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Responsible Purchasing

Last Updated: 2023.09.15
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We have formulated policies and guidelines to ensure responsible purchasing in our supply chain, and we are always striving to build better relationships with our production partners.

Responsible Purchasing Policy

All Fast Retailing brands act as entities that place orders and outsource the manufacturing of products to partner factories. We are aware that conducting transactions in an appropriate manner (responsible purchasing) helps ensure stable management and growth for the factories that receive those orders and promotes the creation of better working environments. We have created the Fast Retailing Responsible Purchasing Policy to serve as a guideline for the conducting of appropriate transactions. We believe that ensuring the implementation of this policy and clear accountability consistently will earn the trust of our customers and other stakeholders. To maintain consistency of the implementation and improvement of our purchasing policy, we cooperate with the Fair Labour Association (FLA) as well as the Better Work program, a program which is jointly supported by the United Nations International Labour Organization (ILO) and International Finance Corporation (IFC).

The Fast Retailing Responsible Purchasing Policy stipulates matters that must be taken into consideration when production departments or other purchasing-related departments placing orders to factory. For example, when placing orders, those departments are required to plan their orders based on the production equipment and capacity of a specific factory, place orders whereby product volumes and delivery dates agreed in advance with the factory, and only change the quantity or delivery date with prior consent of the factory. Departments are also prohibited from exploiting any superior bargaining power when negotiating order prices or period of payments. When negotiating order prices, purchasing-related departments must consider various factors such as rising labor costs including the statutory minimum wage and raw materials costs. Furthermore, if we decide to terminate business relationship with a factory, we must determine the appropriate timing/schedule for the termination based on the factory's management and employment situation of the workers at the factory, notify the factory of our decision at the appropriate time, and continue to monitor factory conditions until all remaining orders are completed; and ensure there are no violations of human rights or other issues at the factory.

Educational activities and monitoring

We conduct regular training for employees working in the production department and other purchasing-related departments based on our Responsible Purchasing Policy. In fiscal 2022, we conducted training for 454 members of Fast Retailing Group brands responsible for merchandising, product planning, R&D, production, and other functions. We also conduct regular surveys and interviews with partner factories regarding compliance with the purchasing policy and strive to implement consistent improvements (see items relating to the Business Ethics Committee below).

Promoting Responsible Purchasing

Production Department initiatives for building better partnerships

Fast Retailing has been building partnerships with partner factories for many years because we are committed to providing customers with truly good clothes, and that includes the background conditions in which our products are made. Through those efforts, we have successfully established long-term relationships with a select number of partner factories. By sharing our planned orders with the factories in advance, the factories are able to conduct a systematic production which can secure sufficient production capacity.

We have implemented various initiatives to strengthen partnerships in the past. The measures that we have put in place primarily at our major partner factories form the foundation of the responsible procurement policy we are pursuing today. For instance, any measures, as listed below, implemented by our flagship UNIQLO brand with effective result will be or have been implemented in our other brands.

  • Information sharing in relation to our business development and product planning strategies with partner factories in a timely manner through holding of regular meetings with senior management as well as annual factory conferences.
  • Assign production department employees to our production offices in Shanghai, Ho Chi Minh City, Dhaka, Jakarta, and Bengaluru to manage product quality and monitor the progress of production processes. Employees of the production department will be responsible for specific factories, together with takumi artisans and textile industry experts, take a site visit of their assigned garment factories and fabric mills on a weekly basis to understand the condition of the factories at site, and give advice on improvements to ensure correct production processes. Through product quality and monitoring process, it helps us to identify the issues and understand the condition of the production capacity to place our orders properly.
  • Share planned orders with our factories on a weekly basis.

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Business Ethics Committee

Deliberations in the Fast Retailing Business Ethics Committee

Any serious problems in business between Fast Retailing and partner factories (e.g. defects, delivery delays) are escalated to the Business Ethics Committee. The committee discusses the issue to determine the share of responsibility, the need to revise our business relationships, and other related matters. The Fast Retailing Business Ethics Committee includes external Audit & Supervisory Board members.

Annual Questionnaire for Business Partners

Fast Retailing sends an annual questionnaire to our major business partners to ensure we engage in fair business practices. For key garment factories and fabric mills, since fiscal 2022, we have switched the survey to an anonymous questionnaire by Better Buying, a global NPO that promotes responsible purchasing by brands, initiated by suppliers in the apparel industry. Questions include whether we place orders in a way that supports the labor conditions and human rights of our partner factories. When questionnaire results indicate a need for improvement, our Sustainability Department conducts interviews of both Fast Retailing and our business partners. When issues are identified, they are escalated to the Business Ethics Committee.

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