Apple was founded in 1976 and there were several important stages in the company’s history that brought the company acknowledgment around the world. Apple II, Macintosh, iMac, iPod, iPhone and iPad were state-of-the-art electronics products that had a massive impact on the development of electronics industry. Apple might not have been able to become so successful without setting up a reliable supplier chain. Apple shifted production from the USA to the emerging region of East and South Asia in the 1990s and in just 20 years 70 million iPhones, 30 million iPads and approximately 60 million other products were produced outside the USA (Cited in Urakami, 2012, p.1). Because Apple does not own production facilities overseas, it is of great importance to find such partners and suppliers that will be able to cope with large orders and produce high quality products. Additionally, in the USA and other key markets a lot of attention is paid to the conditions in which products are made. All large companies including Apple have developed codes of conduct that partners and suppliers must comply with.
At Apple’s corporate website one may find all necessary information on the issue of supplier responsibility. In a nutshell, Apple’s suppliers employ approximately 1.6 million people in 20 countries. For Apple’s reputation it is vital that suppliers treat their employees with respect and adequately reward them for their hard and dedicated work (Annual Report, 2016). Apple developed a lot of criteria that make suppliers operate responsibly. Social responsibility should be achieved in five major areas: accountability, labor and human rights, empowering workers, respecting the environment, and health and safety (Supplier Responsibility Progress Report, 2016). These areas will be further discussed so that potential partners and suppliers could get familiar with some of Apple’s practices that help all involved stakeholders benefit from cooperation. Special attention will be given to specific changes that Apple has made in the Code of Conduct in recent years.
Every year Apple publishes Supplier Responsibility Report that details all changes that the company has made in order to protect human rights, preserve the environment, etc. To begin with, Apple set up very high standards that suppliers have to meet. The Apple Supplier Code of Conduct is one of the strictest codes developed by a private company and is targeted at “creating safer working conditions, treating workers fairly, and using environmentally responsible practices” (Supplier Responsibility Progress Report, 2016). In order to increase suppliers’ accountability, Apple developed a four-stage audit process. The company selects suppliers for audit using a risk-based approach. Moreover, anonymous complaints or complaints made by NGOs or other stakeholders are also taken into account. Apple has zero tolerance for cases of underage workers, involuntary labor, document falsification, putting pressure on workers that participate in audit, harmful working conditions and negative environmental impacts. If suppliers are non-compliant, they must submit a Corrective Action Plan that will be revised every month. After 4 months, auditors check non-compliant suppliers again. If there are still problems, a supplier is given 30 more days for resolving all remaining problems. In 2014-2015 Apple carried out 1273 audits – this figure is twice as high as in 2012-2013. For example, audit in the factory in Liuyang, China showed 57 violations that included age discrimination during recruiting, hazardous waste management, etc. Apple could have penalized the factory, but instead worked with management in order to improve the working conditions for 35,000 workers. A special responsibility team was focused on developing new procedures and practices that would improve the next audit score. As the result, most violations were eliminated and the factory continues to produce cover glass for Apple’s products (Supplier Responsibility Progress Report, 2016, p.9).
The next important issue for Apple is adequate treatment of factory workers. The company does not tolerate bonded labor, underage labor and working overtime. In 2015, Apple carried out 69 special investigations and made Chinese suppliers pay out $4.7 million to the employees that had to pay illegal recruitment fees in order to be hired by Apple’s suppliers. Now Apple cooperates with International Organization for Migration and teaches workers what rights and responsibilities they have and how to report illegal practices. Since 2012 there have not been many cases of underage labor. However sometimes suppliers fail to comply with Apple’s requirements. As the result, contracts with such suppliers are terminated. For example, Guangdong Real Faith Pingzhou Electronics employed 74 children that were recruited by the labor agency Shenzhen Quanshun Human Resources. This agency forged IDs of the children so that they could officially work (Myers, n.d., p.9). In 2015, the largest number of problems was concerned with wages, benefits and contracts. Only 66% of partners complied with Apple’s standards (Supplier Responsibility Progress Report, 2016). Therefore, Apple will be focused on improving the situation with wages in the next few years.
Next, suppliers should be committed to empowering workers by offering classes that improve their professional skills. More than 3 million people participated in the workers’ rights trainings in 2015. In total, since 2007 more than 9 million people participated in this type of trainings (Supplier Responsibility Progress Report, 2016). In addition, many factories participate in the Supplier Employee Education and Development program that allows workers to acquire computer skills, learn graphic design, master English, etc. This program also helps workers to take advantage of Apple’s partnerships with universities and obtain academic degrees (Myers, n.d., p.13). Finally, Apple supports vocational schools within the Rural Education Action Program. Results that were received in 2015 prove that this program leads to an improvement of student’s skills and reduction in dropout rates (Supplier Responsibility Progress Report, 2016).
In terms of environment, Apple has three priorities: to reduce impact on climate change by driving energy efficiency, conserve precious resources, use greener materials in products and processes (Environmental Responsibility Report, 2015, p.3). For Apple it is of great importance to limit carbon footprint. 82% of greenhouse emissions are the result of manufacturing (Environmental Responsibility Report, 2015, p.3). In order to reduce this figure, Apple helps suppliers to replace outdated heating or cooling systems, redirect waste heat, etc. Now the company would like to work with suppliers that will be able to use clean energy in manufacturing. For example, Foxconn will generate 400 megawatts of solar energy in just three years. Some other important steps in reducing environmental footprint include making products with fewer by-products, making manufacturing water conscious, restricting use of toxic chemicals, etc (Environmental Responsibility Report, 2015, p.24). In 2014, Regulated Substances Specification list was released in order to identify the chemicals that must not be used in manufacturing. Later, audits helped to map chemicals across supply chain and identify facilities that violated Apple’s rules. In 2015, all final facility assembly facilities did not used prohibited substances. Now Apple would like to inspect all non-final assembly facilities (Environmental Responsibility Report, 2015, p.24).
Finally, suppliers should improve health and safety standards in their facilities if they want to cooperate with Apple. Every supplier must set up an emergency preparedness system that will protect workers if there is a fire, earthquake or other natural/industrial incidents. In 2015 Apple assessed 40 suppliers that employ approximately 1 million workers (Supplier Responsibility Progress Report, 2016, p. 24). Even if suppliers meet Chinese government standards, their production facilities must correspond to Apple’s requirements. For example, Ri Teng facility in Shanghai, China employs 20,000 people, but there were very few formal emergency procedures. Together with Apple this supplier introduced comprehensive emergency preparedness systems for fires, floods, storms, etc. In 2015 there was an industrial incident and all factory workers were evacuated in just 5 minutes. In general, in 2015 206,000 people took part in safety trainings. Apple strengthened requirements for emergency prevention, preparedness and response, but the results of audit show that a lot of suppliers still do not comply with Apple’s standards of excellence.
References
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Chan, J. Pun, N., Selden, M. (2013). The Politics of global production: Apple, Foxconn and
China’s new working class. New Technology, Work and Employment. John Wiley &
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Environmental Responsibility Report. 2015 Progress Report, Covering FY2014. Retrieved
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