Tuesday, February 4, 2014

Apple Supplier Responsibility

I have been looking at both popular media sources and Apple's own reports and audits in order to understand Apple's relationship with its suppliers, in the context of the scandal over child labor at several of Apple's Chinese supplier factories. As reported in this Guardian article, http://gu.com/p/3dbn8, as well as in the video below:

Apple has recently come under fire for numerous incidences of child labor found at 11 of its suppliers. In addition, other labor and human rights violations have been uncovered, including: workers whose wages were being confiscated to pay off exorbitant headhunter fees; mandatory pregnancy testing; wages docked as punishment.

What is curious is that the discoverer of these violations is none other than Apple itself. Apple carries out a yearly internal audit of its suppliers, even going to such lengths as to call a sizable sample of factory workers. Further, upon the discovery of these violations, Apple demanded a variety of actions from its suppliers, such as the return of docked wages, and the return of children to their homes, with additional payments provided for their education.

At http://www.apple.com/supplierresponsibility/, you can find Apple's Supplier Responsibility Report and a description of measures being taken, as well as company code of conduct, with regards to maintaining ethical working conditions in its supply chain. You can also find a detailed list of some of Apple's hundreds of suppliers.

Given Apple's massive supply chain, the many degrees of separation that might be assumed between some its suppliers and Apple itself, and the legal and cultural climate in which its suppliers operate, it is impressive that Apple appears to go to these lengths to police its supply chain. For instance: in the case of the child labor findings, "according to Apple, the children had been knowingly supplied by one of the region's largest labour agencies, Shenzhen Quanshun Human Resources." (http://www.theguardian.com/technology/2013/jan/25/apple-child-labour-supply) This provides a hint of the very different context in which Apple's suppliers operate. The baseline, legal, or expected treatment of workers in China likely differs from what we would see as ethical. As such, Apple has to impose its own cultural views upon its suppliers. It isn't simply battling against unethical practices at individual factories; its fight is going against the grain of the prevailing local norms. I'd like to propose that Apple imposes its own norms--the norms supposedly shared by a majority of its shareholders--to keep its shareholders happy.

Thus, we can see that maintaining an ethical supply chain can be a costly and labourous process, especially when this can involve differences with local culture. However, highly public companies such as Apple are likely under a lot of pressure to commit to certain codes of conduct.

Question: How is the maintenance of an ethical supply chain a source of benefit to Apple in ways other than the PR benefit discussed above?

1 comment:

  1. If there is any legal action taken against the supplier by the Chinese government for employing child labour, then Apple could potentially loose an integral supplier. Hypothetically speaking, if Apple were to loose Foxcon as its supplier, there will be a huge lag in the production and it will affect the sales.


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