.

In FY2016, we explained the importance of CSR efforts to business partners who were found by the FY2015 survey to be insufficient in their effort and requested them to reinforce their involvement in BCP activities.

Kyocera will continue to promote and spread BCP in the Kyocera supply-chain to help our business partners further promote their own BCP activities.

 Measures to Address Conflict Minerals
In recent years, there is concern that mineral resources mined in the Democratic Republic of the Congo and neighboring countries may serve as a source of funds to the armed groups that have caused human rights violations, and this has become an international issue.

Knowing that some revenue of minerals produced from the Democratic Republic of the Congo and its neighboring countries in Africa including columbite-tantalite (tantalum), cassiterite (tin), gold, wolframite (tungsten), and their derivatives are used to fund armed groups that commit human rights violations, the Dodd-Frank legislation of July 2010 designates these minerals as “conflict minerals” regardless of where they are produced and requires all companies listed on the New York Stock Exchange to disclose information on the use of these minerals in their products.
Image: Democratic Republic of the Congo

Kyocera Group’s Conflict Minerals Policy
The Kyocera Group’s policy is that we will not purchase materials or products that use conflict minerals and their derived metals which are mined in the Democratic Republic of the Congo and neighboring countries and serve as a source of funds to the armed groups that have caused human-rights violations. We issued the Kyocera Supply-Chain CSR Deployment Guideline, which states our policy on conflict minerals, to help our business partners understand our stance and policy, thereby sharing the same attitude toward this issue.

Organizational System to Handle Conflict Mineral Issue
In the Kyocera Group, the Kyocera Conflict Minerals Committee, consisting of directors or general managers of departments in charge of procurement (materials), IR, general affairs, internal auditing and legal affairs, has been established as the central player to deal with the conflict mineral issue.

This Committee determines the methods that serve as the basis of conflict mineral investigation and the information to disclose about conflict minerals, and provides reports on its activities to the top management in a timely and appropriate manner. Furthermore, the Committee provides education to Kyocera Group companies about the rules and policies on conflict minerals and makes sure the entire Group appropriately deals with the problem of conflict minerals.

Furthermore, we play important roles to realize early recognition of risks in handling conflict minerals, including communication with stakeholders, communication with the procurement division, and swift response to complaints or notices on conflict minerals collected through the internal reporting system.

Actions for Business Partners and Survey Results
Kyocera conducted survey to our business partners using the Conflict Minerals Reporting Template (CMRT) prepared by the Conflict-Free Sourcing Initiative (CFSI), an international organization dealing with conflict mineral issues.

The FY2017 survey included holding a total of four briefing sessions in Japan, China and Vietnam, where business partners of Kyocera are concentrated. 146 companies participated in those sessions. In China and Vietnam, Kyocera held a training session for in-house personnel in charge of conflict mineral research to reinforce the internal system of the Kyocera Group.

Based on the results of the due diligence, Kyocera collated the list of refineries and smelters disclosed by CFSI with the processing facilities of conflict minerals used in Kyocera’s products and obtained the following findings as of March 13, 2017:
Photo: Briefing session to business partners
Briefing session to business partners

  Tin Tantalum Tungsten Gold Total
Number of refineries/smelters 81 44 45 134 304
Number of refineries/smelters Validated as CFS* 66 44 40 94 244
Number of refineries/smelters Considered as Non-CFS 15 0 5 40 60
* Refineries or smelters validated to be conflict-free by a third party

Report submitted to the U.S. Securities and Exchange Commission (Kyocera Group)
Report submitted to the U.S. Securities and Exchange Commission (AVX Corporation)(this is located on the AVX Web site.)

Kyocera Group’s Future Measures
The Kyocera Group recognizes the importance of continuing its survey using the CFS program and in identifying and investigating smelters and refiners.

Therefore, we intend to continually establish a strong supply chain relationship through various measures, including the signing of a letter of engagement with suppliers that includes a pledge to contact Kyocera immediately if a connection to a conflict mineral has been uncovered.

Furthermore, Kyocera belongs to a team, formed by JEITA, which assists smelters, and conducts ourtreach activities directly using smelters to obtain CFS validation.

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