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Supply Chain Strategy

The challenges facing modern societies, such as climate change and energy issues, are increasingly global in their scope. To meet these challenges, it is essential for Nissan to identify relevant issues at each stage along the supply chain and make ongoing efforts to address them. As a business with worldwide operations, Nissan has a supply chain that extends across the globe. We promote consistency in procurement practices throughout the global supply chain, sharing our vision and principles with business partners and engaging with them to ensure their adoption.
We aim to achieve sustainable growth built on a foundation of mutual trust with its business partners. We listen closely to and work with our suppliers as equal partners, developing and maintaining cooperative and competitive relations that enable us to implement best practices.

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Nissan’s Approach to the Supply Chain

To optimize purchasing activities, the Alliance partners established a common purchasing company, the Renault-Nissan Purchasing Organization, in 2001 and have steadily increased the scope of its activities in the years since then. The organization now covers all purchasing domains, incorporates all purchasing functions and builds mutually profitable business partnerships with all suppliers. Its name was changed to the Alliance Purchasing Organization (APO) in April 2018, after Mitsubishi Motors joined the Alliance. The new organization aims to help each brand achieve sustainable performance through the steady development of the Alliance as well as through the advantage of economies of scale.
We use common, transparent processes and criteria worldwide to select suppliers and is open to doing business with new partners, regardless of nationality, size or transaction ties in the past. Suppliers are selected after the relevant Nissan divisions meet to examine submitted proposals from a range of perspectives. We explain our decisions to every supplier that takes part in the supplier selection process as part of a thoroughly fair, impartial and transparent system.
Transactions with suppliers are based on the three values that the Alliance regards as important: trust (work fairly, impartially and professionally), respect (honor commitments, liabilities and responsibilities) and transparency (be open, frank and clear).
Nissan and Renault have produced a booklet, The Renault-Nissan Purchasing Way,* outlining the values and processes the Alliance sees as important when doing business. This booklet has been shared with tier-1 Renault and Nissan suppliers since 2006. In Japan, we also adhere to the “proper trading guidelines” issued by the Ministry of Economy, Trade and Industry for the automotive industry.

Supply Chain Company Organization

The Alliance Purchasing Organization (APO)

Processes from Supplier Selection to Mass Production

Working with Suppliers

We aim to make our global supply chain sustainable by conducting ethically, socially and environmentally responsible business at every stage. We collate and manage a database of plant locations, total purchase values and other basic information for all suppliers. We are working together with all suppliers to promote the sustainability principles set out in the Renault-Nissan CSR Guidelines for Suppliers and the Nissan Green Purchasing Guidelines.*

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Supply Chain Management Policies and Philosophy

Renault-Nissan CSR Guidelines for Suppliers

To effectively implement sustainability practices worldwide, Renault and Nissan revised the Renault-Nissan CSR Guidelines for Suppliers* in December 2015. Renault and Nissan distributed the revised guidelines to all their suppliers and have also asked suppliers to share the revised guidelines with their own business partners to ensure they permeate throughout the supply chain. The first edition of the guidelines was drawn up for distribution by Renault and Nissan in 2010 with reference to the CSR guidelines of the Japan Automobile Manufacturers Association, Inc.
Key revisions and clarifications in the 2015 edition included, as a response to new laws and ordinances: (1) updating the procurement policy to include responsible mineral procurement and the elimination of antisocial forces based on new Japanese governmental guidelines and regulations; (2) requiring a shared commitment to sustainability activities with suppliers at the time the guidelines are distributed and (3) beginning third-party assessment of supplier sustainability activities as an Alliance initiative from fiscal 2016. As part of efforts to promote sustainability practices among business partners in emerging countries, the revised guidelines were published in Chinese as well as English and Japanese.
To help suppliers review their corporate activities from a sustainability perspective and take sustainability actions, the guidelines explain expected practices in 26 categories across the following five areas:

  1. Compliance: Complying with laws, preventing corruption, etc.
  2. Safety and Quality: Providing products and services that meet customer needs, etc.
  3. Human Rights and Labor: Prohibition of child labor and forced labor, complying with working hours and remuneration laws, etc.
  4. Environment: Environmental management, reducing greenhouse gas emissions, etc.
  5. Information Disclosure: Open and impartial communication with stakeholders, etc.

The guidelines mandate that suppliers comply with laws and regulations. If suppliers are found to be in a state of non-compliance, the guidelines prescribe required responses, such as filing a report immediately, conducting an investigation and formulating corrective measures. In the case of a non-compliance incident, we will take firm action based on our regulations and do everything necessary to prevent a recurrence. In fiscal 2018 no human rights violations, such as discrimination, occurred, and no supplier was found to be at serious risk of forced labor or child labor.

Suppliers and Environmental Activities

We share our environmental philosophy and environmental action plan with suppliers. To improve environmental performance throughout the supply chain, we first published the Nissan Green Purchasing Guidelines in 2001 and have promoted actions in line with these guidelines since then. After Nissan and Renault integrated their technical standards for management of chemical substances in fiscal 2016, a revised version of the guidelines were published in January 2017. Furthermore, in August 2018, based on the midterm environmental action plan, Nissan Green Program 2022 (NGP2022),*1 we revised the content of the guidelines, adding requests that suppliers undertake their own environmental activities. Additionally, in May 2019, in order to strengthen management of environment-impacting substances, we added requirements dealing with supplier self-diagnosis of environment-impacting substance management and related topics, which all suppliers are asked to follow.*2
The Nissan Green Purchasing Guidelines are part of the detailed explanation in the environment-related section of the Renault-Nissan CSR Guidelines for Suppliers.
Environmental activities undertaken with suppliers involve the core components of compliance with environmental regulations and Nissan’s basic environmental principles, along with activities to reduce the burden on the environment.
As for the former, in response to global trends in such regulations as the European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulation and the European Reusability/Recyclability/Recoverability (RRR) Directive, we have added new items to the list of banned substances and globally expanded component data management. When selecting suppliers for new models, we check their management of and activities regarding environmentally hazardous substances, informing them of specific actions needed to comply with the REACH Regulation and requesting their compliance.
Based on the Nissan Green Program, we hold annual environmental briefing sessions and have since fiscal 2012 conducted surveys to ascertain CO2 emissions, water usage, waste production and other data related to our burden on the environment. To further enhance our activities in this area, in fiscal 2014 we adopted the supply chain program run by CDP, an international environmental NPO that manages a global system for disclosing corporations’ environmental impact and strategies. In fiscal 2018, based on these surveys, we began encouraging some suppliers to improve their environmental activities.

The Role of the Nissan Green Purchasing Guidelines

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Supply Chain Management

Nissan has been working to improve its supply chain through activities including third-party assessment of suppliers’ sustainability activities and sustainability training for workers in its purchasing department. We have also instituted an awards system to recognize suppliers whose performance is superior. This awards system aims to encourage suppliers in the global supply chain to embrace Nissan’s management approach, which balances the economic activities of quality, cost reduction and technological development with social responsibility and environmental concern.

Evaluation of Supplier’s Sustainability Practices, Monitoring and Auditing

We confirm suppliers’ acceptance of the Renault-Nissan CSR Guidelines for Suppliers and check their environmental management systems and their willingness to advance environmental activities with us at the time of selection. Among newly selected suppliers in fiscal 2018, 100% of them met Nissan’s social standards and basic environmental principles.
In 2016 the Renault-Nissan alliance began third-party assessment of suppliers’ sustainability activities to raise standards through mutual confirmation. When results do not meet Alliance standards, suppliers are asked to draw up plans for improvement. We then monitor their implementation.
We also conduct sustainability training in our purchasing department to ensure that employees conduct checks of suppliers’ sustainability activities in their daily work.
If there are issues with the supply of parts and materials, they may lead to problems for Nissan’s production and supply chain as a whole. We therefore address sustainability with the following measures: (1) confirming supply risks under normal circumstances; (2) following up annually on quality, cost, delivery, development and management (QCDDM) performance and (3) working with suppliers to craft response plans for natural disasters to ensure production continuity or early restoration of capacity.
We monitor compliance from the perspective of supplier management, constantly assessing the situation at each supplier based on a range of factors. When high risk is identified, we work with the supplier to rapidly draft and implement countermeasures.
In fiscal 2018 there were no suppliers whose compliance was problematic, and no supplier contract was terminated for such a reason.

Promotion of Monozukuri Activities with Suppliers

Promotion of Monozukuri Activities with Suppliers

We work to continually improve the competitiveness of our products through the Monozukuri Activities program, a collaboration between suppliers and Nissan that was launched in 2008. Since 2009 these activities have expanded through the joint THANKS Activities initiative, which emphasizes trust and cooperation between Nissan and its suppliers. With the goal of working with suppliers to become cost leaders under today’s challenging market conditions, we strive to improve product quality, reduce costs and rationalize manufacturing through measures that include increasing production volume per part, promoting localization and improving logistics. Based on activities at our own plants, we are working with major suppliers to reduce their electricity, gas and other energy costs and CO2 emissions as an energy-efficient THANKS Activities initiative.

In fiscal 2013 we introduced the Total Delivered Cost (TdC) Challenge, aiming to optimize all fluctuating costs, including for specifications, materials, exchange rates and logistics. To achieve the goals of our midterm business plan, Nissan M.O.V.E. to 2022,* our various functional departments, together with suppliers, are continuously working to forcefully advance the TdC Challenge and improve both quality and supply.

Engagement with Suppliers

Providing suppliers with timely and accurate information is a key task for Nissan. Suppliers’ meetings are held in Japan and overseas to spread understanding of Nissan’s purchasing policy for the fiscal year, midterm business plan and other matters. In Japan, we hold monthly meetings and directly informs suppliers of our production plans, activities and requirements. The meetings are also an opportunity for Nissan to respond to supplier questions and requests.

Recognizing Supplier Contributions Worldwide

Each year we recognize the contributions of our suppliers to the development of our business and improvement of our performance with awards presented at the global level as well as in each of the regions where we operate. At the Nissan Global Supplier Awards, we present Global Quality Awards to suppliers showing exceptional performance in quality for the year, and Global Innovation Awards to suppliers whose innovative initiatives improved Nissan’s brand and product power. Global Quality Award recipients are selected by Nissan’s purchasing, quality and other divisions using standard criteria applied worldwide. Global Innovation Award recipients are selected from suppliers nominated by Nissan’s production, development and other divisions in two categories: product technology and process management. In fiscal 2018 six companies received Global Quality Awards, while Global Innovation Awards went to twelve companies.

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Action Against Conflict Minerals

Conflict Minerals Policy

In August 2012 the U.S. government enacted regulations requiring companies to report the use of four minerals mined in the Democratic Republic of the Congo and surrounding countries and believed to be sources of funds for armed insurgents. Agreeing with the spirit of this legislation and aiming to heighten sustainability awareness, Nissan established a policy against use of conflict minerals and published related information on its website.* Investigations of our supply chain for any use of conflict minerals have been conducted since fiscal 2013.
Checking for conflict minerals throughout the global supply chain is a major undertaking. We regularly discuss the issue in working groups with organizations including the Japan Automobile Manufacturers Association, Inc., the Japan Auto Parts Industries Association and the Japan Electronics and Information Technology Industries Association, seeking to establish best practices for investigation and result analysis.

Conflict Minerals Management

We began conducting conflict-mineral surveys in our major areas of operation (Japan, North America and Europe) in fiscal 2013. Starting in fiscal 2014, we gradually expanded the scope of these surveys to suppliers in other areas. The surveys track minerals back through the chain of suppliers using documents called CMRTs (Conflict Mineral Reporting Templates) provided by the RMI.* This enables Nissan to identify smelting and refining companies that are not procuring minerals that are a source of funds for armed groups in their regions.
We provide the suppliers we survey with manuals describing how to fill in required forms and what tools to use to collate results. In this way, we work to increase understanding of conflict-mineral issues throughout the supply chain.
In fiscal 2018 we conducted surveys in Japan, the United States, Mexico, Europe, China, Thailand, Indonesia, Taiwan, India and South Africa. No suppliers were found to be using minerals from smelters/refineries believed to be connected to armed groups.
Going forward, we plan to make our surveys more effective by improving its methodology in conjunction with the member companies of the Japan Automobile Manufacturers Association, Inc., and the Japan Auto Parts Industries Association. We will also continue to seek responses from suppliers that did not reply to the survey.

  • RMI stands for Responsible Minerals Initiative, an organization with member companies and associations from the information and communications technology and other industries that works to improve global social and environmental awareness.