Aiming for a Better Relationship with Suppliers

Basic Policy

We build strong partnerships with our suppliers and put importance on mutual growth. In all transactions, we comply with relevant laws and regulations in each country and region, and conduct fair, equitable, and transparent procurement. From a global perspective, we procure necessary materials and services domestically and internationally, making comprehensive judgments based on appropriate quality, cost, delivery time, and considerations for human rights, labor, safety and health, the environment, and ethics.

• Basic Policies on Procurement

Laws and Regulations: Understanding and Compliance

In procuring materials, we are taking various initiatives, including in-house training, in order to thoroughly comply with the "Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (Subcontract Proceeds Act)."
In FY2024, we continued conducting regular voluntary audits of departments which purchase materials, and enacted the necessary measures for items of concern in order to prevent violations of laws. In addition to purchasing staff, this training was also conducted for supervisors and staff in departments that engage with suppliers, and for staff at related companies in Japan. A total of 625 persons completed this training.

Business continuity management

In order to minimize the impact on customers in case of unforeseen circumstances such as a natural disaster or the bankruptcy of a supplier, we regularly perform verification activities such as checking the actual metal molds which are part of our assets, and monitoring the business situation of business partners. We also conduct practical activities based on the Disaster Confirmation Standards and Initial Response Methods that ESPEC has formulated. Since October 2024, we have operated a system that automatically confirms the status of supplier damage in the event of a disaster, enabling prompt verification and response.

Supplier evaluation

In our supplier evaluations, in addition to QCDESM (Q: Quality, C:Cost, D: Delivery times, E: Environment, S: Services, M:Management), we also evaluate supplier approaches to compliance and BCP (Business Continuity Plans). In FY2024, this system covered 178 key suppliers. We also conducted on-site visits when necessary to help reduce risks.

Promoting Sustainable Procurement

We promote sustainable procurement that considers human rights, labor, safety and health, the environment, and ethics.

Formulating Sustainable Procurement Guidelines

In March 2024, we established the ESPEC Sustainable Procurement Guidelines. In July of the same year, we held a briefing session for 126 suppliers, requesting signed consent forms regarding our guidelines and working together across the supply chain to ensure compliance.

• ESPEC Sustainable Procurement Guidelines

Environmentally-friendly procurement

To promote environmentally friendly procurement, we conduct surveys to evaluate environmental management activities based on the establishment of environmental management systems, including ISO 14001 certification, as a prerequisite. In FY2024, we conducted these evaluations with 126 suppliers, representing 95.0% of our purchased parts.

Formulating the Responsible Mineral Procurement Policy

Profits resulting from trade in minerals mined in conflict areas and high-risk areas may be a source of funds for armed forces that are the cause of human rights violations, environmental destruction, and other conflicts. ESPEC created the Responsible Mineral Procurement Policy in January 2024 and announced its approach to mineral procurement initiatives. In FY2024, we conducted regular checks on conflict mineral usage among select suppliers.

• Responsible Mineral Procurement Policy (For Suppliers: Procurement Activities)

ESPEC Mutual Prosperity Meetings

We have built relationships of mutual trust with our suppliers, and, aiming at co-existence and co-prosperity, have held ESPEC Mutual Prosperity Meetings. A total of 36 business partners have so far participated in the meetings (as of the end of March 2025) In FY2024, we have worked continuously to invigorate QC circle activities with the aim of improving quality. Additionally, we introduced the ESPEC Excellent Supplier Award System as a way to reward our suppliers every year.

Endorsement of the Declaration of Partnership Building

Market Information Briefing Seminar

At ESPEC, we invite our key business partners to our Market Information Briefing Seminar. Through this seminar, we provide the necessary information such as economic trends and order counts for business partners to use during production, which allows us to work toward ensuring stable procurement.