APICS CEO Abe Eshkenazi, CSCP, CPA, CAE -
March 14, 2014
Last week, in "The Real Price of Chocolate," I wrote about the labor challenges associated with the expanded cocoa supply chain. This week, I want to focus specifically on child labor. To shed additional light on the topic, Quartz outlines the complex issues associated with child labor in emerging markets in "What Happens When Apple Finds a Child Making Your iPhone."
"There could be as many as a dozen different suppliers between raw materials and the finished iPhone, iPad, or MacBook you hold in your hand," Fernholz writes. "The most responsible companies look perhaps two or three steps down."
Apple faced a public relations disaster in 2010, when a wave of worker suicides brought to light bad working conditions at Foxconn factories in China. Foxconn built products for Apple, but also for HP, Dell, and others. Because of its success, however, Apple's reputation suffered the most. That same year, Apple found 91 underage workers in factories making its products. It was forced to closely examine how to improve its supply chain monitoring.
Stopping business with the supplier wasn't enough, because the problem would reemerge elsewhere. Going further, Apple adopted a program that makes the supplier pay for the education of any child laborers it is found using, plus pay the child wages until he or she graduates.
"The idea is to deter suppliers from hiring children, while making sure any they do hire end up back in school," Fernholz writes. The program was developed by Impactt, a social responsibility consultancy that works in China, India, Bangladesh, Thailand, and Turkey. Impactt staff people visit the factories to identify underage workers, meet with workers' families, and convince underage workers to return to school.
Sadly, Impactt reports that in 2011 only 34 percent of underage workers offered the package agreed to take part in the program. Why? Quartz reports that although workers might be hired when they are children, they often are discovered when they are of legal working age. Also, sometimes, underage workers prefer work to school. Lastly, and adding to the complication of this issue, is the desire to earn more money.
"In China, as the economy grows with more and more foreign production, the cost of living has in the last decade started rising faster than wages," Fernholz writes. Additionally, "rising wages have put pressure on manufacturers to move inland, automate, or even get out of the country altogether. But for second-and third-tier suppliers who don't have those options, cheaper labor may be all that's left."
Last year, Jeff Williams, Apple's senior vice president of operations, spoke to Bloomberg Businessweek about the issue of child labor. "Most companies, they either don't report on it at all, or they say they look for it and found none, or they obscure the data in some way. If they're not finding it, they're not looking hard enough."
Supply chain responsibility
Having a supply chain that includes the work of child laborers isn't just a public relations problem; it's a blight for the global economy. I brought the topic of child labor to you knowing there are no easy answers, but I think your contributions to the subject are invaluable. You know the complexities of supply chains, and you know what might work. Let's start the conversation. After all, I can't turn to a page in the APICS Operations Management Body of Knowledge Framework and find the formula for eliminating this crisis.
Please consider sharing your ideas—big and small—here. We at APICS and the APICS Foundation will work to continue this important dialogue.