Supply Chain Management

Relationship with Business Partners is the Foundation of Our Business Activities

Since its foundation, KOSÉ has aimed at “co-existence and co-prosperity” management, emphasizing cooperative relationships with business partners.
Together with our suppliers, we are committed to sustainable and responsible procurement throughout the entire supply chain in Japan and overseas while providing our customers with a stable supply of safe, reliable, and high-quality products and services.

Our Relationship with Business Partners in the Supply Chain

Our company cannot achieve sustainable, safe, secure, and high-quality manufacturing alone; it is based on the cooperative relationships with all of our business partners.
To provide better products and services at each step of procurement, manufacturing, distribution, and sales, and to promote initiatives for sustainable procurement, it is essential to strengthen cooperation with a wide range of suppliers in Japan and overseas, and we place the most significant emphasis on this matter.

Product supply flow, from procurement to sales

Sustainable Procurement

KOSÉ’s basic approach to procurement activities is summarized and disclosed in our Basic Procurement Policy: Ensuring quality and safety, Fairness and impartiality, Compliance with laws, regulations, and social norms, Coexistence and co-prosperity, and Maintaining information security. We work toward sustainable procurement, considering global environmental conservation, resource protection, safety, human rights, and more.

We have implemented various initiatives to provide our customers with products that they can use with peace of mind and promote sustainable procurement in consideration of society and the environment as the following

Training of Employees Involved in Procurement

In the Procurement Division, we are committed to fair, responsible, and sustainable procurement based on our Basic Procurement Policy. Employees assigned to divisions in charge of procurement must attend training sessions on the “Subcontracting Act” and learn about fair trade and the protection of the interests of business operators before conducting procurement activities. We also provide education within the division to help employees understand the company’s supply chain management, basic procurement policy, global social issues such as consideration for the global environment, human rights, and labor, and more, and to realize the “KOSÉ Sustainability Plan” with the aim of responsible and sustainable procurement.
We also invite lecturers to conduct seminars for members of procurement divisions as appropriate.

Information Exchange Meetings with Suppliers

Individual information exchanges are conducted regularly to deepen mutual understanding with domestic and overseas suppliers of cosmetic raw materials and fragrances, containers and packaging, and outsourced production (hereinafter referred to as “OEMs”). We will confirm our response to sustainability in addition to quality and delivery time at this meeting, including environmental and social issues, and exchange information and opinions on further quality improvement and stabilization of procurement. Such communication contributes to mutual development by improving quality and procurement efficiency and joint development with suppliers, such as the use of raw materials with lower environmental impact and taking human rights issues of each region and producer into consideration.

Monitoring for Sustainable Procurement

We have established “Sustainable Procurement Guidelines” and work with our suppliers. Once a year, we ask our leading suppliers in Japan and overseas, who have reached a certain transaction value with KOSÉ over the past three years, to complete a Self-Assessment Questionnaire (SAQ) using the CSR Procurement Self-Assessment Questionnaire of the United Nations Global Compact Network Japan (GCNJ). We work with suppliers with low scores on the survey by mutually evaluating the SAQ response results in detail and requesting improvements, if necessary. Particularly, we conduct interviews including site visits to suppliers with a low score related to human rights, labor issues and environmental impact to provide advice on goal setting and request updates on implementation results. In FY2022, we conducted SAQ on all aspects of ESG, including human rights and labor among 157 suppliers, as in the previous fiscal year. We carefully reviewed the responses on human rights and labor from 42 suppliers (accounting for 26.7% of total surveyed) with a score level of 1 and 2. Of these, we conducted site visit interviews, in-person or online meetings and e-mail exchanges with 28 suppliers (66.7% of suppliers scoring level 1 and 2) according to their scores. Through these efforts, we have confirmed that none of our leading suppliers carry CSR procurement risks as of the end of December 2022.

<Items to be confirmed in the SAQ>
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.

Response to global environmental protection and resource conservation

  • Identify the water/energy usage, amount of subsequent waste, and manage reduction targets.
  • Prevent pollution by managing regulated chemical substances and emissions.
<Results of 2022 Questionnaires>
Level Score % Supplier Type Measures
Level 3
(Score %: >70%)
115 Suppliers
Raw Materials:46
Provided feedback along with category averages, respondent scores, and charts.
Level 2
(Score %: 50% – 70%)
31 Suppliers
Raw Materials:8
Examine and confirm responses and, if necessary, conduct interviews or make proposals for improvement.
Level 1
(Score %: <50%)
11 Suppliers
Raw Materials:4
Examine and confirm responses, conduct interviews, and make recommendations for improvement.

* 157 Respondents (Raw Materials: 58, Materials: 54, Subcontractors: 45) Response Rate: 100%
95.9% is covered on a purchase value basis.

<Confirmation with suppliers in fiscal 2022>
Total number of confirmed activities Breakdown
Visits In-person/
online meetings
28 Suppliers 3 Suppliers 4 Suppliers 21 Suppliers

* We performed checks mainly related to human rights and labor issues on 28 suppliers with a low score from among those with a score level of 1 or 2.
Issues included responses that policies and systems on human rights and labor matters were insufficient and that systems to check and rectify results and initiatives were also inadequate.
We learned through the confirmation activities that although suppliers are working on these issues, there was insufficient documentation clarifying the person in charge and the system.
We responded respectfully by presenting reference examples of documentation and external disclosure, and explained the background of the questions.

*Through the above activities, we have confirmed that none of our leading suppliers pose major CSR procurement risks as of the end of December 2022.

Appreciation Party for Dear Suppliers

Supplier gathering (September 2022)

KOSÉ holds an annual purchasing policy briefing meeting to explain the group’s policy, management plan, and purchasing policy, and also holds an appreciation meeting for all participating suppliers, presenting awards to suppliers who have made particularly significant contributions to business performance, quality improvement, environmental friendliness, and other areas.
Due to the spread of COVID-19, the FY2022 purchasing policy briefing was not held. Instead, we streamed a video and sent out a booklet summarizing our Group policy, management plan and purchasing policy to 93 domestic and overseas suppliers of perfume raw materials, materials, OEM, and various production and advertising materials to encourage their active cooperation in quality improvement and environmental and sustainability considerations. The 93 companies covered represent 83% of the FY2021 purchases.
In addition, we strived to enhance our relationship with suppliers by hosting a gathering for the first time in three years in order to recognize and show our appreciation for suppliers’ efforts in the previous fiscal year following strict COVID-19 infection controls with a limited number of attendees.

Factory Inspection

We visit domestic and international suppliers’ facilities as needed. We evaluate and exchange opinions on quality stability, occupational health and safety, environmental measures, and information maintenance, and request improvements in areas that need to be corrected.

Contracts with New Dear Suppliers

For new transactions, we examine the research report by an external research firm and conduct on-site audits to ensure that the transaction conforms to our basic procurement policy before entering into a sales transaction agreement and a human rights compliance agreement. If we deem an existing supplier to be high risk due to lack of management stability, violation of social, labor, human rights, environmental, or other laws and regulations, severe quality defects, or nonperformance of the contract with us, we will demand that the supplier correct the situation. If the situation does not improve, transactions with that supplier may be suspended.

♦ You can apply through the web form on the “Materials Procurement Information” page below for cosmetic materials and OEM.

*“High risk” means a lack of management stability, violation of social, labor, human rights, environmental, or other laws and regulations, severe quality defects, or nonperformance of contract, making it difficult for us to continue doing business.

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.

Identifying Human Rights Issues in the Supply Chain

The close examination of human rights issues that KOSÉ should consider addressing has identified the following issues as important in the supply chain (jointly conducted with the Japan Committee of the CRT from August to October 2021). We will survey the situation and work on these issues in the future.

Ongoing understanding of human rights issues in the raw material procurement supply chain

  • Human rights of raw material suppliers: Human rights issues among small-scale farmers producing palm oil
  • Working conditions of foreign workers at contract manufacturing sites in Japan

Participation in Sedex

KOSÉ joined Sedex*(Supplier Ethical Data Exchange; in October 2021, becoming the 15th AB member in Japan to advance efforts to address human rights and other issues in the supply chain. We will continue to work with our suppliers to address human rights and other issues to build a sustainable and responsible supply chain utilizing the various resources of Sedex.

* Sedex: One of the world’s largest collaborative platforms for buyers and suppliers to share and verify information on labor practices, health and safety, environment, and business. Established to promote ethical and responsible business practices in the global supply chain.

Response to Sustainable Palm Oil

Palm oil is a vegetable oil extracted from oil palms produced in Southeast Asia and other regions. It is used in large quantities worldwide for various purposes, including food products, some of which are also widely used as cosmetic ingredients. On the other hand, the destruction of tropical rainforests and human rights issues related to the development of plantations have been identified. Issues related to palm oil have long been raised in the cosmetics industry. KOSÉ recognizes the palm oil issue as a high-risk human right and environmental issue as a cosmetics manufacturer, and is continuously gathering information and addressing this issue.
KOSÉ joined the RSPO in 2019 and is working to adopt certified oils to procure sustainable palm oil. Since 2020, we have also participated in JaSPON, the Japanese Network for Sustainable Palm Oil, and are working with JaSPON members to promote sustainable palm oil procurement and consumption. The “KOSÉ Sustainability Plan,” announced in April 2020, sets the following goals and promotes systematic efforts.

[Target] By FY2030, the entire KOSÉ Group aims to procure 100% sustainable palm oil for all palm oil-derived raw materials used in its products.

*RSPO:Roundtable on Sustainable Palm Oil

A visit to a large farm in Malaysia and dialogue about its operations (December 2022).

In 2022, following attendance at the RSPO conference in late November, we visited large-scale farms, family-run small-scale farms and palm depots in Malaysia in December to engage in dialogue with various stakeholders on the current situation, challenges, and needs of the field. In the process, we further deepened our awareness of issues. Going forward, KOSÉ will continue to engage in dialogue with stakeholders.

SCCS Certification *

As part of its commitment to sustainable raw material procurement, KOSÉ has obtained an RSPO Supply Chain Certification for its leading factories in Gunma and Sayama, its head office, and related sites in 2021. In 2022, we underwent a surveillance audit and had our license renewed.
We will continue to promote the active procurement of RSPO-certified raw materials in the future.

*SCCS Certification: A system that certifies whether the manufacturing, processing, and distribution processes that handle products made with certified palm oil meet the requirements of the SCCS certification.

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.

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
  • Adopt and promote packaging materials for transportation that reduce environmental impact

*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

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 conducted. These seminars for the retailers include trainings to promote better understanding of the brand and improve counseling skills.
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.