Mar 3, 2010

The Apple that ate the child...

supply_chain_apple_child_scm

Sometimes an Apple to apple comparison is just not possible. Especially when you’re comparing the outsourced component of your manufacturing. I mean, how many companies have you heard admit to have discovered child workers in their supply chains? I’m talking about the shocking new discovery about child workers in some of Apple’s factories. This is an especially disturbing discovery in the light of the fallacies of Apple’s supply chain that have been discovered in the recent weeks. First it was the Foxconn employee who committed suicide. Next it was the Reuters reporter who was manhandled for taking pictures of a Foxconn manufacturing plant. Now, Apple has admitted in a 24 page report that three of its manufacturing plants used 15-year old children in countries where the minimum age for employment is 16. Does this come as a surprise to you? Are you shocked that the Mac that you could have been reading this article on was built by a child who was probably better off getting an education? Maybe you are. But will you do something about it? Probably not. After all, Apple is a company that brings out award-winning products year after year. And who knows what standards the other manufacturing companies have? Perhaps you’re right. Perhaps you’re not. Check out the image below. Its a grab from Apple’s Supplier Code of Conduct, the way it read few days back. imageUpdate: They seem to have subsequently changed this to read “Suppliers may employ juveniles who are older than the applicable legal minimum age for employment but are younger  than 18 years of age.”

 

Let us get a few perspectives on this issue. What have people been saying? (The sources link to the articles. Eg., ‘Businessweek’ links to the article from which the quote is taken)

 

BUSINESSWEEK

Apple didn’t name its suppliers and manufacturers. The company visited sites in China, Taiwan, Thailand, Malaysia, Singapore, South Korea, the Czech Republic, Philippines and the U.S. Apple also found three cases where suppliers “falsified records” to conceal underage hiring, more than 60 facilities where employees were overworked, 24 partners that paid less than the minimum wage and 57 who didn’t offer all required benefits.

 

REUTERS

Apple, a famously secretive company, has come under some criticism over the years for the labor practices of its suppliers, particularly in China.

 

ASSOCIATED PRESS

Apple said it found 17 "core" violations, the most serious type.

 

GIZMODO

February has not been a good month for the Apple supply chain. After the assault, the arson, and the poisonings, now Apple's annual supplier report reveals that this year 11 minors were found working in factories that manufacture their products.

 

SPEND MATTERS

I'm typing this post on a state-of-the-art Macbook Pro. It's silver (unpainted aluminum, to be specific) but depending on your CSR vantage point, it may as well be red. As in blood red. Just as it's impossible to tell conflict diamonds sourced from war torn regions in Africa versus those untainted by suffering, it's also impossible to know if my Macbooks -- and iPhones for that matter -- came from a factory employing child labor (or a facility that trampled on the free speech rights of journalists researching a story).

 

This compelling piece of news has raised a lot of pertinent questions in my mind from a business perspective. How exactly can you determine the level of authenticity of your suppliers? How can you make sure they’re doing what they promise? And most importantly, what do you do when you realize that they aren’t? I can easily think of three broad areas under which companies can analyze their supply chains from a PR perspective. The goal is to have simple take-aways that will help put you on the right thought process when time comes for you to initiate action at your company.

 

The Green Promise

Companies have been promising us lean and green supply chains for years now. But is the Green supply chain fact or fiction? It certainly makes sense from a PR perspective to let the world know that your supply chain is Carbon Neutral. But the fact of the matter is that no supply chain in the world can even dream of being carbon neutral in the next few years. Wal-Mart announced just last week that they were starting a new Green Initiative that involved their suppliers. Even for Apple, green was one of the hot topics discussed in the recent shareholders meeting.

 

Take-away: Does your company have an environment policy? If not, now is a good time to create one. If they do, is it holistic? Check for the following:

  • Does it involve your suppliers?
  • Do you report your GHG emission numbers or at least include them in a public report?
  • Do you monitor your suppliers with visits? If you monitor your suppliers online, there is a good chance the ground realities are extremely different from what you think they are.

Check out the 5 things you can do today to reduce your Carbon Footprint.

supply_chain_apple_child_scm_blog

Ethics and Morals

Often included on paper and frequently neglected in reality. That’s the one line I would use to describe the way many companies handle their ethical policy especially when it comes to their suppliers. The article you’re reading right now is a great example of this. Most companies include it because it is mandated. But many times, the ground realities are vastly different.

Take-away: Think about the following

  • Is your company loyal towards its ethical policy?
  • Does it involve how your suppliers treat their employees?
  • Does it include the effect of hazardous materials and steps taken to mitigate this risk? 

Supplier Scorecards

Many times, letting your customers know about your supply chain in more detail is necessary to maintain the integrity of your practice and also to let your suppliers know of the stringency of your company policy. Supplier scorecards are a great way to do this.

 

Take-away: Think about the kinds of manufacturing your companies’ suppliers help carry out.

  • Are your suppliers being rated on a set of categories? How many of those can you make public?
  • Can you set a reward for suppliers who meet certain pre-specified standards?
  • Do your consumers really care about your suppliers’ performance and their integrity? (Surveys are a good way to find out)

These are basic steps written in the hope of starting a thought-process that you can go an implement at your organization. Let me know what you think. Does your company have a supplier policy that is as strong as the big organizations with thousands of suppliers? What do you think will be the effect on your supply chain if you implement these steps? And most important of all – Will you buy a Mac in the future?

 

Update: I just found another article that covers supplier risk management in the same light. Thanks Pete!

Mar 3, 2010

The Apple that ate the child...

supply_chain_apple_child_scm

Sometimes an Apple to apple comparison is just not possible. Especially when you’re comparing the outsourced component of your manufacturing. I mean, how many companies have you heard admit to have discovered child workers in their supply chains? I’m talking about the shocking new discovery about child workers in some of Apple’s factories. This is an especially disturbing discovery in the light of the fallacies of Apple’s supply chain that have been discovered in the recent weeks. First it was the Foxconn employee who committed suicide. Next it was the Reuters reporter who was manhandled for taking pictures of a Foxconn manufacturing plant. Now, Apple has admitted in a 24 page report that three of its manufacturing plants used 15-year old children in countries where the minimum age for employment is 16. Does this come as a surprise to you? Are you shocked that the Mac that you could have been reading this article on was built by a child who was probably better off getting an education? Maybe you are. But will you do something about it? Probably not. After all, Apple is a company that brings out award-winning products year after year. And who knows what standards the other manufacturing companies have? Perhaps you’re right. Perhaps you’re not. Check out the image below. Its a grab from Apple’s Supplier Code of Conduct, the way it read few days back. imageUpdate: They seem to have subsequently changed this to read “Suppliers may employ juveniles who are older than the applicable legal minimum age for employment but are younger  than 18 years of age.”

 

Let us get a few perspectives on this issue. What have people been saying? (The sources link to the articles. Eg., ‘Businessweek’ links to the article from which the quote is taken)

 

BUSINESSWEEK

Apple didn’t name its suppliers and manufacturers. The company visited sites in China, Taiwan, Thailand, Malaysia, Singapore, South Korea, the Czech Republic, Philippines and the U.S. Apple also found three cases where suppliers “falsified records” to conceal underage hiring, more than 60 facilities where employees were overworked, 24 partners that paid less than the minimum wage and 57 who didn’t offer all required benefits.

 

REUTERS

Apple, a famously secretive company, has come under some criticism over the years for the labor practices of its suppliers, particularly in China.

 

ASSOCIATED PRESS

Apple said it found 17 "core" violations, the most serious type.

 

GIZMODO

February has not been a good month for the Apple supply chain. After the assault, the arson, and the poisonings, now Apple's annual supplier report reveals that this year 11 minors were found working in factories that manufacture their products.

 

SPEND MATTERS

I'm typing this post on a state-of-the-art Macbook Pro. It's silver (unpainted aluminum, to be specific) but depending on your CSR vantage point, it may as well be red. As in blood red. Just as it's impossible to tell conflict diamonds sourced from war torn regions in Africa versus those untainted by suffering, it's also impossible to know if my Macbooks -- and iPhones for that matter -- came from a factory employing child labor (or a facility that trampled on the free speech rights of journalists researching a story).

 

This compelling piece of news has raised a lot of pertinent questions in my mind from a business perspective. How exactly can you determine the level of authenticity of your suppliers? How can you make sure they’re doing what they promise? And most importantly, what do you do when you realize that they aren’t? I can easily think of three broad areas under which companies can analyze their supply chains from a PR perspective. The goal is to have simple take-aways that will help put you on the right thought process when time comes for you to initiate action at your company.

 

The Green Promise

Companies have been promising us lean and green supply chains for years now. But is the Green supply chain fact or fiction? It certainly makes sense from a PR perspective to let the world know that your supply chain is Carbon Neutral. But the fact of the matter is that no supply chain in the world can even dream of being carbon neutral in the next few years. Wal-Mart announced just last week that they were starting a new Green Initiative that involved their suppliers. Even for Apple, green was one of the hot topics discussed in the recent shareholders meeting.

 

Take-away: Does your company have an environment policy? If not, now is a good time to create one. If they do, is it holistic? Check for the following:

  • Does it involve your suppliers?
  • Do you report your GHG emission numbers or at least include them in a public report?
  • Do you monitor your suppliers with visits? If you monitor your suppliers online, there is a good chance the ground realities are extremely different from what you think they are.

Check out the 5 things you can do today to reduce your Carbon Footprint.

supply_chain_apple_child_scm_blog

Ethics and Morals

Often included on paper and frequently neglected in reality. That’s the one line I would use to describe the way many companies handle their ethical policy especially when it comes to their suppliers. The article you’re reading right now is a great example of this. Most companies include it because it is mandated. But many times, the ground realities are vastly different.

Take-away: Think about the following

  • Is your company loyal towards its ethical policy?
  • Does it involve how your suppliers treat their employees?
  • Does it include the effect of hazardous materials and steps taken to mitigate this risk? 

Supplier Scorecards

Many times, letting your customers know about your supply chain in more detail is necessary to maintain the integrity of your practice and also to let your suppliers know of the stringency of your company policy. Supplier scorecards are a great way to do this.

 

Take-away: Think about the kinds of manufacturing your companies’ suppliers help carry out.

  • Are your suppliers being rated on a set of categories? How many of those can you make public?
  • Can you set a reward for suppliers who meet certain pre-specified standards?
  • Do your consumers really care about your suppliers’ performance and their integrity? (Surveys are a good way to find out)

These are basic steps written in the hope of starting a thought-process that you can go an implement at your organization. Let me know what you think. Does your company have a supplier policy that is as strong as the big organizations with thousands of suppliers? What do you think will be the effect on your supply chain if you implement these steps? And most important of all – Will you buy a Mac in the future?

 

Update: I just found another article that covers supplier risk management in the same light. Thanks Pete!