High-profile incidents, such as the collapse of the Rana Plaza factory in Bangladesh in 2013 and the exposé of slavery and human trafficking in the Thai seafood and electronics industries in 2014 have rightly drawn the world’s attention to global supply chains. As shameful as these incidents are, they are not anomalies. Many unethical, unsafe and unsustainable practices persist, under the radar, three or four layers down the supply chain.
It’s a persistent problem that blights the technology sector, as well as many others, despite strong leadership commitments to change.
Why, then, is there still a disconnect between what companies want to achieve and the reality, at the base of our supply chains? What’s impeding progress?
A mission that spans oceans and continents
Dell and Intel recently hosted an executive working group of brands and suppliers that came together to understand how to accelerate progress toward a truly sustainable supply chain.
Candid responses from both suppliers and brands set us on a path to tackling two major impediments to success: high workplace turnover; and sustainability OEM reporting and/or auditing requirements that are broadly similar, but different enough in detail that suppliers struggle to meet the demands of multiple brands.
A place where people want to work
“The direct labor availability in China is getting less and less year over year,” said one supplier at the working group. “When our customers’ demand is not very visible or foreseeable, that will make suppliers in China compete unhealthily for long-term business.”
According to many suppliers, maintaining labor supply, in line with constantly changing demands for products and local regulations, represents a huge strain on business and is one of the reasons why some very important balls, such as sustainable work practices, get dropped from time to time.
There are a variety of reasons for high turnover rates, including the desire of workers to work more overtime to maximize their take-home pay, despite industry guidelines and local laws that limit them due to health and safety concerns; opportunities to move to similar jobs as a way of exploring new areas; limited opportunities for professional and personal development; and lack of stimulation for younger workers. Family needs, such as returning home to help with seasonal harvests, also lead to high attrition rates.
As an industry, we have an opportunity to address these workforce needs, from programs that enable both companies and workers to be successful by improving productivity, more on-the-job training and educational opportunities, “great place to work” initiatives to make the workplace more comfortable and enjoyable, to long-term contracts and increased sharing of early forecasts between brands and factories to enable suppliers to better manage their staffing requirements and provide workers with far greater job security.
This year we will start identifying best practices and developing pilot programs to implement these projects further afield.
Audits for insight — not for audits’ sake
With the best of intentions, companies place numerous sustainability requirements on suppliers such as audits, reporting and training. Audits and reporting can be onerous, but they are an effective means of independently verifying compliance to sustainability standards. However, they can be made more efficient.
The same complaint applies to overlapping requests for varying training and risk assessment templates. By putting our competitive differences and minor process variations aside, we as collective customers can start sharing the information we receive from our suppliers rather than making repetitive demands. We can further simplify the compliance effort for our suppliers by moving to more industry standard training and development programs.
If you think about it, the technology sector effectively enables open-source, collaborative working via various standards and associations. Shouldn’t we apply these same principles to our supply chain on sustainability wherever possible, rather than maintaining our own unique requirements? This will enable suppliers’ resources to be focused on improving true sustainability performance versus completing multiple audits, assessments and training programs.
Sustainable supply chain management is not only the right thing to do — it will also drive innovation, empower people and transform business for the better. As the United Nations reminds us, supply chains have enormous potential to contribute to more inclusive markets and advance sustainable development. Achieving these goals will require new approaches to the customer/supplier relationship model, starting with greater collaboration among both parties and across industries — the first step in a far-ranging process.