Quality

Management Approach

Policy and approach

Toyobo group is striving to ensure customer satisfaction and win customers' trust, not only through the safety of our products and services, demonstrating concern for the environment and maintaining compliance with relevant laws and regulations, but also through high quality standards. In order to achieve this, we have formulated the TOYOBO Group Basic Policy on Quality Assurance and the TOYOBO Group Basic Policy on Product Safety. To safeguard the quality and safety of the products and services that we provide, we have established an appropriate management system, we perform quality inspections using suitable procedures, and we also strive to ensure that data is properly handled.

Responding to the quality-related misconduct incidents that were discovered in our engineering plastics business in fiscal 2021, we are putting new systems in place in order to win back the trust of our business partners and of all other stakeholders.

Structure

Toyobo group has established the PL/QA Committee as a standing committee that oversees product liability (PL) and quality assurance (QA). The chair of the committee is the Controlling Supervisor Director of the Quality Assurance Division, which comprises persons in charge from each business and persons in charge (executives) from the corporate staff. Ordinary committee meetings are held twice a year in principle, and meetings of the PL/QA Standing Committee comprising general managers are held six times a year. The committee met eight times in fiscal 2022.

We established the new Quality Assurance Division on April, 2021 as one of the measures to prevent recurrence of inappropriate conduct. Under the new division, we have placed the Quality Assurance Management Department, and also the Quality Assurance Departments which are in charge of Solutions Division. By establishing the independence of the quality assurance related departments, a function which was previously implemented in each business division (Solutions Division), we have strengthened its control over the business divisions. In addition, the Quality Assurance Management Department has been given the authority to guide and suspend the development, production, and sales of the company and group companies regarding product safety (PS) and QA of Toyobo group, and we are working to reconstruct an appropriate quality management system and strengthen governance.

Before and After Reorganization of the QA Structure

Targets and KPIs

< Targets >

• We will increase customer satisfaction by practicing quality management throughout our entire supply chain, including upstream areas, and ensuring quality that can be trusted.

< KPIs and Results >

• Incidents related to products: Defined according to internal standards based on the defintion stipulated by the Ministry of Economy, Trade and Industry

Initiatives

QA activities

Employees have shared access to the Quality Assurance Manual, which describes the basic approach and code of conduct for all employees when implementing Toyobo group's development, production and sales activities, and use it as the basic philosophy for Toyobo group manufacturing.

In addition, we have formulated the Quality Assurance Guidelines, and we are aiming to develop a system that guarantees quality. Moreover, a QA system is established for each product and service so that quality and product safety can always be guaranteed at each stage. In September 2021, we implemented a revision of the Quality Assurance Guidelines, adding definitions for online systems that will reduce manual processing and manual intervention when handling quality data, so as to eliminate opportunities for data falsification from the perspective of enhancing data reliability. Additionally, checks are repeatedly carried out by business supervisors, related internal and external parties, and experts, to ensure that no incidents occur in the market.

Overview of QA Activities

Product safety promotion activities

For each department and group company, we conduct PL/QA assessments carried out by the Quality Assurance Division, which has been made independent of the business divisions, or by QA personnel from different departments, to verify and improve PS activities. Moreover, we have established criteria for assessing PS and PL risk, and based on these criteria, we carry out inspections at each stage, from product development to sales, striving to reduce risk.

All possible measures are taken to ensure PS, and training drills are also conducted on a regular basis at all business divisions based on PL incident scenarios. PS remains a crucial theme throughout the whole of the group, and we will continue to mitigate risk as much as possible and strive to fulfill our social responsibility.

PL Response System

Product safety and quality assurance training

We implement PS and QA training not only for new employees and new managers, but also for other employees at each level.

In fiscal 2022, we conducted training for new employees and department-specific training through e-learning in a packaged format, with four online courses over the year. In all, 302 people received this training. In fiscal 2023, we intend to begin implementing case study sessions focused on quality-related misconduct incidents, to further enhance awareness.

As part of our efforts to strengthen our awareness-raising system in response to quality-related misconduct incidents, we have designated November as Quality Month, and this is implemented annually. During this period, we conduct various awareness-raising activities, including the displaying of messages from the President relating to QA in each business site using digital signage and posters, and the holding of seminars on PL/QA.

ISO 9001 Certification Status

• ISO9001 Certification Status

Response to the quality-related misconduct incidents (FY2022)

The Toyobo group is responding to the quality-related misconduct incidents discovered related to the PLANAC^® and other engineering plastics in 2020 by firmly establishing “manufacturing that fulfills our promise to provide safety and security from the customer's perspective” and by fortifying the inspection and quality confirmation mechanisms in the group's risk management system.

Status of the engineering plastics department

Following the quality-related misconduct incidents to PLANAC^® and other products, we have been in contact with our customers individually have and reacquired certification from Underwriters Laboratories (UL) for some of our products.

We also proceeded to investigate the status of all of our product through questionnaires and other methods. Any quality-related matters in the Engineering Plastics Department that were considered serious issues, such as violations of our agreements with customers, were considered priority issues and reported individually to all associated customers.

Our investigations and confirmations with the cooperation of our customers have found no significant defects related to product safety or basic functionality. We are continuing to make improvements. Full-scale investigations into the incidents as part of our comprehensive investigation following the discovery of quality issues with the PLANAC^® products, in spring 2021 Toyobo conducted an anonymous questionnaire survey of all 10,101 group employees and officers (excluding the already completed questionnaires of the Engineering Plastics and certain other departments) to determine if there was knowledge of any additional product quality issues. The company received 7,391 responses (response rate; 73.2%), in which were reported 111 cases requiring additional investigation. A follow-up questionnaire was then conducted of respondents who had provided their name, but since more than half of the responses were anonymous, the company issued new questionnaires requiring respondents to provide their name.

The follow-up questionnaire was distributed in summer 2021 to 9,452 group employees and officers in Japan and overseas, from which 8,866 responses (response rate: 93.8%) were received. We confirmed from the questionnaire responses that there were some agreement violations. We discussed the issues with the customers and received confirmation that the issues were not related to quality. Including this result, at this time we have not identified any serious quality-related issues.

We recognize that violations of agreements with customers, non-observance or the lack of internal rules, and concerns about compliance awareness are priority issues that must be addressed. We will make these issues known internally and use the findings from the questionnaires to continue recurrence prevention measures at all of the group's work sites and organizations.

Strengthening the quality risk management system

The company responded to the quality-related misconduct incidents by adopting a “three lines of defense” structure at the start of fiscal 2022. The multi-layered structure for detecting and preventing quality-related misconduct positions the business divisions as the first line of defense and the Quality Assurance Division and Internal Audit Department as the second and third lines of defense.

The Quality Assurance Division, which is the second line of defense, identified improper inspections and other items as significant quality-related risks, and led and assisted risk assessments at each business unit. The division formulated measures to reduce risk and has begun assisting in the application of the measures.

The Internal Audit Department, the third line of defense, created a Risk Management Audit Team to perform quality audits for the first and second lines of defense. The department collects information on the operation status and current issues of the Quality Assurance Division and the business divisions, and examines the best approach to coordinating audits.

In the second half of fiscal 2022, the Internal Audit Department began a first line audit with the Quality Assurance Division. The department also audited the Quality Assurance Division and had a frank dialogue with the division about expectations for its supervision of the Solutions Divisions.

We also implemented data integrity (DI) measures related to quality, including automating the inspection report processes of the Solutions Divisions' Quality Assurance Departments to reduce human error, among other initiatives.

The Three Lines Model for Quality Control