The JAL Group centralized procurement transactions in the JAL Procurement Division in August 2010.
Our main aims of centralized procurement transactions are;
- To reduce procurement costs through centralized purchasing
- To standardize and increase efficiency of the procurement process
- To build a fair, honest and impartial procurement system
External procurement support services are used for certain procurement transactions to increase efficiency.
Basic Concept（with our suppliers）
The JAL Group is aware of the need to gain the cooperation and support of many suppliers to operate its flights and provide products and services to customers on a daily basis. Therefore, we strive to build strong partnerships with suppliers based on mutual trust by ensuring fair and transparent procurement activities and showing our appreciation for their support, as explained below.
1. Fair and transparent procurement
When selecting suppliers, we comprehensively assess a broad range of factors, such as product and service quality, costs and delivery periods, the company's reputation, and its corporate social responsibility (CSR) and sustainability initiatives. We also ensure fair and transparent procurement activities by offering numerous opportunities for domestic and international suppliers to do business with the JAL Group.
2. Providing safe and secure services to our customers
To deliver peace of mind to customers when they board our flights, we cultivate a culture of safety as top priority with our suppliers and conduct rigorous quality management to offer the finest hospitality.
3. Promoting sustainable procurement
We work with suppliers to build sustainable supply chains, including initiatives aimed at legal compliance, global environment preservation, respecting of human rights, appropriate labor practices, and fair business practices.
Dissemination of the JAL Group Supplier Code of Conduct
Although the JAL Group has observed the JAL Group Supplier Code of Conduct since April 2016, given the recent global focus on supply chain management, we significantly revised the code in July 2019. The revised code covers eight key areas on the primary premise of ensuring safety: (1) quality assurance, (2) human rights and labor, (3) safety and hygiene of working environments, (4) the environment, (5) business management, (6) expansion to suppliers, (7) regional and social contribution, and (8) establishment of internal promotion systems. Commentary on social background and examples of specific initiatives have also been added. We have notified our suppliers individually of the revised JAL Group Supplier Code of Conduct by email (sent to approx. 1700 companies by fiscal year 2019) and are collecting a consent form verifying that they have read and understand the contents. We ask all our suppliers to understand and comply with the Supplier Code of Conduct, as we aim to establish sound and sustainable supply chains to achieve the SDGs.
JAL Group Supply Chain
The JAL Group conducts business with approximately 12,000 companies around the world with a purchase amount totaling approximately 1 trillion yen (as of March 2019). We aim to build good partnerships based on mutual trust in collaboration with our business partners.
Identifying Critical Suppliers and High-Risk Products
The JAL Group identifies critical suppliers based on purchasing amount and volume and the criticality and substitution sustainability of products. In fiscal year 2018, we screened all products procured by the JAL Group in order to provide safe and secure services including inflight meals and cabin service goods that passengers enjoy or use on board. In particular, we identified products with high social and environmental hazard potentials such impact on human and labor rights to ensure sustainable procurement. In fiscal year 2019, we collected self-assessment questionnaires from these commodity suppliers.
Cooperation and monitoring with suppliers
To verify compliance with the JAL Group Supplier Code of Conduct, JAL joined Sedex Information Exchange Limited (Sedex*1) in 2015 and uses Sedex’s CSR information platform to select suppliers based on transaction volume regardless of product type or location, and asks them to join Sedex and respond to a self-assessment questionnaire.
By fiscal year 2019, 293 suppliers completed the self-assessment questionnaire. We will continue to conduct supply chain risk assessment based on results of the self-assessment questionnaire using Sedex and ask high-risk suppliers to make improvements.
We will conduct supplier audits when serious issues are detected and further achieve sustainable procurement by interviewing and engaging with experts and NPOs.
We also hold business partner liaison meetings regularly as a venue for business partners to deepen their understand of JAL Group’s basic stance on procurement and to share information and exchange opinions. In fiscal year 2019, we conducted activities to raise awareness of ESG and the SDGs inviting outside lecturers, in which 41 companies took part. By coordinating with suppliers through Sedex, we hope to contribute to the achievement of the SDGs and help solve other social issues. In addition, as an Official Airline Partner of the Tokyo 2020 Olympic and Paralympic Games, we are actively promoting initiatives based on the Sustainable Sourcing Code.*2
*1 Sedex, the Supplier Ethical Data Exchange, is a non-profit organization established in the U.K. in 2004 that provides a platform for managing and sharing corporate ethical information with the aim of ensuring responsible business practices on supply chains.
*2 Guidelines established by the Tokyo Organizing Committee of the Olympic and Paralympic Games to ensure that services truly necessary for the Olympic Games are procured with consideration for economic rationality, transparency and other ethical principles and to ensure procurement with consideration for sustainability.
Auditing High-Risk Suppliers
As part of JAL Group’s efforts to address high-risk products, SMETA*3 audits were conducted on seven suppliers. Based on results of these audits, we worked with the suppliers on items that required immediate improvement and verified improvements and results of corrective measures.
*3 SMETA (Sedex Members Ethical Trade Audit) is an auditing scheme designed to improve corporate ethics in global supply chains and is widely accepted as an international standard. It enables strengths and weaknesses (non-conformities) of companies to be identified against international standards and clarifies necessary actions for further improvement. For further details, please visit the official Sedex website.
ESG Evaluation to Select Suppliers
The JAL Group aims to build sound and sustainable supply chains to achieve the SDGs. As part of this effort, we have started to use external platforms to select suppliers and will continue to expand this approach.
In September 2018, we introduced FSC® certified*4 products, driven by our sustainable paper procurement policy, and will expand the use of certified products.
*4 FSC®(Forest Stewardship Council®) certification：An international forest certification program established in 1994, amid global issues of deforestation and forest degradation and rising environmental awareness among citizens. Based on opinions of interest parties gathered worldwide, forests are inspected and certified against strict standards of FSC’s 10 Principles of Forest Stewardship and 70 criteria that balances environmental, social, and economic factors. These inspections are undertaken by independent organizations. FSC offers two main types of certification: Forest Management (FM) certification which certifies careful and long-term forest management and Chain of Custody (CoC) certification which certifies the processing, manufacturing and distribution process of forestry products. JAL requests business partners in the supply chain to seek FSC CoC certification.
KPIs in Supply Chain Management
|Supplier Self-Assessment Questionnaire||Respondents||293 companies|
|Supplier Audit (SMETA Audit)||Audited companies||7 companies|
|Percentage of procurement staff
sustainability training（Includes JAL Group Supplier Code of Conduct）
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