"Visit and check" we visit our suppliers and provide expert advice on CSR

#SDGAction42791

Description

Intro

Factory shutdowns due to labor strikes and fires were increasing in China, when Fuji Xerox shifted most production from Japan to China in 2005. Fuji Xerox needed to assure that the suppliers’ factories will not face such problems. Thus, Fuji Xerox introduced ethical procurement in 2007 to improve CSR management. 
The key characteristic is "visit and check" program. It aims to provide advice on how to improve supplier CSR issues. 
At Fuji Xerox of Shenzhen Co., Ltd., production line stops caused by suppliers’ CSR risks achieved zero hours since 2015. 
Fuji Xerox believes that this contributed to SDGs 8/10/12/15.

Objective of the practice

Fuji Xerox decided to introduce ethical procurement in 2005, and introduced in 2007 with three main objectives. 
First, to minimize production line stops caused by supplier's human rights and labor, environment, corporate ethics issues (CSR issues). Fuji Xerox’ production is mainly assemble parts to produce multifunction devices and printers, so when parts from suppliers are delayed, the factory cannot operate. In fact, there were cases where suppliers’ delivery delayed due to suppliers’ labor strikes or fires. 
Second, to build a strong supply chain. It is critical for suppliers to continuously improve their labor/human rights/environment/business ethics for their own survival. If Fuji Xerox can encourage and push its suppliers for continuous improvement, it would strengthen the whole supply chain. 
Third, to contribute to solve social problems such as human rights violations, occupational accidents and health hazards. Fuji Xerox tries to identify suppliers’ issues and advise to improve; for example, child labor, forced labor, excessive hours of work, non-payment of wages, insufficient safety of machinery and equipment, etc. By this, Fuji Xerox aims to protect the human rights of suppliers' employees and secure their safety. This is related to SDGs # 8-5, 8-7, 8-8. 
Before implementing ethical procurement, Fuji Xerox already requested its suppliers various aspects such as quality improvement, cost reduction and delivery improvement. To minimize the burden of suppliers, Fuji Xerox reorganized communication and evaluation process at procurement department to incorporate suppliers CSR performance. 
Furthermore, Fuji Xerox invited its major suppliers’ executives to gather their thoughts on what would be the best process to implement promote ethical procurement. Through several study meetings, Fuji Xerox completed the framework of its ethical procurement program.

Partners

It is critical that supplier's executives are engaged. Once they are convinced, they will continuously improve ESG. Fuji Xerox engaged its major suppliers to participate from the preparation stage. Fuji Xerox collaborates with China labor NGO, Institute of Contemporary Observation to obtain advice on China’s labor issues. HR, Environment, General Affairs, CSR staff constituted "expert team" that visited supplier factories to provide advice on labor/environmental management improvement. Buyers play important role to observe suppliers’ issues that leads to factory shutdown.
ILO is also a collaboration partner to study the impact of this project.

Implementation of the Project/Activity

We introduced ethical procurement in 2007. We continuously carry out the following activities.

1. Sharing CSR philosophy
Fuji Xerox holds briefings for the tops of suppliers to share our philosophy and purpose of ethical procurement.
We distribute supplier code of conduct (CSR management guideline) that describes human rights and labor, environment and corporate ethics. It also contains the background, reasons and best practices. We also distribute "CSR Self-Checklist" which is intended to check the progress of suppliers’ CSR activities.

2. Understanding CSR risk at suppliers
Suppliers are asked to report on the progress of their CSR activities. Suppliers are requested to plan and implement improvements where needed.

3. Encouraging CSR improvement activities by suppliers
Fuji Xerox of Shenzhen undertakes "visit and check". The expert team visits a supplier's factory and checks the actual condition of human rights and labor, environment, corporate ethics. The expert team is comprised of Human Resources, Environment, General Affairs, Legal Affairs, and CSR Staff. The expert team witnesses with their own eyes the actual performance at the factory. Based on improvement and practical experience at our factory, the expert team gives advice on what the problems are and how they could resolve them.

The "visit and check" is different from "audit". We are not aiming to score suppliers' nonconformance, or to screen suppliers. We operate based on the spirit of "we learn and grow stronger together with suppliers.”
Suppliers Fuji Xerox Shenzhen carried out "visit and check" improved their CSR problems, and we feel the effect. Since 2012, the labor strike caused by shortage of factory labor management, etc. increased rapidly throughout China. With the existing expert team, the number of times we could visit our suppliers was limited.
Therefore, in 2013, in order to strengthen "visit and check", we doubled the number of visit by increasing the expert staff members who are dedicated to the program.

Results/Outputs/Impacts

Currently, suppliers who exceed 90% of our transaction volume report us the CSR self-check result every year.
In 2012, 74% of the line stop at Fuji Xerox of Shenzhen was caused by parts delay due to supplier strike. After strengthening the "visit and check" team in 2013, we could halve this. By 2015, we achieved zero-hour line stop due to supplier CSR issues, and continues thereafter.
Labor and environmental problems in China are changing drastically. Suppliers have demanded broader advice on practices by human rights and labor, environment, corporate ethics. Therefore, Fuji Xerox introduced seminars every year for suppliers' Human Resources / Environment managers and staff since 2014. Up to now, seminars were held 16 times, and a total of over 1000 companies participated. We are taking a questionnaire every time, and participant satisfaction exceeded 95%.
This has also improved the employee engagement. The “visit and check” team staff come to understand the leading-edge practices, appreciates the positive response by participating suppliers.

Enabling factors and constraints

Cost down and quality are essential to production. Factory CSR management is important, but we cannot invest a lot. In order to maximize effect with limited personnel, Fuji Xerox Shenzhen has reduced the number of direct visits to suppliers slightly and instead, has expanded number of seminars inviting a number of suppliers. Participation in the seminar is not mandatory, but both the attendance rate and satisfaction level of the seminar are high.
Suppliers and we are both manufacturers in China. We believe that the key success factor is that we share our own practices, in terms of securing human resources and environmental measures.

Sustainability and replicability

FXSZ's "visit and check" takes advantage of knowledge and experience of Human Resources, Environment, General Affairs, Legal Affairs and CSR of our factory to improve supplier’s CSR.
Through expert advice according to the standpoint and circumstances of individual suppliers rather than strictly following the uniform standards, we could demonstrate the improvement effect by getting credibility and trust from suppliers.
From now on, we will proceed with our "visit and check" and seminar as two pillars of our sustainable ethical procurement.
Ethical procurement and "visit and check" established at FXSZ, our largest factory, is also being deployed in Shanghai (China) and Vietnam. In addition, we are preparing to start in another factory.
We also pay effort to spread such practice across industry. At the Supply Chain Subcommittee of Global Compact Network Japan, we completed "A Vision of Desirable CSR Activity in the Supply Chain" based on our ethical procurement philosophy and method, with 24 other companies.

Conclusions

When preparing to introduce ethical procurement, we were convinced that ethical procurement should not be introduced if it is not effective. So, we incorporated CSR into the procurement process, designed the activities to benefit suppliers by implementing overall improvement with mutual cooperation with suppliers. We were able to realize ethical procurement that emphasize not only "conduct + audits" but also supplier factory improvement, that both benefits the society and strengthening supply chain.

Other sources of information

Strengthening supply chain management (implementing CSR/expanding ethical procurement at Fuji Xerox manufacturing sites)
https://www.fujixerox.com/eng/company/csr/sr2018/suppliers/theme.html

Sustainability Report (Fujifilm Holdings)
http://www.fujifilm.com/sustainability/report/

Fuji Xerox Ethical Procurement Program (United Nations Global Compact / Sustainable Supply Chains: Resources & Practices)
http://supply-chain.unglobalcompact.org/site/article/52

Making CSR Synonymous with Corporate Management: Fuji Xerox (The Tokyo Foundation for Policy Research)
http://www.tokyofoundation.org/en/articles/2016/fuji-xerox#

A Vision of Desirable CSR Activity in the Supply Chain (Global Compact Network Japan)
http://ungcjn.org/activities/topics/detail.php?id=117

SDGS & Targets

Goal 15

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

Goal 8

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 10

Reduce inequality within and among countries

Goal 16

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels