Supply Chain Management

Our Approach

At Aratas, we place strong emphasis on environmental, social, and governance (ESG) considerations not only within our own operations but also throughout our supply chain, guided by our corporate philosophy and our commitment to contributing to a sustainable society.
We believe that collaboration with suppliers and other business partners is essential to achieving sustainable business operations. Accordingly, Aratas promotes responsible procurement practices that encompass respect for human rights, occupational health and safety, environmental protection, and business ethics. Through these efforts, we strive to enhance sustainability across our entire supply chain.

In addition, we work to identify and mitigate supply chain risks through ongoing dialogue with suppliers and various assessment activities. Where necessary, we support improvement initiatives and collaborate with our suppliers to further strengthen sustainability throughout the supply chain.

Aratas Group Purchasing Policy

Aratas Group is committed to conducting responsible purchasing activities with respect for legal compliance, social responsibility, and environmental sustainability.
We pursue the optimum balance of quality, cost, delivery, and service to create value for our customers and stakeholders.
We value trusted partnerships with our suppliers and work together to build a sustainable supply chain.

Basic Policies

OPEN
We provide fair opportunities to suppliers around the world and support open and competitive sourcing.

FAIR
Suppliers are selected through a fair and objective evaluation of quality, cost, delivery, technology, reliability, and other relevant factors.

GLOBAL
We seek the best partners globally and promote procurement of excellent products and services from the most suitable sources.

SUSTAINABILITY
We conduct procurement activities with integrity by respecting laws and social standards, reducing environmental impact, protecting human rights, safeguarding information, and supporting a sustainable society.

Promoting Sustainable Procurement

To achieve a sustainable supply chain in collaboration with our suppliers, Aratas has established the Aratas Group Sustainable Procurement Guidelines. We ask all suppliers to implement initiatives in line with these guidelines and promote the conclusion of master purchase agreements that include provisions requiring compliance with the guidelines.

The guidelines set out requirements covering human rights, labor practices, occupational health and safety, environmental protection, ethics and compliance, information security, product safety and quality, and business continuity planning (BCP). They also incorporate principles from the Responsible Business Alliance (RBA) Code of Conduct, a widely recognized international industry standard.

In addition, we encourage our suppliers to communicate the principles and requirements of the guidelines to their own suppliers and business partners. Through these efforts, we seek to foster sustainability throughout our value chain.

Going forward, we will continue to strengthen and enhance our sustainable procurement initiatives in response to evolving societal expectations, regulatory developments, and updates to international standards.

Identification of Critical Suppliers

To build a sustainable and resilient supply chain, Aratas identifies critical suppliers based on factors such as transaction volume and the importance of the products and services they provide.

When selecting suppliers, we consider not only financial performance but also environmental, social, and governance (ESG) factors. In addition to conducting financial evaluations, we assess quality and environmental performance, and require compliance with the Aratas Sustainable Procurement Guidelines as a fundamental condition for initiating and maintaining business relationships.

When identifying critical suppliers, we comprehensively evaluate factors such as transaction volume, the strategic importance of procured materials and services, and the availability of alternative sources. We also assess alignment with our business and technology strategies, as well as performance across key criteria including Quality, Cost, Delivery, Environment, Service, and Technology.

In addition, we ask critical suppliers to understand and support the Aratas Sustainable Procurement Guidelines. Through ongoing dialogue and engagement, we strive to build trusted relationships and strengthen sustainability throughout the supply chain.

Supply Chain Risk Management

Aratas manages supply chain risks related to human rights, labor practices, occupational health and safety, environmental protection, ethics and compliance, quality, information security, and business continuity to build a sustainable and resilient supply chain.

Through ongoing dialogue with suppliers and self-assessment questionnaires (SAQs), we identify and assess potential risks within our supply chain and promote improvement initiatives where necessary. When significant risks or issues are identified, we support continuous improvement by monitoring the implementation of corrective actions.

In addition, to minimize the impact of natural disasters, infectious diseases, geopolitical developments, and other disruptions on procurement activities, we are working to enhance supply chain visibility and strengthen information management. Through these efforts, we aim to reinforce supply chain resilience and ensure a stable and reliable supply of products and services.

Key Activities	Description	Frequency
Supplier Self-Assessment Questionnaire	Assess suppliers’ compliance with the Aratas Group Sustainable Procurement Guidelines and promote improvement activities where necessary.	Questionnaire survey conducted for all suppliers at least once every three years.
Human Rights Due Diligence	Identify human rights risks across the value chain. Conduct detailed assessments to verify identified risks, implement corrective actions to prevent adverse impacts, and provide remediation where necessary.	Detailed human rights questionnaire conducted at least once every three years for suppliers with production sites located in countries identified as high-risk for human rights issues based on risk assessments.
Assessment Against Third-Party Standards	Assess compliance with the RBA^※1 Code of Conduct and promote improvement actions where necessary.	RBA Corporate-Level SAQ^※2 conducted annually for critical suppliers of commercial products. RBA Facility Risk SAQ conducted once every three years for production sites of critical suppliers of custom-manufactured products.
Business Continuity Planning (BCP) for Procurement	Maintain up-to-date information on production locations for all procured components. Reduce procurement risks for individual components with the objective of resuming procurement within one month following a major disruption.	Survey conducted for all newly procured components from suppliers and updated annually.
Green Procurement	Assess suppliers’ environmental management practices and management of regulated chemicals to prevent the use of hazardous substances and reduce environmental impacts throughout the supply chain.	Assessment conducted for all suppliers and updated once every three years.
Responsible Mineral Sourcing	Investigate materials containing 3TG (tin, tantalum, tungsten, and gold) and identify smelters and refiners. When conflict minerals linked to armed groups are identified, corrective actions are promptly implemented. Investigate materials containing cobalt and promote responsible sourcing that does not contribute to environmental degradation or human rights abuses.	Conducted annually.
Financial Assessment	Evaluate suppliers’ financial stability to support sustainable business relationships and stable supply. Where necessary, review and implement improvement measures jointly with suppliers.	Conducted annually.

1 RBA: Responsible Business Alliance, an international business alliance that promotes responsible business conduct in global supply chains.
2 SAQ: Self-Assessment Questionnaire, a questionnaire provided by the RBA for self-assessing risks related to labor, health and safety, environment, ethics, and other areas.