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Report Lifts Curtain on Apple's Supply Chain

By APICS Staff | 12 | 2 | January 17, 2012

Report Lifts Curtain on Apple's Supply Chain

Apple has released its sixth annual supplier responsibility report, one likely to be scrutinized by critics and competitors alike, Fortune reports. For the first time, the names of 156 Apple subcontractors were revealed, many in East Asia, representing 97 percent of Apple's supply chain. The list can be found on Apple's site here.

Additionally, the report discusses labor violations found in Apple's 2011 audit of its suppliers. These violations included the following:

  • Apple discovered 19 incidents of underage labor across five facilities. According to Apple, however, "no instances of intentional hiring of underage labor" were found.
  • Employees and potential hires were screened for hepatitis B at 18 locations, and pregnancy tests were conducted at 24 locations. Also, 52 facilities did not prohibit discrimination based on the results of medical tests.
  • At 93 locations, more than 50 percent of workers exceeded 60-hour workweeks in at least one out of twelve weeks.

The majority of Apple's suppliers were in violation of at least one rule, but Apple severed ties with only one unnamed repeat offender. Apple is maintaining its relationship with a second repeat offender.

Chief executive officer Tim Cook said in a letter to his staff that his company's efforts "have been very successful and, as a result, cases of underage labor were down sharply from last year. We found no underage workers at our final assembly suppliers, and we will not rest until the number is zero everywhere." He also announced that Apple is joining the Fair Labor Association, a nonprofit workers' rights group.

QR Codes May Be Key to Solving Food Crises

There recently have been several high-profile cases of food-borne illness. One example is orange juice sold in the United States contaminated with an illegal fungicide called carbendazim. An article on CNN Money asks if a relatively simple system of quick response (QR) codes__a type of two-dimensional bar code__might be a ready solution for the problem, potentially preventing contaminated food from reaching store shelves at all.

One development is the creation of IBM's InfoSphere Traceability Server, a system whereby a unique bar code is assigned to every step of the food distribution chain. For example, each farm, slaughterhouse, food palette, shipping container, truck, grocery store, and even individual products and animals would get its own QR code, enabling consumers to discover exactly where their food comes from. "Someday soon, this will become the minimum requirement to participate in the food supply chain," says Paul Chang, traceability program director at IBM.

There are significant obstacles to mass adoption, however. For the system to work, every member of a supply chain must participate, which requires investment. However, the costs are minimal, Chang says. He points to the fact that small, rural farms in Thailand are already using the system. With the costs of the technology falling, recalls happening on a weekly basis, and the development of an open data standard by the food industry, some policymakers are beginning to see the benefits of imposing requirements that companies adopt food traceability practices.

Best Buy's Holiday Woes Could Indicate Larger Problems

This past Christmas, Best Buy had a much-publicized failure to fulfill many online orders in time for the holiday. Additionally, many customers who ordered products well ahead of time were told only briefly before Christmas that their purchases were out of stock. As USA Today reports, many retail experts and Best Buy customers say the holiday troubles were indicative of ongoing problems that are yet to be resolved.

According to Best Buy spokesperson Lisa Hawks, the company "caught the issue quickly, but not as quickly as we would have liked." She says the company's Christmas difficulties were due to "a combination of software and process issues."

Best Buy now touts its recent installation of Oracle systems for demand forecasting and inventory planning. According to Best Buy forecasting director Chris Hubbs, the technology boosts the chance of an order being in stock by 4 percent. However, to some, the issue is "less about inventory and more about communication," says Brad Wilson, creator of internet bargain-hunting site BradsDeals.com. "Many other stores routinely run out of stock or have items on back order, but their systems allow them to communicate that better," he adds. 

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