Advanced Supply Chain Requires More Social Responsibility

Newsmaker Foxconn triggered social criticism again. Today, when I turned on the computer, the news entered my eyes: Foxconn hired students from Xi’an Technological University North Institute of Information Engineering.

 

Maybe your eyes have got used to such news, but please cast a little attention to the new form: (due to some unknown agreement between the university or local government and Foxconn), all students were threatened to practice in Foxconn, or they will not obtain their diploma. What the students do is non-technical work; the flip side is that the work is unrelated to their major. And during the work, four students have fainted and two were sent into hospital.

 

Naturally, Apple’s supply chain is swirled. According to Gartner’s ranking, among top 25 companies in 2013, Apple has taken the number one position for the sixth consecutive year with supply chain composite score of 9.51. However, I think Gartner takes less consideration of social responsibility when giving the result.

 

Aside from the reported and outside suicide, wage arrears as well as low paying cases happened on Foxconn, Apple’s other suppliers also performs bad in social responsibility.  2012 progress report on its supplier responsibility by Apple shows the fact:

Almost two-thirds (62%) of its suppliers do not comply with its limit of 60 hours per week in the factory;

More than a third (35%) of Apple's suppliers does not meet its standards for workplace safety;

Nearly a third (32%) does not comply with Apple's hazmat management practices.

 

Who should be blamed? Literally, suppliers; but in fact, Apple contributes more, some analyst said. Looking into Apple’s supply chain, we can easily find an obvious characteristic: Apple pushes too low the quote of suppliers via the enticement of large orders. Just because of the low profit, so suppliers have to squeeze workers and cut corners in environment protection such as carbon emission.

 

It is said Apple’s new CEO Cook is increasing attention to social responsibility, but when the real effort surfaces is still of doubt.

 

As awareness of corporate social responsibility grows, to capture advantage, manufactures should pay more attention to ESG (environmental, social and governance) performance.

 

You may ask what advantage is. Government, investor, media and consumer support is the answer. According to a survey be Deloitte, the average investor is paying more attention to ESG information, especially related to downside risks. And the rise of social media rivals the impact of public politics and regulatory processes.

 

In terms of maintaining and advocating social responsibilities, I speak highly of social media. Under its magnification, it seems that any behavior countering labor law, polluting environment can finally see somewhat improvement, regardless of degree. Social media swells consumers’ criticism, and gives pressure to government to adjust inhuman activities.

 

As a result, for the sake of credit and reputation, it is time for enterprises to concern social responsibilities in the supply chain management. “A closer look at ESG by the numbers suggests that it is a lens through which business leaders can build better, more resilient, and more valuable enterprises,” said Dinah A. Koehler, a senior research manager with Deloitte Services LP and coauthor of the report.