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 believes that the mutual prosperity of the entire supply chain can 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 the 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 activities
(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 gatherings 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 FY2018, we held a supplier seminar and social gathering with major business associates in Kyoto. A total of 239 people from 196 companies participated in the event.
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 rights and environmental conservation.

Kyocera established the Kyocera Supply Chain CSR Procurement Guideline 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 of our business partners based on this Guideline.

In FY2018, we had the cooperation of our overseas customers with such survey items as human rights, labor rights, environment conservation, health and safety, fair trade, ethics, quality, safety, BCP, and information security. For business partners whose efforts on some items were found to be insufficient, we requested they work more proactively on CSR activities.

We continue communication with business partners through information sessions and other opportunities.

Photo: Kyocera Supply-Chain CSR Deployment Guideline
Kyocera Supply Chain CSR Procurement Guideline
Kyocera Supply Chain CSR Procurement Guideline(pdf/413 KB)PDF
Supply-Chain BCP Survey

The Kyocera Group establishes the policy that swift restoration and restart of business should be attempted even in the event of severance of product and service supply as a result of a natural disaster. In this respect, we ask business partners to conduct a survey on their effort for business continuity planning and to further promote BCP activities.

We explain the importance of BCP to new business partners supplying us with essential raw materials and components, and request they strengther BCP measures. When the previous year’s survey revealed some business partners’ insufficient BCP efforts, we checked the status of improvements.

Kyocera will continue to promote the advancement of BCP activities both with the Kyocera Group and among our business parters.

 Measures to Address Conflict Minerals

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 armed groups that have committed human rights violations, and this has become an international issue.

Knowing that some revenue from 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.

The recent trend observes even corporations not listed in US stock exchange markets required to conduct “responsible minerals procurement” based on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (hereinafter abbreviated as the OECD Guidance) issued by OECD.

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 committed 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 Ensure Responsible Mineral Procurement

The Kyocera Group has set up a Committee consisting of directors or general managers of departments in charge of procurement (materials), IR, general affairs, internal auditing and legal affairs, as the central players to ensure responsible minerals procurement.

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 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 ensures the entire Group appropriately deals with the problem of conflict minerals.

Furthermore, we play an important role to realizing 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.

Coordination and Cooperation with Trade Organizations
Kyocera promotes coordination and cooperation with trade organizations as part of our system of cooperation with external parties related to conflict minerals. To be specific, we realize responsible mineral procurement and are initially active as one of major members of the Responsible Minerals Trade Working Group set up in the Japan Electronics and Information Technology Industries Association (JEITA) to cope with the related regulations including Article 1502 of the US Dodd-Frank Wall Street Reform and Consumer Protection Act. We extend our cooperation with the Responsible Minerals Trade Working Group in the understanding of and response to problems revealed by the survey, and the implementation of survey briefing sessions. Since 2013, we have served as lecturers regarding the conflict mineral survey information sessions held by JEITA.

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.

In FY2018, the survey based on Annex II of the OECD Guidance was conducted. As a result, we sent a Risky Smelter Report to business partners who had some problems that needed addressing in order to raise their attention.

We checked refineries and smelters listed in CMRTs provided by business partners with the list disclosed at CFSI The following results were found:
Photo: Briefing session to business partners
Briefing session to business partners

  Gold Tantalum Tin Tungsten Total
Number of refineries/smelters 146 42 80 46 314
Number of refineries/smelters Validated as CFS* 101 41 70 41 253
Number of refineries/smelters Considered as Non-CFS 45 1 10 5 61
* Refineries or smelters validated to be conflict-free by a third party

In addtion, we held consultation meetings with business partners to answer their questions. In China, Kyocera held a training session for in-house personnel in charge of conflict mineral research to reinforce internal systems. Furthermore, we started research on the procurement of additional minerals (such as Cobalt based on OECD Guidance) which are more and more demanded by customers.

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 identifying and carefully examining smelters. To this end, we intend to make a widespread survey using the Responsible Business Alliance (RBA), Responsible Mineral Assurance Process (RMAP) as a reference.

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 conflict minerals have been discovered. As a member of JEITA’s smelter support team, Kyocera also conducts outreach activity to encourage smelters to directly obtain certification.

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