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〔Fair operating practices〕Supply Chain Management

Relationship with Business Partners is the Foundation of Our Business Activities

KOSÉ has aimed for co-existence and co-prosperity management that focuses on a relationship with business partners since its founding. We value cooperative relationship and promote Sustainability in the entire supply chain with all of our business partners to provide safe, reliable, and high-quality products and services to our customers and continue growing with our partners in and outside Japan.

Our Relationship with Business Partners in the Supply Chain

Production that is sustainable, secure, safe and high-quality is only made possible because of our cooperative relationship with all our business partners. Strengthening our relationship with our business partners at home and abroad is key to the steady growth of future business activities.

Product supply flow, from procurement to sales

Sustainable Procurement

The Basic Procurement Policy that describes KOSÉ’s approach to procurement activities is available for viewing.

Basic Procurement Policy (Raw Material Procurement Information)

Our company conducts the following activities to provide our customers with products that they can comfortably use and to carry out Sustainability procurement that is mindful of the society and environment.

Employee Training

Employees assigned to the procurement department will attend a subcontracting law course, which is a law for fair transactions and protecting the interests of all stakeholders. In addition, within the department, they will provide education on responsible procurement as a company, including our supply chain management, basic procurement policies, and global social issues such as human rights and labor.
In addition, lecturers are periodically invited to conduct seminars for all related people who are in charge of procurement.

Information Exchange Event

Different information exchange events are held twice a year to deepen our mutual understanding with suppliers at home and abroad on cosmetic essences, containers/packaging and Production consignment (OEMs: Hereinafter referred to as OEM). In addition to quality and delivery dates, Sustainability activities for environmental and social problems are also discussed in the event. Information and opinions are also exchanged for further quality improvement and stabilization of procurement. This event contributes to mutual development by creating opportunities to collaborate with partners that work not only on the improvement of the quality of raw materials and efficiency of procurement but also on the use of environment-friendly raw resin materials from plants and paper-based containers.

Monitoring

Monitoring is conducted once a year through a survey on the following matters to domestic and overseas suppliers. The contents of this monitoring are fed back to the entire company. When problems are identified, we will take actions such as request for improvements and cancellation of business transactions altogether.
The survey for FY2019 was conducted by 140 companies, which accounted for 90% of the annual purchase value in FY2018.

<Items to Be Checked by Survey>

Social Responsibility and Respect for Human Rights
  • Compliance with laws and corporate ethics policy
  • Provide a safe and healthy work environment
  • Eliminate discrimination based on race, nationality, religion, creed, disability, gender, age, birthplace, sexual orientation, child labor, forced labor and exercise consideration towards the socially vulnerable.
  • Corruption prevention, bribery prohibition, etc.

At KOSÉ, we respect and support the freedom of association, the right to collective bargaining, the eradication of excessive overtime work and the right to minimum wage.

Global Environment Conservation and Resource Protection

  • Identify the water/energy usage, amount of subsequent waste, and manage reduction targets.
  • Prevent pollution by managing regulated chemical substances and emissions.

Appreciation Party for Dear Suppliers

An Appreciation Party for Dear Suppliers

At the policy briefing held once a year, we explain the Group’s policies, management plans and purchasing policies, and commend suppliers who have made significant contributions to performance, quality improvement and environmental considerations. We have a thank-you party for all participating suppliers. In fiscal 2019, we invited more than 105 domestic and overseas suppliers of raw materials, materials, OEMs, and various promotional materials, and called for active cooperation in quality improvement, environment, and sustainability considerations. The 105 companies that participated accounted for 85% of the purchase amount in FY2018.
As mentioned above, we are striving to communicate with Dear suppliers on various occasions to help them understand our basic policies and priority measures.

Factory Inspection

Persons-in-charge from our Quality Control Department and Purchasing Department conduct visits on Dear suppliers facilities at home and abroad as needed. The facilities are evaluated based on quality stability, occupational safety and health, and information administration. Opinions are exchanged and improvements are requested for areas that need corrective actions.

We conducted audits and monitoring at 64 factories and workshops in FY2017 and 75 factories and workshops in FY2018.
(Total number of materials & raw material suppliers,and OEM suppliers)

Contracts with New Dear Suppliers

In the case of new business, we will confirm the survey report and conduct an on-site audit by an external research company and conclude a contract after confirming that it conforms to our basic procurement policy. If an existing supplier determines that the risk is high*, we will request a correction, and if it is not improved, we will suspend the transaction.

For cosmetic essences and OEM, application can be done via the online application form in the Material Procurement Information page below.

High risk refers to cases where continuous transaction is difficult due to lack of management stability, violations of laws such as societal, labor, human rights, environmental laws, serious product quality defects, or failure to fulfill a contract with our company.

The Basic Procurement Policy(The Material Procurement Information)

Relationship with Production Contractors

KOSÉ’s high quality standards are constantly achieved

When requesting OEM, KOSÉ always maintains a relationship system that ensures KOSÉ’s high quality standards are constantly achieved whenever consigning production externally, whether domestic or abroad. Audits regarding factory environment and processes are conducted based on the GMP standards to guarantee sanitary production whenever consigning production to a new contractor. Quality audits are also regularly conducted thereafter.Through our relationships to maintain high quality, we strive for mutual development with our OEM suppliers.

Activities in Logistics

High-quality and efficient logistics services

KOSÉ used to handle domestic logistics on its own, but as a part of our business structure reform, we have been outsourcing domestic logistics to Hitachi Transport System and Hitachi Collabonext Transport System since October 2011. Through outsourcing, we were able to improve operational efficiency as well as improve logistics efficiency, speed up response to changing logistical needs, and reduce environmental effects through logistics streamlining. We are still continuing to make remarkable progress in efficiency through the joint usage of charter vehicles with other companies and delivery load optimization to country-wide logistics hubs. Furthermore, we are promoting modal shift to reduce environmental effects –we are using railway transport from Kanto region to Hokkaido and Kyushu areas.

Efforts at offices, logistics, operations, and shops

In 1997, representatives from the logistics departments of six cosmetics manufacturers participated in the “Cosmetic Logistics Forum 21” and started to implement joint order and delivery in several areas across Japan (Hokkaido, Tohoku, Kita-Kanto, Hokuriku, Chubu, Chugoku, Shikoku, Kyushu, and Okinawa). For all of these areas we are taking part in the joint delivery and contributing to the reduction of work of retailers in receiving goods as well as the reduction of CO2 emissions by decreasing the number of times delivery vehicles have to travel. Steps to further increase the target areas of this activity is ongoing.

Declaration of voluntary action for the White Logistics Movement

In September 2019, Kosé stated its support for the purposes of the “White Logistics” movement, which aims to secure the logistics necessary for people’s lives and industrial activities, and will take voluntary actions to contribute to the realization of sustainable logistics. In the future, we will continue to actively work on reducing CO2 emissions as well as improving distribution efficiency.

=Kosé Efforts and Activities=

  • Proposal and cooperation with suppliers and logistics companies to improve logistics
  • Modal shift to ships and railways
  • Promotion of joint deliveries
  • Respect for the suspension and interruption of operations during abnormal weather to ensure drivers’ safety

About “White Logistics” movement
In response to the increasingly severe shortage of truck drivers, this movement was led by the Ministry of Land, Infrastructure, Transport and Tourism, the Ministry of Economy, Trade and Industry, and the Ministry of Agriculture, Forestry and Fisheries with the purpose of contributing to economic growth by securing the stable logistics necessary for people’s lives and industrial activities.

“Co-existence and Co-prosperity” with Retailers

Introductory training on brand characteristics
Makeup lecture for elderly people in collaboration with a retailer in Yamaguchi Prefecture

The KOSÉ group since its foundation has maintained a system of close cooperation with retailers designed not only to provide them with products but also to support their sales efforts, for example, by sending KOSÉ’s beauty advisors out to stores and making proposals about in-store display fixtures. KOSÉ is continuing to strengthen its bond with retailers through the KOSÉ Club, a country-wide organization of retailers, as well as through social events attended by our company’s officers and managers from retailers. Although times are changing with the diversification of distribution and increase in self-service sales through distributors, the spirit of Harmonious Management will never change.
Several seminars are also being held for retailers and their employees to enable them to conduct counseling in their respective stores. Trainings to improve the skills of employees for their careers are regularly conducted. These seminars for the retailers include trainings to promote better understanding of the brand and improve counseling skills. Since 2013, we have also included business behavior and fundamentals of beauty as an employee in the beauty industry in the trainings for newly hired employees in companies and retailers that we conduct business with to support them in becoming professionals as early as possible.
Retailers are important partners for KOSÉ in improving our relationship with localities. As an example, we collaborated with a retailer to hold a makeup lecture for local elderly people. The KOSÉ Group will continue its efforts in developing trust with our partners and delivering responsive customer service through beauty skills they can depend on.

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