Another day, another global sourcing controversy.
Today’s controversy has stemmed from China Labor Watch’s new report about a Chinese supplier of Apple, Pegatron. This report summarized an investigation in which China Labor Watch found working conditions at Pegatron and its subsidiaries to be far worse than those found by Apple’s own audits.
However, it doesn’t appear that Apple was failing to acknowledge the risk of social responsibility issues or turning a blind eye towards potential violations of its supplier code of conduct. In a statement quoted by businessinsider.com, Apple claimed that it had “conducted 15 comprehensive audits at Pegatron facilities since 2007, covering more than 130,000 workers making Apple products including annual audits of Pegatron’s final assembly locations and surprise audits at [two Pegatron subsidiaries named in the report] within the past 18 months.”
In my view, Apple makes a valiant effort at publicly communicating about its socially responsible purchasing initiatives, acknowledging that problems exist when they do, and generally talking a good game about making things better. Yet reports like this latest one from China Labor Watch continue to come out and take aim at Apple and other big companies that offshore their production to low cost locations.
So, my question is: if a well-written supplier code of conduct and two or three audits per year – including surprise audits – are not enough to keep global suppliers honest, what will it take to eliminate controversies in the global supply chain? More audits? On-site, 24/7 procurement supervision? Collaboration with governmental authorities? Moving production out of certain high-risk countries permanently, regardless of any cost advantage? Some other solution?
I’d love to say the answer would be to do business only with suppliers you trust. But I don’t believe the solution is that simple today.
Sometimes, one has to wonder if companies have a “secret number” – an amount of money in cost savings that will actually make it feel “worth it” to have to deal with the occasional media-fueled social responsibility controversy.
I hope not. But, sometimes, even I begin to be skeptical about the seemingly high tolerance levels for bad publicity that some companies have as related to questionable global sourcing choices.
To Your Career Success,
Charles Dominick, SPSM, SPSM2, SPSM3
President & Chief Procurement Officer – Next Level Purchasing Association
Co-Author – The Procurement Game Plan
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