Nowadays global production networks are vital for many large companies and lots of smaller enterprises in the developing countries. In the early 2000s, Apple took a strategic decision to outsource production abroad. Supply chain management, flexibility, and production speed are some of the factors that make production overseas effective and beneficial for Apple (Moyer, 2012). However, cooperating with a very large number of suppliers is not easy and there may be a lot of criticism that can harm company’s image. Therefore Apple respects foreign suppliers, but requires them to pay more attention to the conditions in which employees work and what impact they have on environment. For several years Apple has been publishing Supplier Responsibility Reports in order to show positive changes in the work of foreign suppliers and partners. These changes would not have been achieved, if Apple has not organized regular audits and encouraged partners to put more effort into providing satisfactory working conditions for people.
Apple developed a Supplier Code of Conduct that requires suppliers to act fairly and ethically. What principles are important for Apple? According to Apple Supplier Code of Conduct, “all workers in Apple’s supply chain deserve a fair and ethical workplace” (Apple Supplier Code of Conduct, 2016, p.2). Antidiscrimination, anti-harassment and abuse, prevention of involuntary labor and human trafficking, underage labor, legally mandated minimum wages and benefits are important principles that suppliers should follow. Additionally, Suppliers shall provide safe working environment and integrate safety management practices (Apple Supplier Code of Conduct, 2016, p.1). At last, Apple is committed to protecting environment. Suppliers shall develop environmentally responsible business practices (Apple Supplier Code of Conduct, 2016, p.4).
The Supplier Responsibility Report of 2015 shows that suppliers mostly follow the principles of the Code of Conduct. Those companies that do not comply with Apple’s standards have time to improve the working conditions of the workers. If they ignore Apple’s requirements, they will not cooperate with Apple in the future.
Empowering workers. Workers should have a possibility of training in the factories, because they do not have access to a quality education in schools. Training usually starts with workshops that let employees learn to understand local laws, safety regulations, and get familiar with the Apple Code of Conduct. Such training is of great importance, because workers may become empowered and later have many choices in their career. They can create organizations that will allow them to bargain collectively. They know where they can report grievances. And of course they know what career prospects they have.
In the Supplier Responsibility Report of 2015, Apple described the benefits of SEED program. SEED stands for Supplier Employee Education and Development. This program should be promoted among workers, because its main goal is to improve workers’ professional skills. Factory workers can learn English, computer science, design, and other disciplines that might help them work more effectively. Workers may even receive a bachelor degree because within SEED program some suppliers work with local universities (Social Responsibility Report, 2015, p.16).
Accountability. In the Apple Supplier Code of Conduct it is written that “suppliers shall be ethical in every aspect of business, including relationships, practices, sourcing, and operations” (Apple Supplier Code of Conduct, 2016, p.5). Apple’s partners should have business integrity, disclose information without falsification, protect intellectual property, and strive for responsible sourcing of mineral resources (Supplier Code of Conduct, 2016, p.5). Suppliers should also have a CSR representative that will be responsible for improvement of the working conditions and other aspects of CSR (Apple Supplier Code of Conduct, 2016, p.6).
Apple may audit some suppliers in order to assess social, environmental, health and safety, and business risks (Supplier Responsibility Report, 2016, p.6). Last year Apple performed 21 unannounced audits. 250 requests were closed for environment, safety and labor cases and 25,000 follow-up interviews were conducted to make sure that workers were not punished for participating in audit. Audit usually has 4 stages. Results of audit and improvements in score in comparison with the previous year show that Apple and its suppliers made significant progress in compliance with the Supplier Code of Conduct.
Human and Labor Rights. Human and labor rights is the aspect of supplier social responsibility that used to be the most problematic. One third of the rules in the Supplier Code of Conduct are about the rights-related issues that Apple does not tolerate. Last year, audit showed that suppliers did not exploit underage children, but there were problems with working hours, wages and benefits. Apple will continue to encourage overseas partners to respect their workers and standards that were set up in the Supplier Code of Conduct.
Another issue that Apple does not tolerate is bonded labor when people pay money to recruiting agencies for employment in the factories that cooperate with Apple. For example, Rechel Ragas from the Philippines paid the agency to find work in one of the factories in Taiwan. Agency’s fee was equal to her annual salary in the Philippines. Apple contacted Mektec, which is a company that employed Ragas. They reimbursed Rechel and terminated relationship with the agency (Supplier Responsibility Report, 2016, p.11). In this case, Apple’s reaction was very quick and in the future the company is not going to allow similar incidents.
Environment. Environmental responsibility is at core of Apple’s activity, but there is a lot of work that suppliers have to do so that there was lower level of pollution. According to the Supplier Code of Conduct, suppliers shall not use hazardous substances, irresponsibly dispose of non-hazardous waste, and allow high air emissions. Suppliers shall have environmental permits and comply with reporting requirements. In the near future, suppliers are expected to reduce energy, water, and natural resource consumption (Supplier Code of Conduct, 2016, p.5).
For example, Foxconn, one of Apple’s major partners, had to stop sending production waste to landfills. 80% of waste was generated by production. After in-depth analysis, Foxconn was able to recycle 40% of waste. The remaining waste was used for generating power for communities. In 2016, Foxconn is expected to be 96% landfill-free. There are also many other projects that will make production less harmful for environment. A lot of resources will be spent on installing stations that will be generating renewable energy.
Health and Safety. More than 1.5 million people work in factories that produce Apple products. Suppliers must make sure that during work-time there are no risks to their lives. In recent years, working conditions were significantly improved and facilities became much safer. 206,000 workers participated in safety workshops where they learnt how to use safety gear (Supplier Responsibility Report, 2016, p.26). Apple requires much more from suppliers than Chinese government, but audit shows that health and safety could be significantly improved. A lot of suppliers need to have renewed health and safety permits and improve their emergency preparedness systems (Supplier Responsibility Report, 2016, p. 30).
Suppliers may send their workers to participate in the EHS Academy that helps students to get educated on the issue of emergency preparedness and safety equipment. EHS Academy has an 18-month curriculum and requires students to implement safety projects at their local facilities. More than 1,590 projects were implemented in 2015 and there were 310 graduates. For example, at Marian Suzhou, EHS graduates improved safety routines and reduced the number of machinery-related injuries. They also published new safety precautions that were later officially enforced in all units of the factory.
References
Moyer, E. (21 January 2012). A tale of Apple, the iPhone, and overseas manufacturing. Cnet.
Retrieved from http://www.cnet.com/news/a-tale-of-apple-the-iphone-and-
overseas-manufacturing/
Apple Supplier Code of Conduct. Retrieved from
https://www.apple.com/supplier-responsibility/pdf/supplier_code_of_conduct.pdf
2015 Supplier Responsibility Progress Report. Retrieved from http://images.apple.com/
supplier-responsibility/pdf/Apple_SR_2016_Progress_Report.pdf
