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Theme 3 : Growing with Society

Support for Member Companies of the Komatsu Midori-kai (Management and Society)

Support for Member Companies of the Komatsu Midori-kai (Management and Society)

Support for Member Companies of the Komatsu Midori-kai
(Management and Society)

Komatsu supports Midori-Kai member companies in a variety of ways. Main support activities that we have carried out are described below.

1. Safety

Komatsu provides support for the establishment of systems for safety activities and improvement of the activity level to 99 companies, the majority of which are custom goods suppliers out of the Midori-kai in Japan. The support includes continuous safety patrols by specialists from Komatsu, sharing information and horizontal application of occupational safety measures conducted by other companies, the introduction of management system, and so on. These activities are also carried out at the Midori-kai in China.

(1) Komatsu experts conducting safety patrols

Using check sheets and on-site patrols we conduct surveys to ensure compliance, particularly with laws (e.g. reports and inspections), unsafe locations on site, and the existence of unsafe actions. If anything problematic is found, we request the submission of a countermeasure report, which describes the measures to prevent recurrence, as a follow-up. In FY2017, we reviewed the check sheets and evaluation criteria so that we would be able to use the same standards to evaluate the activities of Midori-kai members company-wide and follow-up with them to improve the level of each company every year.

(2) Encouraging business partners to implement mutual safety patrols

One of the Midori-kai committee activities is the implementation of mutual safety patrols by business partners with similar business standpoints. We also put a lot of weight on inspecting from perspectives specific to each business category (e.g. the handling of heavy goods or the risks of touching hot surfaces).

(3) Connecting and information sharing through safety activities in Komatsu

Executives from the Midori-kai member companies in Japan participate in the Komatsu Group Safety and Health Conference, which is held in June every year. Excellent Zero Accident circles provide presentations about their activities. In addition, we open the Safety Dojo (Safety Training Hall), a facility included in each Komatsu plant, to our business partners, aiming to improve the safety awareness of the employees of each company through danger simulation experiences and danger prediction training.

(4) Focused guidance for companies with repeated accidents

We select companies that have had repeated accidents as target companies for Special Safety Activities and provide special support and guidance according to the unique situation of each company.

(5) Introducing labor safety and health management systems

To increase the level of the activities at each company, we support them in their establishment of their own occupational safety and health management systems, including OSHMS certification. In 2015, we supported 97 companies that implemented Japan Industrial Safety and Health Association (JISHA)'s Workplace Safety Health Impact Project for small and medium-sized businesses, and they are using the project to objectively evaluate their own activities.

Risk assessment training
Group performing a mutual safety patrol
Presentation by Sekigahara factory
at a Komatsu safety meeting

Changes in the results of safety activity evaluations in 2018 and 2019 (99 Midori-kai member companies, 116 offices)

Results of the evaluations of the level of safety activities from 99 member companies of the Midori-kai in Japan

Changes in the number of accidents at Midori-kai member companies in Japan and China Table 1

komatsu csr, Procurement Division

2. Compliance

We conduct compliance and risk audits (CR audits) internally. In 2016, we began to conduct the CR audits even for 16 business partners in which we have made minority investments. The audit is conducted in four fields -- accounting, labor management, procurement (the Subcontract Act) and information security. It is aimed at identifying potential risks and taking corrective measures at an early stage. The risks are identified mainly by checking the status of compliance with relevant laws and regulations, confirming business rules, segregation of business and decision-making authorities, inspecting relevant business documents and conducting on-site examinations.
Voluntary establishment of compliance systems by business partners is essential for promoting CSR procurement. We believe that such a system should desirably be established by 1) formulating rules (establishing codes of conduct of each company), 2) building a structure for promoting CSR procurement (including the appointment of a person in charge and promoters), 3) introducing a whistleblowing system, and then 4) providing employees with awareness training. Under this policy, we provided support to 99 companies, mainly custom goods suppliers belonging to the Midori-kai, for their establishment of compliance systems by providing practical examples at Komatsu and employee training materials, etc. We have completed support activities for 37 companies as of FY2019, and plan to complete them at all of the companies by the end of FY2021. While taking the laws, regulations and practices of each region into consideration, we will expand these activities to the other countries around the world.

Main Findings through CR Audits (2016 to 2019):

Field Findings Countermeasures
Accounting -Business flow, operating procedures and decision-making authorities have yet to be set/ are insufficient. Formulation/ review of business flow/ operating procedure, provision of instructions on physical inventory check, and others
-Physical inventory check is not conducted/ not regularly conducted.
-Rules on sale and disposal of stagnant assets and loss on forced write-down of such assets are not clear.
-Management of corporate seals and password updates for the accounting system are not done thoroughly.
Labor management Error in the service contracts for individual forepersons Switching to direct employment, review of timecard operations, etc.
Handling of the fraction (less than 30 min.) at working hour management
Procurement (the Subcontract Act) -Insufficient details provided on the order form (document set forth in Article 3) Review of order form and supporting documentation, review of business flow, and others
-There is a risk of delay in payment (within 60 days after receipt).
There is a risk of early deduction of the price of raw materials purchased by a subcontractor from the subcontract proceeds to be paid.
-Violation of the provisions prohibiting reduction of subcontract proceeds (Reducing the amount of subcontract proceeds by the amount equivalent to that of discount commission where the payment is made in cash)

Support Activities for the Establishment of a Compliance System The number in () indicates the cumulative number of companies.

FY Achivement Plan Target
2018 2019 2020 2021
Number of companies we support Japan

5

32 (37)

31 (68)

31 (99)

99

Overseas

Reviewing policies and implementation methods
The CSR SAQ survey is conducted for major manufacturers to understand the status of their operations

Changes in Evaluation Level in CR Audits (from 2016 to 2019):

komatsu csr, Procurement Division

3. Personnel Development

We believe that the greatest support that we can provide to the Midori-kai is human resource development. Based on this belief, we provide various job-level training programs as listed below. In recent years, we are particularly committed to Management Salons and skills transfer activities. Management Salons are aimed at developing young individuals in management positions, who have recently taken on new business responsibilities. Through these events, Komatsu executives analyze the current strengths and weaknesses of each company and exchange views on the medium-term management visions of the companies with their counterparts to align and share management policies and ideas. The skills transfer activities are aimed at facilitating the improvement and succession of the on-site skills of each company. In these activities, we help each company build systems for promoting skills transfer and skills evaluation and develop instructors in core skill fields by disseminating our own knowledge and skills.

Training Programs for Midori-kai Member Companies

Target job level Program Outline Major achievements
Management Commissioned training Komatsu accepts sons and daughters of corporate managers of member companies and provides them with on-the-job training for up to five years. 49 trainees have been accepted since 1972.
Middle management training Komatsu's training program for its executive candidates is open to candidates for member company successor. Duration of the training is seven months. 25 people have participated since 2005.
Management Salons Young corporate managers of member companies make presentations on medium-term management visions of their respective companies, which are discussed and shared with Komatsu. Provided to a total of 22 companies since 2014
Employees in managerial positions Managerial training For newly appointed managers and on-site job leaders (e.g. general managers of centers and team leaders) Around 40 people participate every year.
Leader training (for field managers) Exclusive training programs for the Midori-kai. The training is provided two times a year. Around 60 people participate every year.
Representatives Komatsu Technical Institute Intended for leader candidates related to production engineering and manufacturing who are aged 30 or younger. It is a boarding school which provides a two-year program. 25 people have entered since 2008.
Production engineer training It is an exclusive training program for the Midori-kai on sheet metal processing and mechanical engineering. Five-day training is provided once a year. Around 40 people participate every year.
Skilled workers Instructor training A 30-day program for candidates for skilled instructors of each company 84 people have participated since 2015.
Inspection training school Inspection skills training and classroom lectures  
Others All Komatsu QC competition Participants are selected from among the Midori-kai members. Around 20 companies participate every year.
All Komatsu skills competition (Advanced Technique Contest) Participants are selected from among the Midori-kai members.
Instructor training
komatsu csr, Procurement Division

4. Supporting Productivity Improvement Activities by Using ICT

Addressing the issue of the labor shortage, which has been growing more seriously in recent years, is an urgent task for Komatsu and members of the Midori-kai as well. We promote the networking of production sites and facilities by making effective use of ICT (KOM-MICS) and using the network to improve productivity and save human resources. As a countermeasure against the labor shortage, we are expanding these activities to members of the Midori-kai proactively. Tools such as ones for monitoring operating rates that we developed on our own (K-MICS PAD) automatically collect data, including operational status and operating conditions, from the controllers of machine tools and welding robots of each company. These data are accumulated on the network, and processed and edited on a PC with application prepared for each purpose. We thus visualize the issues that need to be overcome to improve the operating rate, leading to collaborative analysis and implementation of measures.

Outline of KOM-MICS

Changes in the number of K-MICS PAD units installed

komatsu csr, Procurement Division

えー18_Our Suppot for Midori-kai member companies(Management・Society)_BCP

5. BCP to Prepare for Natural Disasters

With so many natural disasters, such as earthquakes, heavy rains, and typhoons, in 2018 and 2019, the importance of establishing a BCP system for the supply chain has been rediscovered. Starting after the Great East Japan Earthquake in 2011, Komatsu has implemented measures to withstand earthquakes and water damage, etc. at the buildings and facilities of 104 companies, mainly custom goods suppliers belonging to the Midori-kai. In addition to these tangible measures, it is also necessary to strengthen intangible measures, including the establishment of an initial response system by creating a BCP manual, etc., ensuring its workability through education and simulation exercises, and preventive measures for business restoration in the future. Since FY2019, we have held BCP workshops for 104 Midori-kai member companies, mainly focusing on support for the establishment of their own initial response systems.

BCP workshops
komatsu csr, Procurement Division