Sustainable Supply Chain
Being home to more than 70 products and service offerings worldwide, first and foremost, we value a transparent and responsible supply chain. We work with our
global network of suppliers hand in hand to mitigate risks, protect the environment and human rights and monitor the supply chain to ensure that the products
customers purchase on our platform are delivered swiftly and ethically.
Our commitment to sustainable supply chains is formalized in our Rakuten Group Sustainable Procurement Instruction, while the Rakuten Group Sustainable Procurement Code of Conduct for Suppliers outlines more detailed actions expected from our suppliers.
Rakuten's Supply Chain at a Glance
A supply chain is the network of all the entities involved in the creation and delivery of a product or service, from raw materials to the end users. Rakuten's supply chain consists of numerous stages in its cycle, starting from design & engineering down to product assembly and logistics, depending on the types of products and services. In the process, we procure tangibles such as raw materials, parts and equipment; intangibles such as software, systems, and digital content; and partner with staffing and consulting services.
We recognize that outsourcing our manufacturing, services, or business processes means outsourcing corporate responsibilities and reputational risks. Therefore,
we strive to prevent the negative impact on people involved, from consumers to contractors, to ensure our supply chain is sustainable. This starts with the
selection of suitable suppliers who share our commitment.
As part of our due diligence for a new business relationship, Rakuten evaluates potential new suppliers on the following items:
- Legal compliance
- Fair and equitable transaction
- Financial accountability
- Environmental impact
- Information security management
- Human Rights (Health & Safety, Labor Practice)
- Product and service quality
Our outsourcing contractors also meet the above criteria to ensure that suppliers operate with high ethical standards.
Critical Supplier Identification
An important first step in supply chain management is to identify our critical suppliers.
At Rakuten, critical suppliers are defined as...
|Suppliers of critical products & businesses||
|Suppliers with high transaction volume||Suppliers that have transactions above a certain amount.|
|Non-substitutable suppliers||Suppliers that cannot be substituted (in view of the fact that there are essentially no alternative products on the market, or that a long-term supply chain disruption would critically damage the core business).|
|Suppliers involved in industries and operations with high risk||Industries and operations with high environmental, social and ethical risks. Industries typically include extractive industries such as mining, oil and gas, agriculture, forestry and consumer goods production. Operations typically includes raw material extraction, manufacturing, logistics and waste disposal.|
|Local & small/medium-sized suppliers||Small and medium-sized suppliers may be more vulnerable to environmental and social risks due to a lack of resources and knowledge to implement sustainable practices. On the other hand, smaller suppliers may be more agile and flexible and can more easily adopt sustainable practices and reduce their environmental and social risks.|
Given the vast number of suppliers we collaborate with, putting our commitment into practice in all our businesses is not always easy. That's why, we implement our Supply Chain Management Strategy in stages classified by business characteristics, starting with businesses that offer Rakuten-branded products.
Communication of Policies
We hold briefings to promote awareness and understanding of the Rakuten Group Sustainable Procurement Instruction and the Rakuten Group Sustainable Procurement
Code of Conduct for Suppliers. Suppliers are asked to sign a written pledge and comply with the policies incorporated into outsourcing contracts.
Rakuten employees also undergo related e-learning training regularly to deepen their understanding of our policies. The training is suitable for all employees, regardless of their employment status, since all of our employees can potentially be involved in procurement and purchasing activities in their daily work activity.
Supplier Surveys and Monitoring
We aim to identify and resolve issues in the supply chain using the following steps, checking the status of supplier initiatives in high-priority businesses.
Rather than removing non-compliant suppliers from the supply chain, we hold our suppliers accountable for damages caused and aim to resolve any issues together.
The steps below showcase our engagement flow:
In 2022, we engaged with target suppliers for key products, including electronic devices, sports teams and official character merchandise. Details of the target suppliers and the progress by different levels of engagement are as follows:
|Type||Organizations||Example of products||Target suppliers||Level of engagement|
|Policy explanation||Written pledge||SAQ||Audited suppliers|
|Rakuten-branded||Rakuten Mobile||Smartphones, mobile accessories||48||100%
||Sports team merchandise: apparel goods, towels, foods||100||100%
|Headquarters||Rakuten official character merchandise: stuffed toys, stationaries||6||100%
||Payment terminals, top-up machines, credit cards, point cards||11||100%
Based on the SAQ results, as well as other considerations such as the supplier types, transaction volume and involvement in factory operation, we assigned different risk levels and took actions as follows:
|Risk Criteria||Risk Level|
||Applies more than 1||Applies more than 1||Applies more than 1||0|
|Supplier type||Suppliers of Rakuten-branded and/or critical components||〇||〇||-||-|
|Transaction volume||JPY 10 million or above||〇||〇||-||-|
|Factory operation||Involvement in factory operations||〇||-||-||-|
|# of suppliers||10||3||45||107|
|Action||1-day audit||60-min interview||Feedback by email||Recognize by email|
Findings of SAQ and Audit in 2022
In recent years, the electronics and apparel industries have been under increasing pressure to become more sustainable due to a growing awareness of
their environmental and social impacts. Because of this, we confirmed many of our suppliers have already taken steps to improve their sustainability
through the SAQ and audit. However, challenges remain for some suppliers, such as having no sustainability policy, employee hotlines, long working hours
and decarbonization initiatives etc.
We provide feedback to our suppliers by sharing the details of the SAQ and audit results, with expected improvement actions. We will continue to engage with them toward a more sustainable operation of our suppliers.
Rakuten Group has established a Supplier Hotline as a consultation service for our suppliers. Rakuten executives, employees, or related parties can use the Hotline to report existing or potential violations of the Rakuten Group Sustainable Procurement Instruction.