Relationships with Business Partners

The year 2008 was beset with worldwide fluctuations in the economic environment, and consumer confidence in Japan was shaken by incidents of contaminated food products and false advertising. Under these circumstances, the Ajinomoto Group will strive with even greater determination to build relationships of trust with its business partners in accordance with the Ajinomoto Group Basic Purchasing Policy, established in May 2006. With the cooperation and understanding of its business partners, the group undertakes numerous activities together with these partners to fulfill its social responsibilities in all corporate endeavors, placing a top priority on ensuring safe and reliable products.

Effect of surging raw material prices

In the first half of 2008, rising demand accompanying economic growth in China and other developing nations tightened supply and demand for many raw materials. Speculation also accelerated rising prices of crude oil, grains, and other raw materials. However, following the collapse of Lehman Brothers in September 2008, financial turmoil in the U.S. sparked a worldwide recession that sent raw material prices plunging, and brought stagnant consumption and major adjustments to inventories. This had the result of settling the insecurity surrounding the supply of raw materials.

Group procurement center established

Ajinomoto Co., Inc. established its Group Procurement Center on April 1, 2008. The center has been taking over all of the functions of the company’s Purchasing Department, and several functions handled by the Food Product Raw Material Procurement Department and the Material Purchasing Department of Calpis Co., Ltd. The center coordinates with the procurement departments of the Food Products Company, Amino Acids Company, Pharmaceutical Company, and subsidiaries and affiliates in an effort to secure supplies of raw materials and stabilize prices. Moreover, it is strengthening procurement capabilities and improving greater efficiency of operations.
As an example of improved operations, the center developed and introduced a Packaging Information System for the procurement of packaging material in February 2009. When procuring new packaging material, the system sends the name of the required packaging, packaging codes, standards, and delivery dates to business partners, and receives price estimates, warranty letters, and other documents from suppliers. Adoption of the system has enabled the center's operations to be carried out faster and more reliably, and facilitated secure management of information and documents by business partners. The system also remedied inefficient work processes, including problem handling and double tasking.

Building relationships of trust with business partners

A safety issue involving Chinese frozen foods occurred early in fiscal 2008. The incident highlighted the importance and urgency of quality assurance throughout the entire supply chain, including outsourced manufacturers and raw material suppliers. In response, Ajinomoto Frozen Foods Co., Inc. (FFA) established the Supplier Inspection Department independent of the Purchasing Department. The new department concentrates on auditing outsourced manufacturers and raw material suppliers. In February 2009, FFA held a conference about raw material quality at the Ajinomoto Group Takanawa Training Center in Tokyo, attended by representatives from 201 business partners. The conference offered explanations of quality assurance matters including Initiatives to Advance Reliable Quality for frozen foods, and provided information on the the Supplier Inspection Department as well as a review of the Ajinomoto Group Basic Purchasing Policy.
Procurement departments within the Ajinomoto Group continue to work with business partners on quality assurance, including the performance of audits based on determination of importance and urgency.
In early 2008, it came to light that paper manufacturers in Japan had been falsifying claims about recycled paper content in their products. This incident had a noticeable impact on Ajinomoto Co., Inc., which uses office supplies such as recycled paper and tree-free paper. Accordingly, Ajinomoto Co., Inc. adopted responsive measures, including revising labeling to ensure correctness. The situation was brought back under control as paper manufacturers worked to correct labeling and the market for recycled raw materials eased up in terms of supply and demand. The Ajinomoto Group will remain on guard to ensure that its own business with partners and customers is conducted with the utmost fairness and integrity.

Fair transactions

The basic policy of the Ajinomoto Group is to comply with Japan's Antimonopoly Law and similar laws and ordinances in other countries, as well as all other related regulations, with a view to supporting a free economic system based on fair and free competition.
In this light, despite pressures from severe economic conditions worldwide, the Ajinomoto Group will continue requesting the understanding from its business partners while pressing them to thoroughly comply with the Antimonopoly Law.

Quality assurance through collaboration with business partners

The Group Procurement Center of Ajinomoto Co., Inc. conducts quality audits following the Ajinomoto System of Quality Assurance (ASQUA).
In accordance with the provisions of relevant laws and ordinances, the Pharmaceutical Quality Assurance Department is in charge of quality assurance and auditing related to pharmaceutical raw materials and packaging.
The company's Food Product Raw Material Procurement Department has conducted an audit, according to the Raw Material Supplier Control and Audit Guidelines, which became applicable to the Food Products Company based on ASQUA since fiscal 2007. Major subsidiaries and affiliates take quality assurance initiatives suited to the character of each company's business, including initiatives at FFA and supplier audits at Calpis Co., Ltd.

Fiscal 2008 record of quality audits of raw material suppliers

More details of Ajinomoto Group Basic Purchasing Policy are available here.